24 DECEMBER 2024
Many political commentators argue that Donald Trump views the performance of the US stock market as the ultimate opinion poll.
Hence why he claims his first term was such a roaring success; the S&P 500 index almost doubled over the 4 year period, despite the intervening Covid-led plunge (red box).
Simply put, his comeback appears bullish for equity investors. Over the next 4 years Trump will likely do whatever it takes to drive the market higher.
And, at face value, his pro-growth policies of tax cuts and deregulation speak to both higher nominal GDP growth and stronger corporate profits. We view the latter as essential if the 2-year bull market is to endure.
However, the stock market begins his second term at much higher valuation multiples compared to the first, suggesting a lot of good news is already priced in. And, as noted elsewhere, his return could drive bond yields higher, which often causes equity prices to weaken.
On balance, the prevailing bullish trend should stay intact well into next year, albeit with a few bumps and bruises along the way. But there are some issues on the horizon that suggest Trump may not have it all his own way.
The content of this communication is for information purposes only. Bentley Reid believes that, at the time of publication, the views expressed are a matter of opinion but cannot guarantee replication of depicted performance. Viewers intending to take action based upon the content of this communication should first consult with the professional who advises them on their financial affairs. Capital invested will be at risk, and you may get back less than you invest. Neither the publisher nor any of its subsidiaries or connected parties accepts responsibility for any direct or indirect loss suffered by a recipient as a result of any action or inaction, in reliance upon the content of this communication.
Key trends in portfolio management
Is India Leaving the “Fragile EM” Era Behind?
Discussion on the unrest in the Middle East
