Down goes the Dow

Agita wrote:

Obviously. Market way up again this morning.

Can anyone give a plausible explanation for why the Trump win, which triggered a massive futures decline, has resulted in two days of big run ups?

Obviously what agip said. Also, the health care sector is responding quite favorably to the anticipated repeal of Obamacare.

agip,

I do.

I do not think more government spending, even on infrastructure is the answer. By the way Hillary had an infrastructure plan. I am against more military spending as well. I agree with Hillary that taxes need to go up on the wealthy.

I don't believe Trump is the cure-all, just better than Clinton. I was not emotionally invested in either candidate. Actually sorry I missed my Wednesday morning workout.

Best,

Igy

Igy actually believes that a Wall will be built and paid for by Mexico.

Ghost of Igloi wrote:

agip,

I do.

I do not think more government spending, even on infrastructure is the answer. By the way Hillary had an infrastructure plan. I am against more military spending as well. I agree with Hillary that taxes need to go up on the wealthy.

I don't believe Trump is the cure-all, just better than Clinton. I was not emotionally invested in either candidate. Actually sorry I missed my Wednesday morning workout.

Best,

Igy

fair

Kuplio,I spent eleven years teaching and coaching at the University of Texas-Rio Grande Valley. The University ethnic makeup is 90%+ Latino. My views on the subject are quite a bit different than you think, and I actually have some personal experience related to the broader topic of immigration and relations with Mexico.Igy

Kuplio wrote:

Igy actually believes that a Wall will be built and paid for by Mexico.

agip wrote:

[quote]Agita wrote:

[quote]Tis true wrote:

[quote]The 3 Stooges wrote:

Can anyone give a plausible explanation for why the Trump win, which triggered a massive futures decline, has resulted in two days of big run ups?

peaceful transition of power is most of it

also lower corporate taxes

less regulation

less environment protection

huge huge deficits from lower taxes and increased spending, which can be stimulating in the short term.

Wasn't all this stuff already there when the Asian markets and the futures plummeted due to Trump's lead? Yes it was.

Thanks Igy, I will digest that later. I feel the same way about them being akin to bonds, and overpriced at the moment, and I don't fancy the utilities' exposure to regulation.

I will only do maybe 1 more RE venture, I'm looking at one more property--then, who knows. I would still like to get back in at reasonable levels, it's just so easy.

agip, I have long considered many social programs to represent extreme malinvestment--not because of what they aim to do, but due to how they are run. The bureaucracy is incompetent, and will remain largely intact after Trump takes the reins.

However, policy does play a roll, especially policy that is implemented with the cancellation of line items. That kind of surgical strike may actually be achievable this time around if the House cooperates. This administration needs to pay less attention to changing how things are done, and focus more on what should be done and what should not be done.

Take, for instance, NPR. It's been hugely biased for many years now, and shouldn't be funded in its current form. The question becomes do you try to change the form (i.e. the NPR culture), or do you just eliminate the funding? Obviously the latter, as it's AT LEAST a sticky wicket to try to change such a culture. The same applies to a long laundry list of things.

Hopefully fiscal deficits run by Trump will result in more real economic growth than have those run by Obama, who had to resort to fudging the numbers to make it look anything like a success. I don't really think it can get much worse, so I would prefer Trump deficits to Obama deficits any day.

I'm not a fan of national funding for NPR and I sure hope we can get more growth.

but not sure it can get much worse? You can't believe that. Not defensible.

Anyway

All time high for the DJIA today

agip,

In regards to the Dow high today here are my thoughts. Whether it is infrastructure spending, entitlements, defense spending, tax cuts, you name it, at some point revenues have to get close to expenditures. Investors think that dollars can just be created out of the Treasury and moved to the Fed balance sheet and there is never an end point. Unfortunately we have reached the end point, investors are just ignorant in their assumptions.

Igy

Ghost of Igloi wrote:

Kuplio,

I spent eleven years teaching and coaching at the University of Texas-Rio Grande Valley. The University ethnic makeup is 90%+ Latino. My views on the subject are quite a bit different than you think, and I actually have some personal experience related to the broader topic of immigration and relations with Mexico.

Igy

Kuplio wrote:

Igy actually believes that a Wall will be built and paid for by Mexico.

My post had nothing to do with immigration and everything to do with your misguided vision on government spending.

Kuplio,

Try speaking plainly rather than in riddles and perhaps you would get a different response.

Igy

Ghost of Igloi wrote:

Kuplio,

Try speaking plainly rather than in riddles and perhaps you would get a different response.

Igy

I assume that's intentionally self-deprecating given your penchant for going off topic.

I should have been more precise.

