Portfolio watch
The early call on the Nov. 5 election was one of the biggest surprises, wrote Brian Garrett on the Cross Asset Sales desk in Global Banking & Markets at Goldman Sachs. He said U.S. stock surged “because many clients had reduced the amount of risk in their portfolio,” and have now “re-engaged” positions that were successful after 2016 – including buying financials, small stocks, tech and energy. Goldman Sachs suggested that commodities such as oil and copper may face headwinds from a stronger U.S. dollar and lagging growth in China, particularly if tariffs are imposed.
Speaking of China, BMO is also looking at the pressure the Trump victory could put on policymakers. But tariffs could ripple beyond exports multinationals may relocate manufacturing and how much China would support the sagging housing market. A 60% tariff would cut China’s real GDP growth from 4.5% to 2% in 2025, BMO estimates adding a caveat that there is a “large margin for error.”
Mechanics Bank Wealth Management offers one of the most succinct comments on recent economic trends stating: “There isn’t one!” The cooling labor market and hefty consumer spending are sending opposite signals, Mechanics notes. A Fed rate cut in December is likely with a good deal of uncertainty after that. Meanwhile, S&P 500 earnings are up 8.4% year over year, a bullish signal — for the near term.
