The initial market reaction to Donald Trump’s election was unexpected exultation, as previously worried traders chose to focus on Mr. Trump’s fiscal plans, including tax restructuring, infrastructure spending and deregulation. However, this enthusiasm may quickly dissipate should uncertainty continue, Mr. Trump’s plans continue to look vague and the numerous economic contradictions contained therein supersede the economic reality Mr. Trump claims he can deliver. The expected boost in growth is likely to lead to a stronger dollar and higher inflation, so much will depend on how the U.S. Federal Reserve will accommodate Mr. Trump’s policies. However, the economic outlook for 2017 remains relatively stable. There are U.S. equity opportunities inherent to the very uncertainty posed by Mr. Trump’s anti -trade proposals, though it remains unclear what will and will not be implemented. The inability to project beyond the first six months is a central element of the political risk posed by Trumponomics so far.
THE GENERAL OUTLOOK
Market analysis is divided on the Trump administration’s economic development and outlook for 2017. On one hand, Mr. Trump’s promises on infrastructure spending, deregulation and tax reform have sent markets into premature euphoria. On the other, the vagueness subtending Mr. Trump’s plans could put an abrupt end to this elation if it transpires that Mr. Trump is not as much outlining thought-through policy as scrambling to chase economic realities, regardless of the verbal band-aids he deploys to take credit for positive developments, and disavow responsibility for negative ones. According to a survey conducted by the Wall Street Journal, the majority of economists are forecasting the U.S. economy will grow by about 2.2% in 2017, pushing the inflation rate above 2%. This is mostly in line with predictions from Goldman Sachs, which forecasts that 2017 will be accompanied by higher growth, but higher risk, and slightly higher returns. “Markets are starved for growth,” Goldman wrote in a forecast, which is “plainly visible in the eagerness with which [they] seized on Trump’s growth-focused
