US equities expensive and vulnerable to fading Trump-related optimism - AmpGFX

In view of Greg Gibbs, Director at Amplifying Global FX Capital, the USA stock market may appear relatively expensive to other markets. 

Key Quotes

“The Republican-led Congress failed to deliver reform on healthcare.  Tax policy reform may be just as difficult to construct with different views on a border tax and budget control.  The debt ceiling problem looms again, and the Trump team faces an ongoing Senate inquiry and FBI investigation into its alleged Russia links.”

“The USA stock market may appear relatively expensive to other markets.  US equities have vastly out-performed other countries’ since around 2010/12, indicative of its progress towards returning to more normal economic conditions in the wake of the Global Financial Crisis in 2007/08 and the Great Recession of 2009/10. Its P/E ratio based on year-ahead earnings estimates of over 18 is around the high since 2002, and high relative to other major markets.”

“Global equities have rallied sharply since the election of Trump, so it is hard to say there is a specific Trump bump in USA equities related to optimism that Trump can deliver growth-boosting reforms, such as a tax policy overhaul and reduced business regulation.  Nevertheless, it may be the case that USA stocks start to under-perform if doubts grow over the capacity of the Trump administration and Republican-led Congress to deliver reform.”