Monday, January 30, 2017 - Ever since Franklin D. Roosevelt assumed his role as the 32nd President of the United States in March of 1933, each subsequent presidency has often been defined and judged by the actions they take during their first 100 days in office. FDR inherited a nation that was mired in the depths of the Great Depression. Upon assuming office, FDR immediately used the powers of the presidency to undo certain policies of his predecessor and steer the country into a new direction. 15 landmark bills were passed during FDR's first 100 days that laid the groundwork for his entire presidency. While FDR's circumstances were unique, the legacy of the first 100 days has endured, as a period for a new president to take swift and decisive actions to reshape the country according to his or her vision. This transition period is now often regarded as a measure of presidential effectiveness and a barometer of the policy direction the country will undergo with each new president.
Accordingly, the first week of Trump's presidency has been subject to intense scrutiny. Similar to FDR, albeit for different reasons, Trump has taken office during a period of widespread uncertainty. This uncertainty has kept the markets on edge since November's election, as investors have awaited a clear policy direction from our new administration. The uncertainty that accompanied the Trump administration began to abate this week, during which Trump acted on several of his campaign pledges on trade, regulation, immigration and foreign policy. As the priorities of Trump's administration have begun to emerge, investors are now assessing the areas of the economy that appear poised to benefit from our new President.
The major benchmarks all registered new highs thanks to last week's emerging policy clarity, positive earnings reports, and continued hope for faster economic growth. Most notably, the Dow Jones Industrial Average broke through 20,000 milestone for the first time in its 120 year history. Not surprisingly, the Dow's index-tracking counterpart, the SPDR Dow Jones Industrial Average ETF (DIA), was among the top asset-gathering funds for the week, attracting nearly $595M in inflows.
Trump's early executive actions indicate that deregulation and infrastructure spending will be priorities of his administration. This fueled optimism among investors for related sector and industry funds deemed to benefit from these policy shifts, such as the Materials Select Sector SPDR (XLB) and ALPS Alerian MLP ETF (AMLP). XLB and AMLP rose 3.4% and 3.5% respectively for the week.
Our Quant Movers list paints a similar picture, where the perceived winners and losers of the Trump rally have registered the largest movements. IJR, the iShares Core S&P Small Cap ETF, is currently the top rated fund according to our Quant model. This conforms to the prevailing sentiment that domestically focused small-cap companies will prosper under Trump's protectionist policies and relaxation of regulations. Similarly, our top two Quant movers on the week are from the financial sector, whose prospects appear bright under Trump's pro-growth, anti-regulatory policy shifts. The Financial Select Sector SPDR (XLF) and iShares U.S. Broker-Dealers ETF (IAI) saw large rises in their behavioral scores amid this improving sentiment and ended the week as our top Quant gainers. Conversely, sentiment continued to sour on defensive sectors, like utilities, with the Utilities Selector Sector SPDR (XLU) experiencing the largest drop in our Quant behavioral score.
As the Trump administration's priorities continue to crystallize during his first 100 days, so will investors' understanding of how to operate and where they should consider deploying capital under our new president.
Thank you for Reading ETF Global Perspectives!
ETFG 21 Day Free Trial: https://www.etfg.com/signup/quick
Assumptions, opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. ETF Global LLC (“ETFG”) and its affiliates and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively ETFG Parties) do not guarantee the accuracy, completeness, adequacy or timeliness of any information, including ratings and rankings and are not responsible for errors and omissions or for the results obtained from the use of such information and ETFG Parties shall have no liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of such information. ETFG PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. In no event shall ETFG Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of the information contained in this document even if advised of the possibility of such damages.
ETFG ratings and rankings are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investment decisions. ETFG ratings and rankings should not be relied on when making any investment or other business decision. ETFG’s opinions and analyses do not address the suitability of any security. ETFG does not act as a fiduciary or an investment advisor. While ETFG has obtained information from sources they believe to be reliable, ETFG does not perform an audit or undertake any duty of due diligence or independent verification of any information it receives.
This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue. Prices, values, or income from any securities or investments mentioned in this report may fall against the interests of the investor and the investor may get back less than the amount invested. Where an investment is described as being likely to yield income, please note that the amount of income that the investor will receive from such an investment may fluctuate. Where an investment or security is denominated in a different currency to the investor's currency of reference, changes in rates of exchange may have an adverse effect on the value, price or income of or from that investment to the investor.