DOW Likes Trump

[Spare_change]

A whipsaw week powered by election uncertainty for markets ended on a high note as the Dow notched a fresh record high and the best five-day period since 2011.

On Friday, equities took a bit of a breather from a two-day stretch of solid gains fueled by Donald Trump’s surprise victory on election night and the perception of a pro-business president taking over the White House. As evidence of the calm that settled over stocks, the Dow crossed the unchanged line more than 150 times during the session.

By the closing bell, the Dow Jones Industrial Average rose 37 points or 0.20% to 18845, and leaping more than 5% for the week. The broader S&P 500 finished down by three points, but not before tacking on weekly gains of 3.79%.

 

[Cobys]

Yes, with the economy all right!
Business News November 14, 2016

 

[Toro]

I thought that if Trump won, there'd be a rally, since if he won, he would almost certainly mean the GOP would also take the House and the Senate.

But then, I think the rally is likely to peter out. There are some things Trump will do that the market likes and should be done - such as deregulation, infrastructure spending and higher deficits. But there are things the market is ignoring that could have profound consequences, i.e. trade wars.

Plus, interest rates have spiked, and the market has been driven by QE over the past few years more than anything else. If rates are going higher, it will put pressure on the market.

Politics is over-rated. And multiples are very high. There is absolutely no correlation between the party in power and stock market performance. The biggest driver of market returns over the intermediate term are multiples. High multiples mean lower future returns and vice-versa. Therefore, stock returns are almost certainly likely to be low for the foreseeable future no matter who is in power.

 

[william the wie]

I thought that if Trump won, there'd be a rally, since if he won, he would almost certainly mean the GOP would also take the House and the Senate.

But then, I think the rally is likely to peter out. There are some things Trump will do that the market likes and should be done - such as deregulation, infrastructure spending and higher deficits. But there are things the market is ignoring that could have profound consequences, i.e. trade wars.

Plus, interest rates have spiked, and the market has been driven by QE over the past few years more than anything else. If rates are going higher, it will put pressure on the market.

Politics is over-rated. And multiples are very high. There is absolutely no correlation between the party in power and stock market performance. The biggest driver of market returns over the intermediate term are multiples. High multiples mean lower future returns and vice-versa. Therefore, stock returns are almost certainly likely to be low for the foreseeable future no matter who is in power.

I tend to agree but check me if I'm wrong. Authorizing Keystone would end the law suit and also drive oil prices at the wellhead in the US far enough up to increase domestic supply and reduce the Brent price. That should lead to a very tight squeeze in world market prices.

If US oil prices can sustain $30-40/bbl due to lower transport costs is one problem for the rest of the world then the at least two more domestic LNG plants scheduled to come online in the coming year and the use of otherwise unusable coal fields to increase natural gas output will be a real global deflationary black swan. Therefore I suspect even justified high multiples are likely to become rare, yea or nay?