Financial markets back to the whiteboard after Trump’s victory

Wall Street might actually benefit from the election of the 45th president of the United States.
15 Dec 2016 – USA Today

The moment Donald Trump was declared the winner of the presidential election on Nov. 8, Wall Street’s script for where financial markets were headed in the new year underwent a major rewrite. Suddenly stale 2017 market outlooks were torn up and new, more bullish, forecasts drawn up.

Indeed, the arrival of business-friendly Trump at the White House, coupled with a Republican sweep of Congress, added up to a bullish change agent that the four Wall Street pros that took part in USA TODAY’s 21st annual Investment Roundtable weren’t necessarily expecting – but which they now view as a mostly positive development for a U.S. stock market that has been in bull-market mode for nearly eight years.

“Trump’s election is a game changer,” said Roundtable panelist David Kostin, chief U.S. equity strategist at Goldman Sachs.

The well-respected big-picture strategist, who hails from the same Wall Street firm where several of Trump’s cabinet picks and advisors have worked, expects the so-called “Trump Rally” to extend into the new year.

His call is for the broad Standard & Poor’s 500 stock index, which closed Wednesday at 2,253, to climb as high as 2,400, or nearly 6.5% higher by the end of March. But he sees the market giving back some of its gains and finishing 2017 at 2,300 (or 2% higher than current levels) as the reality of what Trump can get passed through Congress “tempers” the post-election market euphoria.

Rupal Bhansali, chief investment officer of international and global equities at Ariel Investments, summed up the 180-degree political and economic shift this way: “What we are essentially witnessing,” the Roundtable panelist and five-star fund manager said, “is a regime change. We had Reaganomics in the 1980s. We have Abenomics in Japan. Now we have Trumponomics.”

Trump’s platform is seen propelling the domestic economy to a faster growth rate and providing a boost to corporate earnings growth, the fuel that drives the stock market. The general outline of Trump’s plan, namely to slash the corporate tax rate to as low as 15% from 35%, do away with regulations that U.S. businesses’ complain makes it difficult for them to grow, and spend $1 trillion to rebuild the nation’s infrastructure over 10 years, is viewed as a template for growth.