Financials will be hot this year because of deregulation promised by president-elect Donald Trump, agrees J.J. Feldman, portfolio manager at Miracle Mile Advisors in Los Angeles, which has $473 million in AUM . But Miracle Mile is moving away from Europe. There may be some uncertainty about what will happen in the United States, but there is even more uncertainty in Europe, he says.
“Our markets are one tweet away from a 3 percent correction,” warns Feldman, referring to Trump's penchant for controversial tweetins.
Julian Rubinstein, CEO and president of American Asset Managemen in Boca Raton, Fla., with $192 million in AUM, is even more cautious in his outlook. “I think the optimism over Trump is overblown and equities are far ahead of where they belong. There is no fear in the markets and history tells us that is a very bad thing.”
David Joy, chief market strategist at Ameriprise Financial, adds his warning. ”The anticipation of a very different investing environment ahead, whether in terms of faster growth, less regulation or tax reform, is not the same as its realization. Even if policy in the new administration is more investor friendly, how much of that was already reflected in the rally [that already transpired] remains open to question.”
However, “we anticipate 2.8 percent GDP growth this year, higher than some others say. The dollar is strengthening but it may face some headwinds in the future,” Joy adds. “If there is deregulation, it will be good for financials and energy.”
The election was a game changer, according to David Harden, chief investment officer for Summit Global Investments in Salt Lake City, with $520 million in AUM. “If president-elect Trump reduces corporate taxes it could put $200 billion back into the economy and boost GDP growth even more than anticipated. We’ll invest in the U.S. and developed countries internationally.
“Recently the dollar has risen and oil has fallen. Now both are rising. As a consequence, energy is particularly important. We were underweight in the past, but now we will do equal weight or even overweight. Drillers and other subsectors of oil are our bailiwick,” he says.