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T. Rowe’s Stromberg: Still hope for Trump’s goals after uncertain first 100 days

(The Daily Record / Maximilian Franz)

(The Daily Record / Maximilian Franz)

President Donald Trump has not had much of an effect on the financial markets so far, T. Rowe Price’s CEO said Tuesday.

“I don’t think there’s been a lot of impact,” William J. Stromberg said after the Baltimore-based money manager released its first-quarter earnings report Tuesday morning. “I think it’s been harder to get some things implemented than they had thought.”

The markets saw strong gains after Trump’s election in November, especially in hopes that his administration would help pass tax, regulatory and health care reforms. Trump’s struggles to accomplish his legislative priorities have increased uncertainty, but Stromberg said he remains optimistic.

“I would say markets generally dislike uncertainty and some people, certainly what I read in the press, are less certain that Trump will achieve his goals,” he said. “But I think that there’s hope that Trump will achieve those goals.”

This week, Trump is expected to release the broad outlines of his tax-cut proposal, and the administration and Congress have been negotiating over funding for the federal government, which is set to expire Friday. If no deal is reached, the government will shut down.

But such an outcome will not have much of an effect on the markets, Stromberg said, citing the 2013 shutdown.

“It’s had a pretty minor effect on the markets overall,” he said.

Two other federal actions could have minor effects on T. Rowe, Stromberg said. The Federal Reserve raised short-term interest rates last month, something he said was anticipated.

“The Federal Reserve is intent on normalizing short-term interest rates,” he said. They’ve been very intent on doing it at a modest pace.

Should the modest pace continue, he added, “I think we’re on the right track.”

The administration also delayed implementation of the Department of Labor’s fiduciary rule from April to the beginning of June for a review process. T. Rowe was prepared to implement the rule this month, and Stromberg said the company would be able to “react fairly quickly” when the rule is implemented in June.

  1. Rowe reported$861.6 billion in assets under management for the quarter, a $50.8 billion increase from the previous quarter and up $97 billion from the first quarter of 2016, a 12.7 percent increase.

The company attributed most of this growth to broad appreciation in the market.

The firm reported diluted earnings per share of $1.54, up 36 cents from the same point last year. Those earnings increased 30.5 percent.

Stromberg said the strongest headwind facing T. Rowe and the entire money management industry appeared to be a move from active equity to passive equity.

“I think it’s been happening for a long time,” he said. “The average active manager hasn’t beaten the passive market. It’s cheaper to invest in the indexed market.”

T. Rowe also said it had reduced pretax operating expenses by $50 million through insurance recovery againstthe Dell buyout vote mistake last year. The company paid $194 million to compensate some account holders due to errors made in a proxy vote.

Stromberg also is scheduled to speak with shareholders during the company’s annual meeting Wednesday morning.