Animal spirits matter in markets and despite the obstacles that the new administration will face in passing legislation, the overall pro-business environment is in sharp contrast to the last ‘you didn’t build it’ administration attitude toward business, enterprise, and free markets.” In the letter, Loeb writes that his fund is seeing more opportunities in Europe due to strong and improving economic data.
He also expects this trend to continue now that the French elections have passed “without incident.” “While we think legislative failure on tax reform could be negative in the back half of this year, we are encouraged that BAT seems to be off the table,” Loeb wrote.
Recent dampening of data in the US, particularly in consumer spending, has raised a red flag and we will know more when we see Q1 GDP.
Chinese nominal GDP growth has potentially peaked, but the main event there will be the change of government this fall and so we expect a muted status quo until then.” New positions include Honeywell ( HON), which he would like to see spin off its aerospace unit to unlock $20 billion in shareholder value.
He also initiated a stake in Unicredit, noting the first quarter marked a “turning point” for European financials.