As they relate to U.S. economic growth, the lofty expectations concerning the Trump administration seem to be cooling off, says a recent article in Barron’s.
Since March 1st, the article states, the fifty biggest stocks in the S&P 500 are down by 1.8% and the fifty smallest are off by 5.4% (citing data from Bespoke Investment Group). Overseas valuations are more moderate, it asserts, and the dollar has “failed to rally further even after an interest rate-hike this month.”
While Trump’s pro-growth agenda fueled the post-election run-up in the market, the recently-aborted health care plan vote was a dose of reality and shined a light on the gridlock in the Republican Party, according to the article. David Lafferty, chief market strategist at Natixis Global Asset Management, sees a “looming showdown between deficit hawks in Congress and Trump’s growth agenda. Given fiscal limitations, both cannot be satisfied.”
Ned Davis (of Ned Davis Research) believes a passive investing bubble is expanding. “Not only have index funds outperformed, but the crowd has noticed,” according to Davis, who sees the next five years as presenting a “great opportunity for active managers to outperform passive indexes.”
