The Inauguration of a President

Inauguration Day, January 20, 2017, saw the 45th President of the United States, Donald Trump sworn into office.

While it has always been true that politics matter very little to markets, it seems to have become even more so of late.

Brexit, Key’s resignation, US election and the Italian referendum – none mattered thanks to the central banking guardian angels.

However, the four most dangerous words in markets are “this time it’s different” and we bear that in mind when proclaiming that this time it really will be.

President Trump is now confronted with a mature economic cycle, low and rising interest rates, low unemployment, and market valuations that all represent more headwind than tailwind. More chance he’s a disaster than a saviour.

As media and social justice warriors have frantically defied Obama and demonised Trump, we hope to see Trump succeed. There’s a chance too. But listening to his, mostly awful, Inauguration speech it became apparent that the odds are really very small.

What is very clear though is that Trump represents change, “big league” change, and the status quo is under attack. Given the status quo of recent years hasn’t suited the active, risk managed, absolute return style of investing that we advocate – that is a good thing.

Thankfully we don’t need Trump to succeed in order for us to succeed. Long only, relative performance driven investors do.

Absolute return’s time to prove its value is here.


24 January 2017 – Greg Peacock is NZAM’s Chief Investment Officer.


Disclaimer: This NZAM article is provided for general information purposes only and does not purport to give investment advice. This information is not intended for or directed towards retail investors but is for the use of researchers, financial advisers and wholesale clients. While the information contained in this document has been prepared with all reasonable care and has been sourced from published information believed to be reliable, accurate and complete at the time of preparation, its accuracy and completeness is not guaranteed. New Zealand Assets Management Ltd accepts no responsibility or liability for any errors or omissions or misstatements however caused. Information and any analysis, opinions or views contained herein reflect a judgement at the date of publication and are subject to change without notice. To the extent that any such information, analysis, opinions or views constitute advice, they do not take into account any person’s particular financial situation or goals and, accordingly, do not constitute personalised advice under the Financial Advisers Act 2008, nor do they constitute advice of a legal, tax, accounting or other nature to any persons.