Stat of the Day: How Trump's start stacks up...
It's a popular notion in some circles that this year's positive stock market start has a lot to do with our new president. Well, we gotta be careful with that, for, as I pointed out in a recent post, if Trump had taken office in January 2008 he'd be unfairly catching the blame for the worst bear market/recession since the Great Depression.
So how's the market done since he took office? Well, compared to all of the past first-termers since 1900, President Trump's first 100 days fall smack-dab in the middle (10th place out of 20), with a return just a hair above the median (but way better than the results under past Republicans!):
Clearly, it's more about timing!
Data source: Bespoke Investment Group
Marty--interesting. I remember in our meetings during the previous administration, we talked about a high percentage of investor money being on the sidelines due to a lack of confidence. So far, under Trump has that improved?
ReplyDeleteHi Laura, I'm certainly open to the notion, but we gotta let the data speak for itself:
ReplyDeleteWe've seen a net 6.7% growth of inflows into U.S. equity ETFs so far this year (which, given the size of our market, is quite a large dollar amount). In terms of the Americas, that puts us in fifth place (on a percentage basis) behind Argentina (+35%), Brazil (+18.5%), Columbia (+15.1%) and Canada (+7.1%). In terms of the rest of the world, the U.S. is nowhere near the top 10, which ranges from Pakistan (+39.7%) to Malaysia (+16.7%). In terms of global market cap (the total value of the stocks in a country as a percentage of the value of the world stock market), the U.S. has dropped from 37.49% to 35.52% since the beginning of the year. In terms of country-by-country market gain year-to-date, at 8.9% (thru June), the U.S. sits at #32. Ironically, our client portfolio returns this year have been driven notably more by our non-US exposure.
There indeed was a big jump from the election to the end of the year in sectors that would ostensibly be helped the most from the stated positions of the Trump administration. I do believe the political prospects helped those sectors. However, since the inauguration, the stocks that did the best from the election to inauguration have performed the worst (the stocks that found themselves in the top 10% of performers from election to inauguration, have produced a negative 3.05% so far this year). Ironically, the worst performers (the bottom 10% from election to inauguration) are up 6.65%, and the second worst decile is up 13.43% since.
To answer your question, yes, we've seen positive inflow into U.S. markets under Trump. But, as I implied in the post -- and as strongly suggested by the global data -- it's clearly more about timing than it is a political agenda.
All that said, we can't deny that certain sentiment indicators saw a huge boost after the election; small businesses in the aggregate, and homebuilders for example. However, homebuilder sentiment has declined from recent highs, citing Trump's 25% tariff on Canadian lumber (apparently a big input for U.S. housing) and concerns over potential steel tariffs going forward. Small business sentiment, while still high, has waned a bit, with government red tape moving back into the number 2 concern spot (it dropped from 2 to 3 after the election).
My view is that if Trump can get back on course with tax and regulatory reform, and infrastructure, while substantially toning down the protectionism, we'll see those sentiment indicators improve, which will, on balance, be good for the U.S. equity market.