Stocks set a record again. But is Trump the reason?

The Dow, S & P 500, Nasdaq and Russell 2000 each hit record highs on Monday.

Investors are dazzled by excitement and are confident that both large, high-quality multinationals and SMEs that do most of their business in the United States will continue to thrive.

So is this the Donald Trump Rally? Or is it Janet Yellen Rally?

Some strategists believe that the talk of abolishing Trump’s stimulus and many nasty regulations is why stocks are skyrocketing.

Or is this better characterized as a continuation of Barack Obama’s rally instead?

You can claim that POTUS44 handled POTUS45 with a pretty good hand.

The strong job market and overall economy that Trump has inherited may be the reason why consumers and businesses are so confident.

However, investors (and financial journalists) often give and blame the president for more credit than is probably worth the performance of the stock market.

RBC strategist Jonathan Gorab pointed this out in a report on Monday. The report is properly titled “Message to the Market: Donald is Not Everything”.

Related: Trump is not killing the bull market

Golub pointed out that the S & P 500 rose nearly 7% from late June to the election day. This is the time when most polls predicted Hillary Clinton to be president-elect.

But since then, stocks have continued to rise, rising another 8% since Trump removed the upset victory (at least to mainstream media and Wall Street).

You can’t have it both ways. It makes no sense to suggest that the stock price rose because investors believed that Trump would lose, and that the stock price continued to rise because Trump did not lose.

Bond yields have also risen since Trump’s victory. This is a phenomenon that many investors have attributed to potential stimuli from the President and Republican Parliament.

Still, Gorab points out that 10-year US Treasury yields were rising by the end of the summer.

Of course, many investors also expected Clinton’s inspiration.

But once again, many investors claim that Trump was not only what happened before he was elected, but also a catalyst for something that was happening because many thought he would lose. increase.

Related: Stocks avoided 1% dive for an unusually long period of time

Therefore, it’s strange that Trump is cited as the main reason for a market rally that started months ago when everyone feels they can win.

What is really happening? What has been constant over the past few months is the Federal Reserve.

yes. The market is reacting to Washington. But they are paying more attention to Janet Yellen, not the White House.

Prior to the election, the Federal Reserve clarified that it would probably raise interest rates in December and several more in 2017, regardless of who won the presidential election.

The good news for investors is that the US economy appears to be growing steadily, but there is no risk of overheating.

Related: Here’s why the world’s largest money managers are worried

According to the latest employment report, wages are growing at a decent rate of 2.5% each year. But that raises the fear of runaway inflation, not high enough for the Fed to aggressively raise rates.

Even if Yellen and the Fed raise rates three times this year, they could raise rates by only a quarter of a point each time. It will push the Fed’s key short-term interest rates in the range of 1.25% to 1.5%.

It’s still very low. At these levels, stocks are more attractive than bonds. Corporate profits should be able to continue to rise with a healthy clip. And consumers will probably continue to spend.

Therefore, investors not only pay attention to Yellen and focus short-sighted on the president,

With that in mind, Yellen is set to testify in front of Congress on Tuesdays and Wednesdays. And what she says about the timing and scale of future rate hikes could be to keep pushing the rally forward or stop it altogether on its trajectory.

CNNMoney (New York) February 13, 2017 First Edition: 12:30 PM ET

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