FIS Group Market Insights Alert Paper on Investment Implications of Trump’s Current Proposed Policy Intentions

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The aftermath of a Trump victory and impending investment implications is the focus of FIS Group Market Insights Alert: “I’m Mad as Hell and I’m Not Going to Take This Anymore” – The Revenge of the Precariat Part Two

We hope to see policies which raise employment and boost wages

FIS Group, a manager of U.S. and global developed, emerging and frontier markets equity portfolio strategies, today issued its latest Market Insights Alert which looks at how surging populism led to the unexpected victory of President-Elect Trump and the investment implications that will follow. The full article can be seen here

The Market Insights Alert, “I’m Mad as Hell and I’m Not Going to Take This Anymore – The Revenge of the Precariat Part Two,” compares the Trump victory, seemingly championed by “people who are out of work, continually searching for work, or underemployed,” to the Brexit campaign. According to the report, the erosion of public confidence in our political and financial institutions, as well as anemic economic growth, makes these populist sentiments in the U.S. and Europe unsurprising. The phenomenon is in large part due to technological disruption to the Precariat labor force, increased globalization shifting income from low-skilled workers to high-skilled workers, increased integration of the global labor market between rich and poor countries, and a rise in income inequality.

“So, the real question is even if Trump and his trans-Atlantic cohorts make good on their promise to keep immigrants out, how will they stop the advance of robots?” says Tina Byles Williams, CEO and CIO of FIS Group.

The Alert highlights FIS Group’s views on the investment implications of Trump’s current proposed policy intentions, such as:

  • A delay in the anticipated Fed hike in December due to continued market turmoil;
  • Industrial stocks benefiting from increased infrastructure and defense spending;
  • Financial stocks benefiting from increased rates and the paring back of Dodd-Frank regulations;
  • A steeper yield curve that would boost value oriented stocks relative to bond proxies and growth stocks;
  • Bio-tech and pharmaceutical companies expected to face less pricing pressures if the Affordable Care Act is repealed with the backing of an all-Republican Congress;
  • A decrease in M&A activity with insurance companies and less stress on the liquidity of their surplus accounts; and
  • A shift in policy choices that would significantly impact trade, wage and profit growth thus changing the line-up of winning and losing economic agents and investments.

Investment assets FIS Group expects to outperform from increased protectionism and fiscal expansion include Japanese equities (on a currency hedged basis), real assets and precious metals, such as gold, as a possible hedge against further debasement of fiat money.

“We hope to see policies which raise employment and boost wages, because while ‘unconventional’ monetary policies have been effective in stemming liquidity crises and propping up investment account balances through the so called ‘wealth effect’; they are not designed to expand aggregate demand in the real economy in which the Precariat primarily preside. Moreover, some central banks like the Bank of Japan appear to have reached the point at which monetary policy may be doing more harm than good,” Byles Williams added.

In addition to its Market Insights Alerts, which examine global economic themes and are published throughout the year, Ms. Byles Williams contributes to FIS Group’s Market Outlook series on a quarterly basis, based on research that examines market conditions over a three-to-six month period. The last Market Outlook was published in October 2016.

About FIS Group

FIS Group is an investment management firm that provides customized manager of managers investment solutions for institutional investors. For 20 years, we have delivered risk-adjusted returns by conquering the complexity of identifying high skill, high active share entrepreneurial managers that have gone largely undiscovered by the institutional investor community. Unique among our peers, FIS Group enhances risk-adjusted returns by using macro strategy insights to allocate capital among the managers and/or through a global macro tactical completion strategy. Our culture is a fusion of relentless curiosity and a scientific, disciplined process.

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Siaolan Albigese

Tina Byles Williams
FIS Group
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FIS Group

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