Global Crystal Ball for the Trump Administration 2017. @prchovanec, Silvercrest Asset Management.

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12-14-2016

(Photo:PEOTUS, Reince Priebus, VPEOTUS, Election night, 2016) )

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Global Crystal Ball for the Trump Administration 2017. @prchovanec, Silvercrest Asset Management.

The rise in U.S. Treasury yields, alongside the U.S. stock market rally, reduces the gap between risk- off and risk-on valuations we have frequently discussed. The equity risk premium has declined from 6.3% at the beginning of November to 6.0% at the end. That’s still a highly favorable premium for equities, and far from being a reason for concern, highlights a case we’ve made before: that a large equity risk premium can act as a cushion for share prices as interest rates rise on rising growth expectations. That is what we’re seeing right now. Of course, that growth has to materialize for the valuations to hold up. We remain alert to the potential risks as well as opportunities presented by a Trump presidency. In the meantime, however, we take assurance from the existing data, which shows the U.S. economy on track, and earnings steadily rebounding from last year’s energy and materials-led slump. It validates our earlier determination not to take fright at every bump in the road, or whiff of uncertainty, that rattles markets, and keep both our hopes and our fears in perspective.

http://www.silvercrestgroup.com/uploads/viewFile/58498336-b414-4543-8b4a-7b76c0a864b8/12_Economic%20Market%20Review%20December%202016.pdf

about 1 month ago
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