Donald Trump promised to be a president for “the forgotten man and the forgotten woman,” but those really looking forward to him taking office are America’s wealthiest.
Swiss bank UBS surveyed 2,000 of its richest US investors, those with at least $1 million in investable assets, and found they are more optimistic than they’ve been in the eight years since the financial crisis. Fifty-eight percent of investors surveyed last December said they are optimistic about the economy this year; just 39% said that in October, the report (pdf).
They are particularly confident about Trump’s effect on the stock market. Sixty-eight percent of the investors expect the S&P 500 index to deliver strong returns over the next six months, versus just 25% before the US election.
Traders were just as optimistic, sending US stock indexes to record highs following Trump’s win, believing that Trump’s plans to cut taxes, increase fiscal spending and reduce regulation will boost US economic growth and be a boon for financial, energy and healthcare companies.
The rally has recently fizzled. The S&P 500 has barely moved since mid-December and the Dow Jones Industrial Average index has been stuck in the tightest range in its 120-year history, according to Bloomberg. The Trump rally began running out of steam after the president-elect’s press conference (paywall) failed to outline plans for fiscal stimulus.
This week Trump said the US dollar was too strong (paywall), which may leave currency traders betting on the dollar’s strength vulnerable. The dollar reached a 14-year high against a basket of currencies last month, and the most recent data from the Commodity Futures Trading Commission showed that the value of speculative investors’ long dollar position was almost $25 billion in mid-January.
Traders will be waiting to see if Trump turns his plans into policy before pushing stocks and the dollar firmly higher. Of the investors surveyed by UBS, 55% said they were actively looking for new investments and 42% said they are likely to increase their stock market investments.
A second wind in the Trump rally will give UBS’s wealthy clients even more to smile about.