Waiting Patiently
There have been plenty of global and market events for investors to focus on other than the current administration’s policies. For instance, we have had the litany of central bank meetings, the Fed’s rate hike, the invocation of Article 50 in the UK, the upcoming elections in France and the surprise resignation of a regional Fed President just to keep things interesting. Having said that, we continue to feel that expectations of current and upcoming policy remain the primary market theme that keep risk assets generally firm and volatility near their year, if not multi-year lows. We had previously commented on investor patience over the timing and expectations on fiscal spending, changes to tax policy and possible deregulation across a multitude of industries. With the legislature’s inability to pass healthcare reform a few weeks ago, a skeptical eye would conclude that Washington was functioning as usual, and major legislative changes will either be delayed, watered down or both. We think this thinking was on display when the Fed last met, with the committee discounting any economic impact from the policy initiatives despite raising rates for the third time during this tightening cycle.