Welcome to Trumptopia

RBC’s chief strategist Jonathan Golub is firmly in the “new paradigm” camp as a result of the Trump presidency. He sees the S&P 500 hitting 2500 by year-end 2017 on $128 in S&P 500 earnings with $140 possible in calendar 2018. That’s a 17.9 multiple on next year’s profits.

Here’s his case, in a nutshell:

Pro-Growth Policies

Corporate tax cuts could easily add 5–7% to profits annually going forward

Deregulation should increase economic growth through greater productivity

Financials would be the greatest beneficiary of less onerous regulations

Fiscal spending, while a positive, would have a delayed impact on growth

Consumer spending should improve as wages rise and savings rates fall

Higher rates should positively impact Banks and consumer spending (paradox of thrift)

Golub says the rotation to more cyclical, US focused financial stocks and cyclically sensitive, smaller cap companies is still in the early innings. He notes that, overall, the S&P 500 is only up 3% since the election, despite all the commotion. Here’s two tables illustrating what’s gone on so far, he thinks these trends continue:


Here’s how it looks by sector – technology companies are among the most likely to have large cash balances to repatriate so its weird to see them lagging by this degree. Perhaps its the globalized nature of their businesses vs the more US-centric banks and energy firms that have them languishing to this degree.


Josh here – there’s a lot of wishful thinking in here, but the same could be said for all market / economic outlooks. How much of the agenda is implemented, and in what time frame, will determine how much these post-election trends can continue.

This also assumes no monkey wrenches thrown in the works, like a 35% tariff on goods imported from China, for example – or some other geopolitical freak-out. If an emboldened Putin marches troops into Lithuania, for example, I don’t think we’ll be out here celebrating corporate tax cuts.


2017 Outlook – The Trump Playbook
RBC Capital Markets – December 5th 2016

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.

What's been said:

Discussions found on the web
  1. w88 commented on Sep 21

    … [Trackback]

    […] Information to that Topic: thereformedbroker.com/2016/12/05/welcome-to-trumptopia/ […]

  2. eatverts.com commented on Sep 22

    … [Trackback]

    […] Read More on to that Topic: thereformedbroker.com/2016/12/05/welcome-to-trumptopia/ […]

  3. bitcoin evolution reviews 2020 commented on Sep 23

    … [Trackback]

    […] Information on that Topic: thereformedbroker.com/2016/12/05/welcome-to-trumptopia/ […]

  4. Bitcoin Era Review commented on Oct 01

    … [Trackback]

    […] Read More Info here on that Topic: thereformedbroker.com/2016/12/05/welcome-to-trumptopia/ […]

  5. 홀덤사이트 commented on Oct 07

    … [Trackback]

    […] Find More here on that Topic: thereformedbroker.com/2016/12/05/welcome-to-trumptopia/ […]

  6. Earn Fast Cash Now commented on Nov 03

    … [Trackback]

    […] Read More on that Topic: thereformedbroker.com/2016/12/05/welcome-to-trumptopia/ […]