Winners & Losers In Post-Election Sector Rotation

November 23, 2016 So, what’s your broad outlook for 2017?

Mazza: We still expect growth to be low and slow, and inflation to be muted. But the important change is the potential for fiscal stimulus. That actually could improve economic growth relative to what it has been, especially because we can see an increase in government spending.

It's not a done deal that Speaker of the House Paul Ryan will be able to get the broader Republican Party behind some aggressive spending from the stimulus side. But if we see that happen, I think we might accept that this is a regime shift. And that may cause people to want to rethink how their portfolios have been positioned if they were solely focused on wealth preservation and safety, and not as concerned about the potential for inflation and really reflationary forces. Outside the U.S., what’s on your radar?

Mazza: Investors need to keep an eye on Europe with the Italian constitutional referendum taking place Dec. 4. Expectations have been changing recently. This has a lot of impact across broader Europe as well. We've seen a sell-off in the bond markets, and the Italian referendum is very important for our outlook.

More broadly, it’s been another year where fundamentals have mattered less and geopolitics mattered more in driving markets. The macro continues to matter.

Contact Cinthia Murphy at [email protected]


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