For market watchers and geopolitical commentators, the first quarter of 2017 offered a lot of interesting details, many focusing on our new President Donald Trump. Here’s an experiment you can try: go to “news.google.com” or your favorite online portal for categorized news information. The Google news website categorizes stories into different groups: Top Stories, US, Business, Technology, Entertainment, Science, Health, and so on. You will find Donald Trump is almost always a topic heading in three or more of these headings. As President, you can expect him to take up a position on US news articles, but he has quite frequently been a topic under Health, Science, and Entertainment. This observation applies to traditional newspapers as well; I was recently killing time in an airport, browsing through a complementary USA today, and couldn’t help but notice that Donald Trump was on the front page of nearly every section.
Love him or hate him, the man does a good job of creating a constant coverage. Even when trying to limit our attention market performance, the media is selling a narrative of the market that focuses on the new President. The story is that US investors first experienced unbridled optimism, the Trump rally, and a subsequent deflation of expectations after the ObamaCare replacement fiasco. It seems that Donald Trump’s constant media attention has ensured he becomes a filter through which events are interpreted. Moreover, if the President isn’t involved, the story may get less attention.
Since Quarterly reviews are a good time to catch up and take stock on the big picture. Sometimes, by focusing on these details and the latest drama playing out on twitter, we miss the larger trends which, although relevant, haven’t penetrated the news cycle. Example: there has been constant attention on new stock market highs in the US and the recent pullback. When all is said and done, the S&P 500 ended the quarter up 6.07% for the year – a fantastic result. Given the lack of coverage, would it surprise you to know that international markets returns drastically outperformed the US stock market year-to-date, up 7.25%? Emerging market equity performance crushed S&P 500 performance, up 11.45% so far this year. We may be focused on the daily details, missing a bigger story – a potential transition away from US market dominance.