Stock Market Commentary for January 2017
Edward Lane, Adjunct Professor, Finance, University at Albany, SUNY (UAlbany)
Sunday, January 22, 2017
Friends, my January newsletter is now available in the Market Commentary section of my website (www.LaneAssetManagement.com).
In past January updates, I’ve taken a swing at providing a market forecast for the coming year. With the changing dynamics and unpredictability of President Trump, I believe forecasting market returns for 2017 and beyond would be little more than a guess.
My Commentaries are intended to be stock market focused and not political (for the most part). But let me say this. For those who have expressed concern about a Trump presidency (and I include myself in that group), I think it would be a good idea to hold judgment for the time being.
Leaving aside Trump’s other characteristics, it is possible, with regard to economic and foreign policy, that there are two Trump’s – one that sets the stage in the public forum and appeals to his populist base (and perhaps are used for negotiation positioning) and one that is more pragmatic (which can be seen in the choice of some of his cabinet picks, a number of whom seem to disagree with Trump’s public stance on various topics).
Trump has laid out a number of tax, trade and infrastructure proposals, some of which, I think, will have a tough time getting through Congress as is. The Republican Congress, too, has laid out a number of proposals (think Obamacare repeal and the less well known “destination-based cash flow tax”) that will have a hard time getting implemented as proposed.
Therefore, while I’m not that optimistic about the distributional effects of any tax, trade or spending program that comes from the current Administration, my expectation is that there will be a net positive for the stock market, at least in the short run. Donald Trump surely wants to be reelected as the prior three presidents were. He may make invalid or questionable claims about his accomplishments, but the numbers will speak for themselves.
As always, I welcome your comments and questions.