Although government spending can increase the velocity of money and therefore GDP as measured, it is a very, very lossy system that DISSIPATES accumulated wealth. Given the entire lack of real economic growth that we have seen, given the massive money supply increase from the QE rounds, and given the exponential increase in deficit spending, I stick to my opinion that it can't get much worse. It doesn't get much worse than exponential, because exponential is the precursor to system breakdown.

All sorts of market-types are today heralding the dawn of a new era, of corporate tax reform, of the removal of burdensome regulations, of more favorable trade agreements, etc., and all of a sudden there is an injection of "fundamental exuberance" into equity prices, based on the premise that Trump's policies will be "growth-oriented".

There is certainly some truth to that, and also some logic in rising equity prices--but issues remain, for instance the historic over-pricing of equities at the start point. And we haven't even seen the growth yet, meaning that they are relatively more overpriced today than they were yesterday.

If the Dow was projected to grow from a level of, say, 14k instead of 18.5k, the exuberance would have more of a foundation.

The problems are baked in, and have not yet gone away. It is still hugely a speculator's game rather than an investor's game.

Granted that a speculation at this time could pan out very well. I myself am tempted to get in even at these elevated levels, at least a little bit--but sort of like quantum conjugate attributes, US equities have to be related to something, or measured against something. There is nothing intrinsic about them.

Traditionally they are measured against the USD currency, but they could equally be measured against any other currency, metal, market, asset, etc. That's why and how you diversify and hedge, as you know. Cash as an asset class in the form of USD is still doing well, measured against many things, and there is still a lot of it "on the sidelines".

Maserati,

I am glad you used a quotation around the phrase "cash on the sidelines." if every dollar of cash was deployed into the stock market you would have the same amount of "cash on the sidelines." For every buyer of stock there must be a seller. A ridiculous statement that is another excuse to buy stocks at all times. Never a bad day.

Igy

My take with Trump's election is that there are a lot of crosscurrents going on right now with the stock market.

On a general level it seems Trump represents fiscal stimulus over monetary stimulus. I think that is positive for the stock market. Basically Trump is going to try be Reagan in the 1980s. Just promise everything to everyone. Tax rate cuts, infrastructure spending, military spending, maintaining entitlements.

The negative side is that bond yields are spiking in response to this. My concern is that balance sheets are going to matter again and it will not be good for those companies who have run up debt to finance stock buybacks for the past 6-7 years.

Ryan,

You covered it. There is no magic bullet, and the trends that were tailwinds become headwinds.

Igy

ryan foreman wrote:

My take with Trump's election is that there are a lot of crosscurrents going on right now with the stock market.

On a general level it seems Trump represents fiscal stimulus over monetary stimulus. I think that is positive for the stock market. Basically Trump is going to try be Reagan in the 1980s. Just promise everything to everyone. Tax rate cuts, infrastructure spending, military spending, maintaining entitlements.

The negative side is that bond yields are spiking in response to this. My concern is that balance sheets are going to matter again and it will not be good for those companies who have run up debt to finance stock buybacks for the past 6-7 years.

Those who have already run up their debt will have no problem, which is why there was a race to debt-finance so many buybacks in the past 2 years. Get while the gettin's good and rates are at rock-bottom.

The difference between Trump and Reagan, in the fiscal stimulus dimension, is that Reagan did not have to contend with the history with which Trump will need to contend. In the years prior to Reagan's program, there was no huge run-up in the debt, both in absolute and relative terms, as there has been under Obama.

Trump is a builder, and in my experience builders often have the "build it and they will come" mentality--they commit to building or actually build, and then they market the heck out of what they just built to convince people to use it. It is entirely possible that he feels the same way about public infrastructure. If we actually do have real growth, he will be vindicated, but it still might not be worth it, economically.

We will know more especially when the time comes next year to address the debt ceiling.

Maserati,

You may be right that those companies who have already run up debt will have no problem. Obviously there are few companies like Apple who were only using debt as a tax dodge because they have so much money they don't know what to do with it. But for lesser companies I think its questionable.

Even if it is no problem with the debt they already took out. It is still a problem that debt is becoming more expensive and they will no longer be able to continue stock buybacks. Meanwhile, it could be tough for companies to earn more because they haven't invested, because they have used debt for stock buybacks.

Basically I see spiking yields as a hangover stage.

I absolutely agree with with you on your observation that Trump is coming into office in a much different environment with the economy than Reagan. You could almost say its polar opposite. Reagan put his policies into place when the Fed chairman had raised rates sky high to induce a recession. Trump is coming into office after years of zero interest rates. Its another reason why I'm skeptical the stock market performs the same for Trump as it did with Reagan.

Ghost of Igloi wrote:

I assume yours is the self-defecating response of a Troll.

Reported and recorded.