Strong US Economy, Strong US Stock Market =Trump Wins Again
$DIA, $SPY, $QQQ, $HD, $AAPL
Business guru Ken Langone says that President Donald Trump will easily be re-elected to a 2nd term if the US economy continues to strengthen and the US stock market surges to record highs on a daily basis, this latest streak is 9 days running.
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“Guess what, if this economy continues to strengthen and it strengthens over the next three years, like it or not Trump’s going to win again,” Mr. Langone said Thursday
President Trump took to Twitter to trumpet his success in delivering an economy that just witnessed the blue-chip DJIA close above the 22,000 mark for the 1st time. And as things continue expect it to mark 25,000 sooner rather than later.
Trump himself claimed credit for the surge, noting on Twitter Tuesday that the Dow stood only at 18,000 points around Election Day and crowing Wednesday that “we have a lot of things happening that are really great.”
But leading analysts attribute the market’s latest push higher primarily to strong results from Blue-Chip companies, most recently Apple (NASDAQ:AAPL), by far the biggest gainer in the DJIA Wednesday rising 4.7%
The more than 8-year-old bull market in US stocks got a 2nd wind after last year’s election of Donald Trump as US President, on expectations that his business-friendly policies including tax cuts and deregulation would boost corporate gains and economic growth.
For his part, the Home Depot (NYSE:HD) co-Founder praised the President for conquering opposition in the Democratic Party, Republican Party and within the media.
“Trump beat 3 US political dynasties: Obama, Bush, Clinton. The American people have spoken loud and clear. Like it or not, he won fair and square and the American people are fed up, and these people in Congress ought to get off their butts and get something done. Shame on them,” he said.
Mr. Langone also urged Congress to accept that the nation’s healthcare system in beyond repair.
Scrap, it as it cannot be fixed
Mr. Langone praised President Trump for “attacking some of these insane regulations.”
Mr. Langone said “business people are feeling better about an environment that is less hostile to them,” as President Trump has eliminated Red Tape in a bid to reward success and innovation.
Notably: all 9 of my Key technical indicators are flashing Very Bullish in here.
“The market gain has been built on a narrow group of issues. That typically is not indicative of great health,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia. “I would not be shocked … if we saw a pullback.”
And with the Dow Industrials at a record high, Dow Theory suggests that the Dow Transportation Average index should also hit a record in order to confirm the market’s march higher.
But that index trails the DJIA YTD performance by almost 10% and is nearly 6% below its own 14 July record high.
Naeem Aslam, chief market analyst at Think Markets in London, said the DJIA milestone was “a remarkable thing for investors … but at the same time, this could also be a trap if the momentum does not follow.”
But tax cuts and other parts of The Trump Agenda have not materialized, leaving earnings growth as the real engine of the market.
“Earnings growth allows the market to be patient about Washington. It allows the market to be patient about fiscal reform,” said Steven Chiavarone, portfolio manager at Federated Investors in New York, who said they would “be buyers on any weakness.”
Fundamentals remain strong.
With 350 of 500 companies’ reports in, the S&P 500 index is on track to post back-to-back double-digit Quarterly earnings growth for the 1st time in 6 years.
Still, the market is expensive by historical standards.
Investors are paying $18 for every $1 in expected S&P 500 earnings over the next 12 months, near the highest since 2004 and above the long-term price-to-earnings average multiple of 15.
“The market isn’t without issues as it relates to valuations which are full if not somewhat expensive,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia. He expects the DJIA to go beyond 22,000, however.
- NAS Comp +17.8% YTD
- S&P 500 +10.4% YTD
- DJIA +11.5% YTD
- Russell 2000 +3.5% YTD
|HeffX-LTN Analysis for DIA:||Overall||Short||Intermediate||Long|
|Very Bullish (0.54)||Very Bullish (0.52)||Very Bullish (0.56)||Very Bullish (0.54)|
|HeffX-LTN Analysis for SPY:||Overall||Short||Intermediate||Long|
|Neutral (0.17)||Neutral (0.09)||Bullish (0.44)||Neutral (0.00)|
|HeffX-LTN Analysis for QQQ:||Overall||Short||Intermediate||Long|
|Bullish (0.26)||Bullish (0.34)||Bullish (0.27)||Neutral (0.17)|
|HeffX-LTN Analysis for VXX:||Overall||Short||Intermediate||Long|
|Bearish (-0.44)||Neutral (-0.22)||Bearish (-0.47)||Very Bearish (-0.62)|
Have a terrific weekend.