Stock Market Update

There are many prominent issues facing world markets today. Trump’s first 100 days in office has been quite eventful, but markets have not responded similarly with intense volatility. The lift in US equity markets since his election has been mostly led by tech stocks, making the Nasdaq the biggest winner among the major indices (12.81% YTD) followed by the S&P 500 (6.67%) and the Dow Jones Industrial Average (6.05%).

Since the beginning of 2017, US indices have led world equity markets built upon the promise of deregulation, lower taxes, and a stronger government. To date, Trump has taken action against Dodd-Frank banking regulations and made the biggest tax cut in US history. Congress looks able to agree on health care changes and recently passed a budget deal of $1.17 trillion until September which doesn’t allow for Trump’s wall and keeps full funding for Planned Parenthood.

Worldwide, Trump continues to make moves on international trade. Trump identifies the United States to be the victim in unfair trading practices worldwide and has been active in holding these conflicts as cornerstones in renegotiation.

Fundamental macroeconomic indicators in the US still lag expectations; there are renewed mortgage default scares arising out of California. Around the world, the UK is experiencing political conflict regarding their departure from the European Union, Greece’s bailout subsides have been renewed, there are signs of credit scare in China, and bankruptcy in Puerto Rico.

France is in an intense presidential nomination between far-right Le Pen and the more centrist Macron. Le Pen is campaigning on intensifying the fight on Muslim extremism and France’s departure from the European Union. Riots in Paris give evidence towards the support for the populist movement. Apple tops $250 billion in cash holdings, Tesla takes over US automakers in total market-cap (43.33% growth YTD); both companies failed to meet earnings expectations: nevertheless, despite many analyst’s claims of these stocks being overvalued, their prices continue to rise.

Trump continues to negotiate terms with leaders worldwide in return for their support in the US stance against North Korea.

The debate over active vs passive management remains hot worldwide as exchange traded funds make index holding easier than ever and hedge fund returns fail to meet market benchmarks: what happens when everyone tracks the index?

More on this next time!