|
The
S&P 500 <.SPX> has fallen a median 2.7 percent in the month
after each new president has taken the keys to the White House
since Herbert Hoover did so in January 1929, according to
Reuters analysis.
Only four presidents have seen Wall Street rise in their first
month in power: Hoover (+3.8 percent), John F. Kennedy in 1961
(+6 pct), George H. W. Bush in 1989 (+5.3 pct) and Bill Clinton
in 1993 (0.8 pct).
The market has fallen in the first month under every other
incoming president since Hoover. Even Ronald Reagan and Barack
Obama, who ultimately presided over 120 percent and 165 percent
rallies on Wall Street during their two terms, respectively, saw
initial slides of 4.8 percent and 15 percent.
The dollar tends to fare better. Analysis going back to the
early 1970s when the currency was taken off the gold standard
shows it has risen an average 2.2 percent in the first month of
a first-time president.
Donald Trump takes office as the 45th president of the United
States with investor apprehension over an incoming president has
rarely been higher.
"There are two sides to Trump, the one side focusing on U.S.
stimulus which drives up global growth and the other side, the
protectionist Donald Trump that could do the opposite. So the
big question is which will we get?," said State Street Global
Advisors' EMEA head of currencies James Binny.
Markets latched on after Trump won the November election to his
reflationary and pro-growth stance: stocks rose to new highs,
the bond selloff deepened, and the dollar clocked a 14-year peak
against the euro.
But as the inauguration has drawn closer, that momentum has
faded. This week, the Dow Jones <.DJI> and dollar <.DXY> hit
six-week lows, the 10-year U.S. Treasury yield its lowest since
late November <US10YT=RR>, and gold rose to its highest in two
months <XAU=>.
Some investors are playing safe.
"We are neutral, because we don't know exactly what direction
Trump will take," said Lukas Daadler, chief investment officer
of investment solutions at Robeco, a subsidiary of Robeco Group.
The latter has 269 billion euros in assets under management.
"There is some extreme positioning out there, so there's the
risk of a short squeeze. But we've taken a neutral stance, and
we might see more detail on his plans next week."
Much of that positioning is in the U.S. bond market and the
dollar. Speculators have amassed record bets against 10-year
Treasuries, and according to Bank of America Merrill Lynch's
January fund manager survey, the most overcrowded trade in the
world now is the pro-dollar trade.
BAML strategists said on Friday that although there has been a
clear cooling of "Trump trade" bets in recent weeks, overall
investor sentiment is its highest in three months.
They recommend sticking with they call the "Icarus trade" - one
last 10 percent rise in stocks and commodities before the rally
ends.
For graphic on markets one month into presidency:
http://reut.rs/2k8p0Ui
The Presidential Touch: http://tmsnrt.rs/2j1OyVe
(Graphic by Vikram Subhedar; Editing by Jeremy Gaunt)
[© 2017 Thomson Reuters. All rights
reserved.] Copyright 2017 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
|
