Doubts Grow Over Stock Market's Trump-inspired Surge

By STAN CHOE and PAN PYLAS, Associated Press, San Francisco Chronicle: World
Fri, 02/24/2017 - 5:07am

U.S. stocks have screamed to records since Election Day because investors are expecting Donald Trump's White House to cut taxes for business, make regulations easier for them and goose more growth out of the economy. [...] it was only a few weeks ago that the committee made the decision to go "underweight" on stocks and favor bonds more instead. Besides the high price tags for stocks, another reason for the move was that the pace of change on business-friendly reforms in Washington will likely be slower than the market expects, Riley said. Not much, according to Ben Inker, head of the asset allocation team at GMO that warned of bubbles in the stock market before the 2000 dot-com implosion and the 2008 financial crisis. [...] stocks, for most investors such as pension funds, are meant to be long-term investments, to be held longer than a news cycle or even a four-year White House term. "All the talk surrounding tariffs and trade barriers and walls, whether they're physical or financial, these are distinctly not helpful or supportive of real economic growth," said Rich Weiss, senior portfolio manager at American Century Investments. For now, the prevailing assumption in markets is that Trump will eventually be able to push through lower corporate tax cuts, ease regulations on business and push through some increased infrastructure spending.

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