US economy in 'good shape' despite unwinding of Trump trade

Hard data lagging soft indicators

A hot topic of discussion recently has been the divergence between strong economic sentiment data and trailing hard (real) data, leading investors to question the ability of the Trump administration to deliver a potent boost to the US economy.

We believe the market's outlook is meaningfully pessimistic than justified by current US economic fundamentals and policy outlook. The macro backdrop is currently pervaded with a sense of overall bearishness. Yields on US 10-year Treasury bonds have fallen back to levels not seen since last year's US election as the market discounts President Trump's ability to deliver positive stimulus through tax cuts and infrastructure spending. Trump appoints Carl Icahn as special adviser on regulatory reform The downbeat mood has been compounded by fears on the geopolitical front, which has...