Beware Trump Tweets, And Other Major Catalysts In 2017 According To JPMorgan
By Tyler Durden
In the latest macro update from JPM’s Adam Crisafuli, the strategist writes that the Trumpflation rally which more than doubled the market’s YTD gains since the Trump election, has gotten ahead of itself and that “it seems like a lot of headwinds that have been accumulating below the surface for weeks are quietly moving to the fore.“
Here are the details:
Specifically, the initial Trump/Ryan fiscal enthusiasm is getting tempered as investors focus on the details of tax reform, the likelihood of infrastructure spending, and the potential for negative trade actions (this has been discussed throughout the press over the last week).
Note that while investors haven’t been without Trump skepticism, most of the doubt concerns timing (when the Trump policies will be enacted) and not magnitude or efficacy (i.e. it is still the overwhelmingly consensus view that Trump’s “pro-growth” agenda will materially help growth once it takes effect) although this dynamic is starting to gradually adjust (there is more anxiety around efficacy).
Meanwhile, the conciliatory and anodyne nature of Trump’s initial post-victory rhetoric has shifted back to the pre-11/8 tone and the tweeting is actually growing more frequent.
Away from domestic politics, China worries continue to mount as CNY weakness persists (currency outflows are expected to intensify during the opening months of ’17 as quotas get refreshed) and Taiwan/Washington tensions build.
Bottom Line – the SPX hasn’t really moved since ~12/8 and all the major US indices will finish the year w/respectable gains. However, the Trump/Ryan enthusiasm (which has by far been the biggest contributor to the stock rally) is certainly waning (or at least suffering more scrutiny).
And as a bonus, here are JPM’s key preliminary catalysts for 2017:
- CES – the Consumer Electronics Show formally runs from Jan 5-8 in Las Vegas but “media days” take place Jan 3-4.
- US Dec jobs report Fri 1/6.
- Obama “farewell speech” on Tues Jan 10.
- ICR consumer conf. Jan 9-11. Orlando.
- Yellen will host a town hall meeting with educators from across the country. There will be a Q&A. Thurs 1/12 7pmET.
- US bank earnings season kicks off Fri 1/13 (BAC, FHN, JPM, PNC, and WFC all report that day).
- Earnings – week of Mon 1/16 is the first big one of the CQ4 earnings season.
- World Economic Forum 1/17-20 in Davos.
- ECB – first ECB decision of the year will occur on Jan 19.
- Trump inauguration Fri 1/20.
- Trump priorities – Trump will have a finite stock of political capital but a broad agenda, including tax reform (individual and corporate), infrastructure spending, deregulation (ACA,
- Frank, fiduciary rule, etc.), immigration reform, trade deal adjustments, Supreme Court nominees (at least one). What parts of the platform are prioritized and which get deemphasized?
- Trump fiscal specifics – what are the particulars of the tax reform bills – rates, deductions, etc.? How will the fiscal priorities be sequenced? Will corporate and individual tax reform get tackled separately, in which case the latter may not …read more
Source: Beware Trump Tweets, And Other Major Catalysts In 2017 According To JPMorgan
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