Spinning Tops – When Euphoria leads to Sector Rotation

1637
SHARE

The markets are currently trading on euphoria, strong confidence, and high expectations. They are at all-time highs with multiples at highs as well. As a team, we are believers in “sector rotation”. A break in optimism could cause corrections and we expect to start seeing industry sectors rotating out of the euphoric state before the end of the first quarter of 2018.

 

What is driving the market upwards?

Many positive indicators are driving the market upwards. Innovations in technology, high-GDP numbers, improving retail sales and inventory numbers as well as potential new tax legislation are all creating positive sentiments. Fundamentals are looking good with strong global trade activity and good company revenues.

Following Trump’s election, global markets rose due to his promises of increased spending on infrastructure and tax reforms. Deregulation, cutting taxes and infrastructure investment programs all suggest future growth.

The rebuilding of infrastructure after the fires in California and hurricanes throughout the world will also affect spending. This effect will be seen all the way from retail level up to large redevelopment companies – from gas and electric companies all the way up to corporate lease companies and those involved in building expansions.