More and more business leaders and Wall Street strategists have expressed concern about what President Donald Trump’s protectionist policies and unpredictable nature will bring to the market and economy.
But we all know that actions are more eloquent than words. What investors actually do is in stark contrast to what people are saying. The Dow, S & P 500 and Nasdaq hit record highs again on Friday.
And Russell 2000, an index of small-cap stocks that tend to do most of the business in the United States, is just a few points away from the all-time highs recorded in December last year, triggered by the euphoria of the Trump market.
moreover, VIX ((((The volatility index, known as Wall Street’s horror gauge, has fallen by nearly 25% this year as well. If investors were really afraid of Trump, VIX would be much higher. ).
When CNN Money’s original Fear & Greed IndexIs examining the other six indicators of VIX and investor sentiment, showing signs of greed and not far from extreme levels of greed.
Of course, Trump still doesn’t seem to be able to help tweet about doing nothing to help the economy, to be honest-Nordstrom investors have told them that Trump has abandoned his daughter Ivanka’s brand. Despite the attack, he is wealthier.
However, it seems that the main reason the stock has recently taken off again to give credit when it’s due is that Trump has promised to announce a “amazing” tax system soon.
Mr. Trump also promised to invest more in infrastructure when he met with the CEO of the airline on Thursday.
That’s what the market wants to hear.
Matt Rockridge, Manager of the Westwood Smallcap Value Fund, said: “Timing is a big issue, but it’s coming.”
Rockridge believes that if Trump’s stimulus drives the economy to higher gear, many companies that generate most of the revenue from the United States should benefit.
He likes stocks in various industries, such as movie theater owners. Masco ((((Snack food company ).J & J (((( And aerospace equipment company ).Kaman ((((.. ).
Another money manager said he was still bullish on US small caps that could get a rise from Trump policy.
Barry James, President and CEO of James Investment Research, iShares Russell 2000 ETF (((( The day after the election, he is confident that Trump’s stimulus will boost the growth of US small businesses. ).
“When Trump first said America, I really think that’s what he means,” James said, adding that he’s thinking of an internet telephone service. Vonage ((((Rental dealer ).Aarons (((( And discount chains ).Big Lots (((( If Trump’s suggestion passes, everything could thrive. ).
But there is another reason why the US market is close to record highs. Despite all the uncertainties in Washington, the United States is still considered a relatively stable paragon compared to the rest of the world.
Thanks to Brexit, the European economy remains a big wildcard. The rise of populism in France has led to concerns about so-called fragrances, problems that seem to never disappear, and Greek debt problems.
The Japanese economy is also stagnant. We are now talking about the lost decades or more. Plural. And China’s economy is also slowing down.
Bond fund manager Bill Gross often jokes that America is like what Johnny Cash and Kris Kristofferson sang in “Sunday Morning Coming Down,” the “cleanest dirty shirt.” Is saying.
To that end, bond rating agency Fitch analysts said in a Friday report that “a factor in President Trump’s economic agenda will be positive for growth,” but “the current balance of risk is less modest. We are heading for global results. ”
Of course, the coin has two sides. Trump’s bomb could come back to annoy him.
His ongoing tendency to rebuke companies he disagrees with on Twitter can undermine investor confidence.
And while his proposed travel ban on immigrants, primarily Muslims, has been overturned by the US court system so far, the president has vowed to fight for his reinstatement. ..
Even if he loses the battle, Trump is serious about turning more inward with tariff and border adjustment tax plans that could ignite a trade war with Mexico, China and Japan. It is clear that there is. It can hurt major US multinationals and reduce headcount.
However, investors still seem to believe / expect that the benefits of Trump’s growth plans and tax cuts will outweigh the effects of isolationism. Let’s hope they are right.
Investors may hold their noses, close their eyes, and stuff their ears with cotton to drown the president. But they are still buying stock.
CNNMoney (New York) February 10, 2017 First Edition: 11:55 AM ET