As an investor/ trader I’ve spent most of the summer wondering what would be the catalyst to propel this market from the box congestion that it’s spent a long period of time in. After reading a book with a chapter dedicated to the dot com boom- I was wondering aloud – what could get this economy and hence the market moving again? Let’s decouple these facts- the market is supposed to be an indicator of corporate health- and corporate health should be an indicator of overall economic health and growth.I’ve stated before there seems to be a popular consensus decoupling of the economy from the stock market. People have used the market as a proxy of economic health- and the last 7 years has showed us that the Fed can and did levitate the market through easy money policy. As stated before the FED even invented new methods of monetary policy as the basic standard of money supply and interest rate manipulation had diminishing returns. With sustained 1% GDP growth a stock market rally (or lack of a crash) had to based on something other than growth or health. The downside risks to our economy were great and omnipresent and may still be. Little did we know that the catalyst for the breakout would be ……………………….. drum roll please………………………………………A Trump Presidential win!
Now let’s not be foolish enough to think that ANYTHING Trump can or might do- has yet to happen- because it HAS NOT! The man doesn’t get sworn in until January- but this bares out an even greater truth. The Stock Market never has, nor will it ever, move solely based on pure rational data points. The movements of the stock market are more based on the confidence of it participants than pure data. Market confidence means a lot, and oddly confidence in the economy changed significantly after the election. I would think this was based on a pro- business, business man getting elected-but I find that hard to believe after the zillions of hours the mainstream media spent telling us Trump isn’t really that successful anyway?? Could this just be a product of the election just being over? Could the jubilation have also happened had Hillary been elected? I would doubt it- as most of her economic policies were similar to the last 8 years, so the continuation of those policies, whether you’re a fan or not, just would seem to lack inspiration to anyone!
Oddly for all the MSM’s (Marxist Socialist Media) effort to warn us of the doom and gloom that would follow a pro- business- pro America, and pro- protectionist (in terms of unfettered immigration) policy- the market participants appear to feel otherwise. Breakouts require a tremendous amount of energy and that energy must be revitalized and maintained for the breakout to continue. Only time will tell if the policies that a new administration, one who for lack of a better term seems to be somewhat pragmatic, will bring. From a traders perspective- I once read that the reason that breakouts occur is the orders that are waiting on the breakout side get filled propelling the breakout, the sustaining of the breakout is a whole different story and requires fundamental confirmation for continuance. Trump in the very least is pragmatic in such a way as to not be pigeon holed into ANY ideology. When Trump talks of infrastructure spending- he talks more like a new deal Democrat. Obama’s “shovel ready” jobs was self admittedly not so ready! Let’s face reality- government spending on social programs- in spite of Nancy Pelosi’s wacky multiplier example, rarely lead to growth, yet Government spending on infrastructure which trickles (opps) down to Main Street will have a positive growth effect, which in turn should fuel Government receipts to facilitate the paying down of the money spent (borrowed). Sometimes liberals buy their own media induced bull and claim that Repub’s don’t spend money, they do. While the Monetary policy of the FED and the current administration has led to elevation of the stock market- and a widening of the wealth GAP- Sound Fiscal policy may just have a similar effect on the stock market, albeit with different sectors finding renewed growth, but a greater effect on the average person as growth of the REAL economy will create jobs and REAL prosperity- not just the illusion of such. I harken back to the 80’s, I experienced it it first hand, as lower class people bought houses from the lower middle class, as the lower middle class bought houses from the upper middle class and we witness a ratcheting upward of all the classes (as revisionist history attempts to tell you it CAN’T and DIDN’T happen, it did, I was there!)……………….. and so on and so on…… A rising tide still raises all boats.