Equity Market Review_ Trump guessing game

Summary of Key Points from the Equity Market Review Industry Overview - The report discusses the impact of Trumponomics on the equity market and the potential for reconstruction in Ukraine, which may begin in 2025. The AI investment theme remains strong despite recent market volatility [3][4][12]. Core Insights 1. Trumponomics and Market Volatility: The market is currently in a "guessing game" regarding the implementation of Trumponomics policies, which is expected to create volatility until the new administration is in place in late January 2025. Initial positive reactions to the Trump win have waned, with some investors taking profits [4][12]. 2. Ukraine Reconstruction: The World Bank estimates that nearly $500 billion will be required for the reconstruction of Ukraine over several years. A basket of European stocks that may benefit from a ceasefire and reconstruction efforts has been launched, which initially outperformed but has recently faced volatility due to escalating tensions [12][19]. 3. AI Investment Theme: Nvidia's Q3 earnings and guidance indicate continued strength in AI investments. The report highlights a European AI ecosystem beneficiaries basket, which includes sectors like Utilities, Industrials, and Real Estate, expected to benefit from infrastructure spending related to data centers [19][20]. Market Trends 1. Equity Inflows: Risk assets, particularly equities, have seen inflows of $14 billion this week, marking seven consecutive weeks of inflows. The inflows are primarily driven by US funds, while emerging markets and Europe have experienced outflows [27][28]. 2. Sector Performance: The technology sector dominated inflows, capturing two-thirds of the total, while defensives like Utilities and Telecoms lagged. In Europe, all sectors continue to see outflows [28][29]. 3. Fixed Income Trends: Fixed income funds saw inflows of $9 billion, with strong interest in high-yield bonds, while treasuries experienced outflows for the second consecutive week [29]. Additional Insights - Sentiment Indicators: The AAII Bull-Bear index has retreated to more moderate levels, indicating a shift in investor sentiment following the election [10][12]. - Upcoming Economic Data: Key market-moving events include US new home sales, consumer confidence, and GDP data, which are expected to influence market trends in the coming weeks [22][25]. This summary encapsulates the critical insights and trends discussed in the equity market review, providing a comprehensive overview of the current market landscape and potential future developments.