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Real reform or just rhetoric: views on Trump’s first 100 days

Investors give their views on US president Donald Trump's first 100 days in office.

Equity markets have risen strongly since the surprise election victory of Donald Trump, buoyed by expectations of widespread pro-growth reforms.

However, after the Republican failure to repeal Obamacare during the first 100 days of Trump’s presidency, there is growing scepticism over Trump’s ability to deliver his ambitious stimulative agenda – including upcoming efforts to significantly reduce corporate and personal tax rates.

Here are four investor views on president Trump's first 100 days in office.

Equity markets have risen strongly since the surprise election victory of Donald Trump, buoyed by expectations of widespread pro-growth reforms.

However, after the Republican failure to repeal Obamacare during the first 100 days of Trump’s presidency, there is growing scepticism over Trump’s ability to deliver his ambitious stimulative agenda – including upcoming efforts to significantly reduce corporate and personal tax rates.

Here are four investor views on president Trump's first 100 days in office.

Mark Sherlock, lead portfolio manager, Hermes US SMID Equity fund

As Donald Trump passes 100 days in office, it appears more time is required for his administration to implement the stimulative policies he has promised.

Irrespective of any policy changes, we believe the underlying strength of the US economy and its wealth of high-quality small and mid-cap businesses will continue to provide attractive investment opportunities. Software developer Manhattan Associates is one of them.

The US retail supply chain is being disrupted – fast. As large and small players compete for shoppers across channels, we prefer to invest in the enabling technology rather than the brands on offer, which can easily fall out of favour with consumers.

While our investment in the stock is not predicated on any specific policy initiatives – which are uncertain in timing and quantum – any reduction in the 36% rate of tax currently paid by Manhattan would be the icing on the cake.

David Osfield, manager of the Amity International Fund, EdenTree Investment Management

Since his January inauguration, barely a day has gone by without a 140-character memo from president Trump. Aside from picking up followers, it would be fair to say the new administration’s accomplishments in office have failed to meet overly-optimistic investor expectations.

Given the ambitious reform rhetoric articulated during Trump’s campaign, one should not be too surprised at the rate of progress. As a key enabler for far-reaching tax-reform, the failure to 'repeal and replace' Obamacare was a natural pivot point for investor sentiment.

Despite signing more executive orders than any other president since World War II, the need for a major bill success is very apparent.

The latest tax reform plan will be a critical test, although often the degree of legislative 'awesomeness' is inversely proportionate to its chances of approval. A commitment to compromise is likely to yield more in the next 100 days.

Brad Tank, chief investment officer – fixed income, Neuberger Berman

Markets have been very optimistic regarding the prospects for constructive change in the US, but the reality is that until substantive changes are implemented, this optimism is largely based on expectations.

Indeed, the new administration’s ambitious reform agenda is moving slower than expected and it is likely that consumers won’t see substantive change in terms of increased spending power until at least mid-2018.

Currently, there are tangible developments taking place on the regulatory front, but here too there are big lag effects in terms of translating this into improved economic activity.

With respect to taxes, health care and infrastructure, the markets may be disappointed relative to early expectations but ultimately constructive change is likely in the cards, which could translate into improved growth prospects in 2018.

Nikolaj Schmidt, chief international economist, T. Rowe Price

The tide is changing inside the White House. Congress is as gridlocked as ever, with Republicans failing to act on trademark legislation.

In addition, on the back of the horrific attacks in Syria, geopolitical tensions are bubbling to the surface.

Trump’s turn toward more moderate policymaking is a positive from an international perspective, but it complicates the President’s domestic legislative agenda.

We continue to expect some fiscal stimulus in the form of tax cuts, but we continue to believe that the market is a bit too optimistic with respect to both the timeline and the size of the coming fiscal stimulus.

We keep a close eye on developments at the White House given that everything seems to be in a state of flux.

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