Monthly comment: Optimism despite insecurity about Trump

In January, optimism about the US elections in November continued. The MSCI World (EUR) saw a return of 0%, but this also covers a large rise in the euro against the dollar (see more below) of 2.5%. Long-term interest rates continued their upward trend from mid 2016, and German 10-year interest rates are now threatening to break above 0.5%. At the end of January, US 10-year federal interest rates are roughly unchanged at 2.5%.

There is certainly considerable disagreement about how well Donald Trump has done as president so far. But there is consensus that he has actually been trying to implement many of the promises he clearly communicated throughout his campaign, Chief Strategist at Sparinvest David Bakkegaard Karsbøl writes in his latest monthly comment.

David Bakkegaard Karsbøl's overall assessment of Trump's activities since his rise is that he has helped create more uncertainty in terms of foreign policy (including trade policy and immigration), while his domestic policy (and especially business) operations so far have been growth-positive.

Sparinvest's MomVol indicator assumed a value of 0.75 at the end of January. This is slightly better than at the end of December, but still firmly above the threshold of 0.6. Below this threshold, one should have an underweight in the stock market.

The indicator's signal is also supported by the fact that most of the OECD leading indicators pointing upwards. An overweight to equities should therefore be maintained in February.

Read the Monthly economic report here


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