Why The Trump Rally Will Continue


January 20, 2017, 4:15pm EST

President Trump officially took office today.  From the close of business on November 8th, as people across the country were still voting, the S&P 500 has climbed 6% – from election night through today.  The dollar index has risen 2.8.  The broad commodities index is up 6%.  The 10 year Treasury note is down 4% — which means the yield is UP from 1.80% to about 2.50%.

His policy agenda has clearly been a game changer.

But if you recall, the broad sentiment going into the election was that a Trump Presidency would cause a stock market crash.  These were people that weren’t calibrating the meaningful shift in sentiment that came from projecting pro-growth policies in a world that has been starved for growth. That event (the election) alone did more to cure the global deflation risk than the trillions of dollars that central banks have been pouring into the global economy.

But many still aren’t buying it.  I don’t often read financial news. I’d rather look at the primary sources (the data or hear from the actors themselves/ the horse’s mouth) and interpret for myself.  But today, I had a look across the web.  Four of the five top headlines on a major financial news site, on inauguration day, ranged from negative to doom-and-gloom — all laying blame on the dangers of Trump.

Because Trump has talked tough on trade, the common threat most refer to is a potential trade war. But remember, Trump has also talked tough on U.S. companies moving jobs overseas.  Thus far, he hasn’t created enemies, he’s gotten concessions and has created allies. He’s used leverage, and he’s negotiated win-wins.  Expect him to do the same with trade partners. With pro-growth policies coming down the pike and a meaningful pop in U.S. economic growth coming, no country, especially in the current state of the global economy, will want to be locked out of trade with the United States.

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