President Trump is ‘Crazy Like a Fox’, Investors Not Afraid
$DIA, $SPY, $QQQ, $VXX
US stocks rose for a 5th day running, with technology shares bolstering major indexes, as investors continue to price in the impact of tax cuts before corporate earnings season begins later this week.
- The S&P 500 Index rose 0.2% to a record 2,747.43 as of 4 p.m. in New York. It rose 2.5% last week.
- The NAS Comp rose 0.3% to an all-time high, while the DJIA slipped 14 points from its record to halt its 4-day rally.
- The MSCI All-Country World Index added 0.1% for a 5th straight gainer.
- The MSCI Emerging Market Index gained 0.4% to the highest in nearly years.
All of that despite:
- Michael Wolff ‘s “Fire and Fury: Inside the Trump White House” claiming that the our President is “an idiot surrounded by clowns.” And,
- Some armchair psychiatrists declaring via MSM (mainstream media) that the book confirms that the President suffers from ADD (attention deficit disorder) and narcissism.
Responding to questions about his mental health on Saturday, President Trump Tweeted, “Actually, throughout my life, my two greatest assets have been mental stability and being, like, really smart.” He said he was a “VERY successful businessman” and television star who won the presidency on his first try. “I think that would qualify as not smart, but genius….and a very stable genius at that!”
From what I know President Trump is right, and all his left wing critics are wrong.
And investors agree, thay worried that our President is not fit to govern.
The market’s performance suggests that President Trump is “Crazy like a Fox”.
The S&P 500 is up 28.2% since Election Day, November 8, 2016 and marked it 88th record on Friday
The NAS Comp is up 37.4% over the same frame.
Managed Money flows indicate comfort with President Trump. They attracted $355.8-B over the past 12 months, with $197.8-B going into equity ETFs that invest domestically and a record $158.1-B into those that invest globally.
The Trump Rally is being driven by rising earnings expectations as the global economy has continued to show more and more signs of booming without reviving rampant inflation.
The global economy is flashing Bullish signals for earnings and stock prices, as follows:
1. World equity prices. Since November 8, 2016, the All Country World ex US MSCI stock price index is up 23.9% in local currency and 28.1% in dollars. In USDs, the rest of the world has been mostly outperforming the US, though much of that outperformance was attributable to the weaker Buck.
2. Copper: The nearby futures price of a pound of copper rose to $.29 on 28 December, the highest since 25 February 2014, It’s up 28% Y-Y.
3. Forward revenues and earnings guidence. It is really too soon to tell how the cut in the Trump corporate tax rate late last year will affect the consensus earnings estimates of industry analysts. But, they will be raising their estimates. But they may wait until they get more guidance from company managements during the Q-4 earnings season this month. At the end of last year, weekly S&P 500 forward consensus earnings estimates through the 12/28 week resumed their relatively flattish trends during most of Y 2017 for Ys 2017 and 2018. Notably, earnings estimates for Y 2019 have been moving higher .
At the end of last year, industry analysts predicted that S&P 500 EPS (operating earnings per share) will rise this year by $15.76, or 12.0% to $147.23 and next year by $14.99 or 10.2%)to $162.23. So, we can assume that the cut in the corporate tax rate will add $6 per share to this year’s earnings.
Forward earnings, which will soon be calculated as the time-weighted average of Y’s 2018 and 2019 estimates rose to a record high of $147.23 per share at the end of Y 2017. It has been tracking the record-setting trend of forward revenues all last year. Those revenues will not be affected by the tax cut as much as earnings will be in Y 2018. It is clear that the solid gains in both last year reflected the strengthening global economy.
The Crying Wolf is not rattling the stock market, and Steven Bannon is on his knees begging for forgiveness, as his political career has been destroyed.
The market is responding very positively to the Trump tax reform plan passed in December, Now there is welfare reform, an infrastructure spending program, and talk starting between North Korea and South Korea.
The Q-4 earnings season is just starting, and investors are anticipating that many companies will be taking 1-time charge-offs on deferred tax assets, but will have a lower tax rate in the future.
Several companies announced that some of their tax windfalls will be used to make bonus payments to their workers.
Many companies are talking about how much money they will repatriate from abroad, and what they will use their cash piles for.
Will all of the above its is hard for a gossip columnist to convince investors that they should be afraid Crazy like a Fox Trump.
Monday, the US major stock market indexes finished at: DJIA -12.87 at 25283.00, NAS Comp +20.83 at 7157.39, S&P 500 +4.56 at 2747.71
Volume: Trade on the NYSE came in at: 809-M/shares exchanged.
- Nasdaq Composite: +3.4% YTD
- S&P 500: +2.6% YTD
- Dow Jones Industrial Average: +2.3% YTD
- Russell 2000: +1.6% YTD
The HeffX-LTN Overall Analysis for the US Stock market is Very Bullish in here.