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Trump bump or long term recovery?

Dear Investor

What is happening to cause these equity markets to rise like this?

There are three possible drivers:  Better economic data in China & the US, many promises from Trump and also the US Federal Reserve being determined to raise interest rates.

Underlying growth momentum in the US is continuing to build now that the uncertainty around the presidency is over.  Investors are also more secure in their futures in the US because they feel that there is now more unity of purpose in all three levels of government and that means more policies will be passed into law and therefore progress will be made…?  

Concerns remain however, with no clear outline as to how the promised tax cuts, deregulation and infrastructure spending are to be executed and funded.

Finally, how does a pending increase in US interest rates help an economy to grow?  Well, it’s not about that actually, but rather that investors and analysts feel that if the Fed is confident enough to raise rates, then the members must be confident in the robust nature of the economic recovery…

Outside of the US some European countries are showing promising economic growth signs, while China starts to move forward again and this translates into a possible commodity revival, in turn resulting in stronger Emerging Market growth.

Was my concern, expressed in December,  about the markets possibly foundering in the coming months unfounded?

 

Best wishes  

Brian Groom

briang@intasurelife.co.za