Barclays said two weeks ago that the Trump agenda was finished. Japanese money manager Nikko Asset Management in New York is going the other way. Despite all the political wrangling, Nikko’s chief global strategist, John Vail, thinks a good portion of Trump’s agenda really will be enacted this year, including moderately-sized corporate tax cuts and infrastructure spending in the second half.
“It will be important for markets whether this is financed with short term deficits or be offset by income,” he says.
“Our base case is that a Border Adjustment Tax will not occur, but the repatriation tax holiday will generate more than expected income with the balance being deficit-financed.”
Following two failures – the migrant travel ban and the Obamacare do-over – betting on the Trump agenda carries many uncertainties. The view from Nikko’s global investment committee though is upbeat. The net impulses for global economic growth and corporate profits have improved. They’re overweight global equities, particularly the U.S. and Asia ex-Japan (ironically).
They’re underweight bonds, but that’s not a Trump trade; it’s a Fed trade for now. Vail thinks Trump keeps a strong dollar and thinks investors should be more biased in favor of the greenback than taking risks in foreign currencies at the moment. Nikko Takes Contrarian View On Trump
Barclays said two weeks ago that the Trump agenda was finished. Japanese money manager Nikko Asset Management in New York is going the other way. Despite all the political wrangling, Nikko’s chief global strategist, John Vail, thinks a good portion of Trump’s agenda really will be enacted this year, including moderately-sized corporate tax cuts and infrastructure spending in the second half.
“It will be important for markets whether this is financed with short term deficits or be offset by income,” he says.
“Our base case is that a Border Adjustment Tax will not occur, but the repatriation tax holiday will generate more than expected income with the balance being deficit-financed.”
Following two failures – the migrant travel ban and the Obamacare do-over – betting on the Trump agenda carries many uncertainties. The view from Nikko’s global investment committee though is upbeat. The net impulses for global economic growth and corporate profits have improved. They’re overweight global equities, particularly the U.S. and Asia ex-Japan (ironically).
They’re underweight bonds, but that’s not a Trump trade; it’s a Fed trade for now. Vail thinks Trump keeps a strong dollar and thinks investors should be more biased in favor of the greenback than taking risks in foreign currencies at the moment.