CIO Commen­tary: Donald Trump is US Presi­dent again

In the short term, our Chief Invest­ment Officer Simon Lutz and his team see positive momentum for the equity markets. The pro-business agenda will stimu­late growth and corpo­rate profits. US equities, the US dollar and crypto­cur­ren­cies are likely to benefit from the imple­men­ta­tion of the election promises. Rising infla­tion and interest rate risks, on the other hand, will have a negative impact on bond prices. In antici­pa­tion of a Trump comeback, the finan­cial markets have already been moving in this direc­tion for several weeks. We can well imagine that this price trend will continue, although further stock market develo­p­ments will depend on many other factors.

In the long term, however, the downsides of his policies should also be kept in mind: Trade conflicts, the risk of infla­tion and incre­a­sing debt will weigh on future growth, weaken the US dollar in the long term and increase the risks.

Should you buy US equities now? We have long argued that US equities should have a perma­nent place in every portfolio. Anyone who does not yet have any US equities in their portfolio should do so. For those (like us) who already have substan­tial US exposure, there is no need to buy more. Follo­wing the strong outper­for­mance since the begin­ning of the year (21% compared to the Swiss equity market, in CHF), US stocks are already trading at a signi­fi­cant premium (25% compared to Switz­er­land and 65% compared to Europe, measured by the P/E ratio for the next 12 months).