2017 presents markets with significant potential policy changes on taxation, regulation, healthcare, infrastructure and trade.  After years of gridlock, where the main focus of policy has been on central banks, now the focus is squarely on the new administration and Congress.  On balance, we expect global stocks and interest rates to rise.

Since November, the prevailing mood of investors has been one of optimism about faster economic earnings growth from lower taxes and less regulation, and we agree.  For now, the more alarming rhetoric on trade seems to have been viewed as part of a negotiation.  At RiverFront, we recognize that policy negotiation through tweeting is just a part of the new world.  Our challenge is to avoid the emotional cycle generated by the headlines and seek to assess policy changes that we believe will actually occur.  For now, we will seek to make changes when we believe assets become mispriced.  The baton pass from the dry language of central banks to the colourful one of politicians is our new reality.  

David Fuller's view

There is much of interest in this short letter, and I commend it to subscribers.  

Here is The Weekly View.