I hope you are well and this quarter I’m writing slightly later because I wanted to squeeze a bit more out of the Trump Rally before we begin to park some profit.

Since the Brexit referendum last June our currency has devalued some 15% and this has boosted our stock market, and in the USA their stock market has been boosted by the prospect of tax cuts.

However both these scenarios are fluid in that as our currency rebalances this will erode some of the gains, and in the USA the planned tax cuts are unlikely to come through as quickly as the market thinks, which again can erode gains.

We have considerable political risks in the short term as outlined in my update of 3rd February, and I’m expecting some market pull backs and volatility. We can take advantage of this if we prepare in advance, which means taking some profits whilst markets are at all-time highs. By rebalancing and diversifying into areas we feel can still grow, we can protect some of the growth achieved to date, whilst looking for any opportunities volatility may provide.

Overall the US economy continues to improve and so we might well see an interest rate rise in March. However Trump is still to announce anything concrete on his planned tax cuts and of course this could disappoint markets.

Portfolios have coped well with the volatility caused by Brexit and the Trump result, but we must remain vigilant and adaptable. It’s important to diversify some of the core holdings and park some additional profit. There will be opportunities in the next few months to possibly drip feed when markets are lower.

Technical Analysis supplied by Bloomberg / Macrobond / Sarasin