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Understanding The Trump Rally - will the reality match the hope?

Financial Markets, Reflation and Protectionism

The November-March period has historically been the strongest period for equity markets, and this year that period has coincided with a remarkable post-election rally. With over 100 days having passed since the election, now is a good time to take stock, to analyze exactly what has happened in financial markets and why.

Below we have selected a number of papers which aim to do just that; combining an analysis of what has happened with discussion of what will evolve in the months to come.

Wall Street Trump Rally

The Trump Rally - 100 Days In (T. Rowe Price, March 2017)
The authors of this paper state that while the magnitude of the "Trump Rally" is garnering much attention, the composition and shape of the rally is in many respects the most interesting dimension to analyze.

Reality May Soon Overtake Post-Election Equity Rally (OppenheimerFunds, Feb 2017)
This paper by OppenheimerFunds explores the likely trajectory of the U.S. equity market once the realities of post-election politics and policy collide with the optimistic rhetoric of campaign promises.

How will President Trump reshape the Fed? (Fulcrum Asset Management, Feb 2017)
President Trump has an almost unique opportunity to reshape the Federal Reserve - its personnel and legal foundations. What will the likely impact be on monetary policy formulation?

Investing in the Era of Reflation (Pioneer Investments, March 2017)
This paper by Pioneer Investments discusses the end of Developed Markets inflation. The authors focus on five key reflationary trends to watch.

Can Trump reverse globalisation? (Handelsbanken, Feb 2017)
Anti-globalization sentiment has gained significant traction in recent years, culminating in the election victory of Donald Trump. Can he reverse existing trade deals and, in effect, globalization as we've come to know it?

Prospects for Inflation under a Trump presidency (BNP Paribas, Feb 2017)
This briefing discusses the impact of increased political uncertainty in the US, and in Europe, on volatility and risk premia across asset classes.

Could Inflation End the U.S. Equity Cycle? (T. Rowe Price, March 2017)
Despite the widespread consensus of rising growth, inflation and profits following President Trump's election victory, the authors of this paper discuss the conditions and criteria under which they would foresee a bear market forming.

Playing Economic Acceleration (Pioneer, Feb 2017)
This paper by Pioneer Investments examines the outlook for global economic growth and reflation.

The Risks of Protectionism Are Offset by Global Reacceleration (Fidelity, Feb 2017)
This article by Fidelity Investments investigates how the risks of protectionism affect the outlook for the business cycles and financial markets in the U.S. and other countries.

Why the Fed means business this time (Gavyn Davies, March 2017)
In this article, Gavyn Davies examines recent comments by senior members of the FOMC, including by Janet Yellen herself, which suggest that the Committee will probably raise rates by 25 basis points this month.

US-China: Trump's New Approach Risks a Dangerous Confrontation (Pictet WM, Feb 2017)
Tensions between the US and China are likely to come to a head under Trump’s presidency. This paper by Pictet Wealth Management discusses strategies for dealing with the resulting market volatility.

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