Thoughts on our not-so-new President and markets

It’s now a little more than six months since President Trump was sworn in. World markets show that of 76 countries, stock markets around the world have risen an average of 8% since Trump’s inauguration. Of all 76, all but 14 countries are up for the year.

But before anyone considers that as an endorsement of the new administration, may I say that it is not so. There is a global economic recovery taking place that started well before the November, 2016, U.S. election. And the new administration can claim little credit for that ongoing global recovery.

Look around. The President has accomplished nothing of his larger policy agenda, though much business-friendly, growth-oriented work has been accomplished by executive order. And market indices are at all-time highs.

The talk that this is all Trump, or that if his agenda wasn’t enacted, it would spell big trouble for the markets was simply…wrong.

Still, so many pundits simply can’t wrap their brains around this bull market. Their myopic view dismisses what is really happening and cites any of many issues that arise every week as a reason to sell everything you own.

None of this is meant to minimize the largely pro-business bias that the new administration endorses. But accomplishing any of this will take more time. If any of Trump’s major initiatives is enacted (with the possible exception of trade) even more positive tail winds for American growth, business, and job will follow.

So far this year, optimism in the business community has rekindled and corporate earnings have been nifty. Revenue generation and bottom line profits are growing. Margins are holding at healthy levels. An earnings-driven bull market is taking over from a Federal Reserve-engineered liquidity-driven market. The major banks and other financial businesses, always key to any bull market’s life blood, are performing.

Looking ahead, in spite of the ever-present reality of an possible pullback, I see more growth ahead. Investors fearful of pullbacks should keep in mind that positive results, so far, have being accomplished with none of the administration’s pro business agenda having been enacted as yet.

As I have pointed out before with charts and data, as of today, there is still little evidence that a recession is around the corner, nor much global credit market stress. A low interest rate environment with the Fed moving at a measured pace is raising interest rates slowly. On a more technical side, our U.S. indices and other global markets have broken out to the upside across the board, around the world. As least for now, it simply does not get much better, at least from an investing standpoint, than it is right now.

August is almost upon us. The economic calendar for next month seems clear of any major market moving events. It is at these times, of course, that is when we least expect it, that market weakness might strike. But I mean no prediction by that, just a statement of fact. Again, we’ll get pullbacks from time to time. They can come at any time. If you know of someone who has the date when the next one will begin, please let me know. But, in reality, when pullbacks will occur is unknowable, and they are an unavoidable part of the investing scene.  Moreover, they shouldn’t be feared, especially with the backdrop in place that we currently have. With the strength I currently see, any pullback is likely to remain contained. So I don’t see any bear market drop lurking. And any weakness on the next “scare” should be viewed as a buying opportunity.

I hope this gives my often worried readers a sense of the markets and investing ahead.  Nothing is a given.  N. Korea could act up even more than they are or ISIS could strike an American landmark.  But outside of these sorts of unpredictably events, even a chaotic White House and a Republican Congress that can’t pass legislation that it has dreamed of passing for seven years – if only they had a President willing to sign their bill – things look remarkably encouraging for the investors among us.

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3 Responses to Thoughts on our not-so-new President and markets

  1. Susie Boyer says:

    As always, I thank you for sharing your thoughts.

  2. Karen says:

    Thank you Jim for your report each month. Not only do I enjoy reading, but always finish with more insight and knowledge. Karen

  3. Helen says:

    Thank you. I look forward to your remarks on the stock market

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