June 19, 2017
The winds of political change that blew through the United Kingdom and United States last year apparently have left investors wondering: What else could possibly be in store for the global economy and markets this year?
In the United States, market participants are deciding how much of the recent rally in riskier asset classes is due to the new administration and how much is grounded on improving global growth. Investors have shifted their focus from the U.S. Federal Reserve’s monetary policy agenda to the new administration’s legislative agenda. The recent healthcare debate that ultimately culminated in deferred action but muted market reaction suggests that markets are not completely dependent on new legislation to drive investment gains.
In Continental Europe, a spreading wave of populist sentiment may have a significant impact on the markets, with a key German election looming later this year.
Overall, U.S. Bank views investment markets as a glass half full, with positive returns for equities, a difficult bond environment and varied returns for alternative assets.
Equities Still Appear Attractive
While equity securities are subject to market fluctuation due to economic and business developments, the equities markets raced forward after the November elections. Some question if these markets got ahead of themselves.
Robert Haworth, Senior Investment Strategist for U.S. Bank Wealth Management, doesn’t believe so, “as long as some of what they anticipate comes to fruition, such as corporate tax cuts and a reduction in regulation.”