Wall Street to Trump: We're still not that into you

President Donald Trump and Wall Street have a complicated relationship.

Most investors believe Trump is unequivocally good for the stock market, but they aren't thrilled with the way he is doing his job otherwise.

They also aren't terribly optimistic about what the rest of the year will hold for the market and believe that bond yields are on their way higher, according to a survey from brokerage Convergex that takes the Street's temperature each year.

For obvious reasons, this year's questions focused mostly on Trump. The new president's term so far has featured a series of record highs for the major indexes, but also a steady stream of incendiary headlines that, while posing potential risks ahead, have yet to shake the market's confidence.

"It is clear from the results that most of the respondents feel President Trump will have a positive impact on the near-term prospects of the financial market, even if they don't necessarily agree with his overall vision for the country," Convergex President and CEO Eric Noll said in a statement.

The survey's responses do reflect a wide divergence of opinions about the new administration.

For instance, nearly 74 percent say Trump has had either a "very positive" or "somewhat positive" effect on the "general investment climate" for stocks. Moreover, 57.1 percent said he would be better for the stock market against just 21.5 percent who thought his Democratic opponent, Hillary Clinton, would have had a stronger impact.

However, when it comes to overall job approval, the market feels far less certain.

The president garnered barely 40 percent of respondents who "strongly approve" or "approve" of his performance. It gets worse: The biggest response of any choice came for "strongly disapprove," with 28.4 percent, while 13.5 percent disapprove. In total, that puts the disapproval level at 42 percent to 40 percent, despite the belief that Trump is net positive for the market.

The outlook for the rest of the year isn't particularly rosy, either. Survey respondents put their expectations for the Dow industrials at an average 20,740, which actually is marginally lower from the current level.

Investors badly want tax reform, with 54.4 percent selecting it as the most beneficial of Trump's priorities and 46.2 percent believing that a reduction in corporate rates specifically will be the best thing for stocks. Their expectations, though, are in line with political realities, with most seeing Congress getting a bill through by the second half of 2017 or later.

The two biggest risks by far are the threat of a trade or currency war (31.8 percent), and Trump's inability to get his agenda through Congress (31 percent).

The survey received a record showing this year, with 359 responses across a swath of investment professionals. To be sure, the results shouldn't be viewed as gospel, with a relatively high margin of error of plus or minus 10 percentage points.

However, the sentiment does bear resemblance to other surveys.

Sentiment gauges, particularly those that measure professionals as the Investors Intelligence survey does, show market optimism around 30-year highs. But the president's overall approval rating is muted and among the lowest of any of his predecessors for this point in his term. Gallup indicates just 44 percent of Americans support Trump's performance.

Even some market bulls are starting to get nervous about the stock rally.

Bob Doll, chief equity strategist at Nuveen Investment Management, believes in stocks over the long term but worries that the current rally is overheated. The S&P 500 is up 5.8 percent in 2017 and has gained 10.7 percent since Trump's election.

"We believe equity markets may be ahead of themselves. The pace of the current rally is not sustainable, and investors may be overly optimistic about the political, economic and earnings environment," Doll told clients in his weekly investment letter. "As such, we think a pullback or correction is possible at some point."

The Convergex survey had several other interesting findings.

Respondents put the 10-year Treasury yield at 2.85 percent by the end of the year, or about a third of a point higher than current levels.

They also see a somewhat more volatile market, with 44 percent expecting the CBOE volatility index to increase 10 percent to 25 percent this year. However, even a 25 percent increase in the VIX would still put the popular fear gauge well below its historical average.

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