The S&P 500 and NASDAQ hit record highs the week of May 8, and the Dow closed over 21,000. The “Trump Bump” (as the run up in capital markets is called) remains in full force. In all, I believe the business environment will be more favorable under the Trump administration.

Some factors make maintaining a favorable environment for business less likely, however. For example, the current run up is premature given we are still lacking specifics on many aspects of the new administration’s fiscal policy. In addition, predicting when the new administration’s fiscal measures (and in what final form) will be passed and become effective is problematic.

Another concern for businesses in the current economic climate is the Federal Reserve’s rate-raising intentions. The decisions and narrative of the Federal Open Market Committee demonstrate a heavy bias toward employment measures at the expense of GDP, inflation, the nuances of employment (like participation rate), and even a full appreciation of the unique circumstances of rates near zero for seven years. Notably, the FOMC’s rate forecast has been widely off for five years in a row. In all, this doesn’t lend confidence that the Fed will make the right decision about interest rates during its remaining meetings in 2017.

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