Charles Schwab executive Jeffrey Kleintop debunks idea of 'Trump rally,' attributes market climb to fundamentals

Charles Schwab executive Jeffrey Kleintop has a message for supporters of President Donald J. Trump who believe his election is behind recent stock market gains: The rally is not about him. The president's advocates attribute the upturn to anticipation of Mr. Trump's efforts to cut taxes, decrease regulation and increase infrastructure spending. Mr. Kleintop, senior vice president and chief global investment strategist for Charles Schwab & Co. Inc., doubts that the president's anticipated policies have been decisive. "The Trump rally doesn't exist," Mr. Kleintop said on Monday at the InvestmentNews Retirement Income Summit in Chicago. "It's rooted in the fundamentals." What's driving the markets upward are corporate sales growth and first quarter earnings, both of which have registered their biggest gains in several years. "Economic growth is coming back; sales are coming back," he said. "Global economic momentum is strong." He downplayed the odds of a recession over the next year. "I'm pretty confident this economic and earnings revival is here to stay," Mr. Kleintop said. "Stay invested." Just as he debunked the idea that Mr. Trump has changed the market in less than 100 days in office, he also cautioned against too much analysis of the potential market impact of Mr. Trump's unpredictable governance style. In fact, he said investors should ease their minds about political change around the world. For instance, the initial round of the French election over the weekend indicated that Marine Le Pen, a right-wing candidate who supports pulling the country out of the European common currency and the European Union, will be in an uphill battle in a runoff against the centrist candidate, Emmanuel Macron, who supports the euro and EU.

Schwab's Jeffrey Kleintop: What's next for the economy

"The biggest political risk in 2017 is being too worried about political risk," Mr. Kleintop said. Looking ahead, Mr. Kleintop said the biggest influence on the global economy over the next 15 years will be the burgeoning middle class in Asia. He said that India and China will account for 40% of worldwide middle class spending. "It's enormous," he said. He also marveled at the number of billionaires he has encountered during trips to China. "These are the new investors," he said. The growth in Asia will benefit the United States no matter who is president. There will be "huge demands for global brands, especially those based in the U.S.," Mr. Kleintop said.