Investing

Move ‘tactically neutral’ to navigate through Trump’s first week: Asset manager

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The key to sailing through the current political uncertainty is to move to a "neutral" position on equities, bonds and cash, the chief executive officer of economic consultancy Longview Economics told CNBC on Friday.

"We are at a stage now where market positioning is really quite optimistic, very 'short' on bonds ... Very optimistic on equities, and we're coming to the stage where we're going (to) have (President-elect Donald) Trump turning up Friday next week," Chris Watling, told CNBC on Friday.

His firm last week removed its recommended tactical "overweight" position on equities and said investors should move "tactically neutral" all asset classes.


"Political risk is high and has been ignored by the market: Recent appointments (and statements) by Trump have increased the political risk for markets immediately after his inauguration," last week's note said.

Investors are transfixed on any upcoming policy moves by after months of rhetoric and there's still a lot of uncertainty regarding what exactly he will do when in office. Markets have priced in expectations of de-regulation under Trump's presidency but there are other policy areas left to look at.

"Now we have to think about protectionist measures, and geopolitically what may come to pass once (the) Trump government starts," Watling added on Friday.

"There's a very real risk that politically (Trump) does something reasonably dramatic. It's difficult with Trump because you kinda have to read between the lines and the pieces of the jigsaw and try to work out what may or may not happen."

In the research note issued last week, Watling also stated that bad newsflow represented an added . This was seen last Wednesday when Trump gave a press conference, for the first time since July. Pharmaceutical stocks plunged after he accused drug firms of "getting away with murder."

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