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Paul Moore, Chief Investment Officer at PM Capital has enjoyed a stellar run investing in cyclical stocks that surged ahead since Trump's election victory. In the video below, he explains the drivers of the reflation trade, and whether the market has room left to run.

“If Trump’s tax decreases go through, banks' earnings will increase and their PE multiple will be about ten times – so they’re cheap again… If those tax cuts go through, I think we’re going to have another leg up.”

Key points:

  • 2016 appears to have been the bottom in long-term rates
  • Brexit was the final nail in the coffin for ‘lower rates for longer’, but underlying trends were already there
  • Trump’s policies are all pro-growth
  • Fundamental shift is also happening in Europe
  • Defensive stocks were overvalued and due for a correction anyway
  • All industries are drowning in red tape, Trump plans to reduce this
  • Combination of fundamentals and sentiment is driving the rally


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