November 9th, 2016

And then there’s the stock market

Financial markets were shaky last night with the news of the Trump victory, but guess what? At least for today, all is well and the Dow is up 200 as I write this.

This is just the beginning for Trump, of course. Everyone has known that one of the Trump drawbacks and pluses is his unpredictability as chief executive in the most powerful office in the world. Unpredictability can be frightening, particularly to financial markets, but it also represents opportunity. The world awaited with bated breath Trump’s first speech after his win. He scored high with me on that, and apparently with the people who put their money where his mouth was. The speech hit exactly the right tone.

A speech, however, is just a speech, and a first one at that. The next six months or so will tell a very important tale (as they did with Obama). Who Trump will choose as advisors will be the first indication—that and his demeanor in public statements such as his speech last night (actually, this morning, but who’s counting).

With most winners of a presidential election, a sober and presidential demeanor is a given. With Trump it’s not, and therefore his demeanor takes on a heightened importance, because it can either reassure people or further alarm them about what’s in store.

24 Responses to “And then there’s the stock market”

  1. Cornhead Says:

    Those were foreigners selling the futures in panic last night. Clueless.

    Trump will lower taxes and bring back all of that overseas capital.

  2. Big Maq Says:

    I worry he puts Ivanka in a cabinet role.

    It would send the absolute wrong message, after all, wasn’t the election result, in part, a repudiation of that kind of thing?

  3. Artfldgr Says:

    I was watching the futures market last night, down 900, then podesta came out and said hillary isnt going to show, everyone go home.. then trump gave his speech and put out his hand to those that opposed him and it flew up 300 pts, and this morning its been great..

    ie. if you know reality well, you can do well in the market

    here is my porfolio so far
    VLO – up 4 pts and later this month a .60 dividend
    RPM – up 2.40
    CSX – up 1.83
    VNDA – up 1.05
    RTK – up 0.05 as it reports tonight (long shot)

    and i backed up and loaded the truck on ACHN.
    i sold my intc before it dropped, and will buy back after ACHN reports in the next month or so.

    i only have twelve companies…
    and only two are down… MU/Micron down .16 cents
    KKR down .19 cents (but a nice dividend for the price so i dont care)

    i got tired of my employer witholding raises for ten plus years despite exceeds and excelent reviews… so i decided to go back to my swing trading, get my $$$ and get the heck out of dodge

    started 4 years back.. (should have started way back but i forgot from when i did it before and was distracted), first year i did 83%, second 50%, third i lost 17k and claimed 3k the trump way, and this year i am down in the books, but high in the shares ownership

    if things work out, i should be able to hit 200k next year post ACHN, and VNDA (non 24, and looking for a buyer to sell out to)

    not bad for an initial investment under 15k and only a few years in a timultous market compared to the few years before this.

    i put my money where my mouth is..
    which is why i am more right than wrong
    if the latter i would lose a lot of what i dont have…

    anyone want tips? heh heh..

  4. Big Maq Says:

    “Unpredictability can be frightening, particularly to financial markets, but it also represents opportunity” – Neo

    Unpredictability itself has its own consequences.

    trump needs to show he can be a steady hand navigating the complexities he will now face.

    If not, one of the first expectations that should go is any hope of a 4% growth rate, that some have expressed here.

  5. Artfldgr Says:

    and the basis of your saying that Big Maq is?
    flights of fantasy horrors fit the world has 10 ways to end stuff on tv… but he would put her and others in charge of his empire before he took them put them in a cabinet and left his empire to who?

    be real people
    i have worked with billionaires, i nearly married a social register debutant worth over 40 million, and have had friends worth more than that, while i have pittance.

    and one thing i learned from ALL of them who were not trading paper, and were actually doing business and such… thatmost of the fantasy about their actual behaviors have no merit… and a lot of it runs on the ignorance of people who actually dont know how or what they do.

    its really sad that our idea of success went from being proud of self made people to thinking like karl marx about anyone who gets anywhere… lovely to save your own face and claim that you could have done that, but your honest or some such high road, but its not valid

    the major difference between the bankers vs the makers is that the bankers dont work with those they do deals with and so dont need to create ongoing relationships accross all they do.

    and as far as the upper class, they realize that the press is crap and that the reputation in the press means little to them… its bs for the consumption of little people who dont spend much time learning how things work and doing right by their own families and bnak acounts.

    to a T i have met more poor peopel who have read the rules for monopoly and have not even read books on basics of investing, and so on.

    even worse, they gamble at a casino, then try to convince me that i am gambling on the market. except that the casino is designed to bleed you over time, and the market isnt… each market horror story i have EVER heard could be traced back to their doing things that they were not supposed to under some idea of making an exception to make a lot in a short while

    look at this way…
    you pay 13$ today for a kkr stock, you will get a dollar a year, and occaisonally disbursments of profits as well..

    if that holds, the stock pays for itself by the time i retire… $13 or so buys me a dollar factory, whose output is taxed at 15%..

    compound that, and keep adding to it, and you will find how the majority of the rich get rich… why should they clue you in on it? they have better things to do with their time than argue with an idiot who wont listen to the experienced.

    even sadder i watch people spend money on the lotto tickets and such in great amounts weekly.. and do it for decades.. meanwhile, if they put that same thing into a monthly buying account and just bought what they could, roll over dividends, and just left things alone for the same period they were buying tickets, they would have the prize they were seeking
    (the exception is the welfare people that play a lot, they cant save or lose their welfare. so they waste looking for the big score that would be enough to just pluck them out and drop them in a better place, but since they are money ignorant, they lose it all very fast)

  6. Matt_SE Says:

    The stock market is rigged, and only responds to Fed increases in the interest rate (which represents free profit for them). If Trump ends that corruption, as he’s promised to, you will see the market spasm violently.

    Right now, they’re hoping someone can talk some sense into him.

  7. J.J. Says:

    Watched a lot of Fox Business this morning. The mood is euphoric. Everyone seems to be expecting Trump to improve things greatly for business. The big ones – tax cuts, deregulation of banks, infra-structure projects, and trade deals will take some time. But the tone is highly optimistic today. I don’t expect that to last. Reality will set back in as the loyal opposition (MSM, progressives, academia, Hollywood, etc.) start throwing up road blocks. I do believe that over the next four years, if the Congress stays in Republican hands, the economy and markets could do very well.

  8. parker Says:

    This is a bump not a ditch. IMO there needs to be a significant correct in equities and drop of 20 or even 40 percent should surprise anyone. 2017 will a very interesting just like this year.

  9. Frog Says:

    Re financial markets, what cratered on the NYSE today?
    Hospitals, hospital suppliers; Tenet down 25%, Hill-Rom, hospital bed maker down 15%, as examples. Anticipating the death of Obamacare, certainly.

    Smith & Wesson and Sturm-Ruger down ~15%. Fewer gun sales anticipated, doubtless because the Statists lost last night.

    What went up? The oil patch and biotech. Keystone may get approved! Biotech advances means fewer hospitalizations for many.

    Mirabile dictu!

  10. Frog Says:

    parker, why does there “need to be” a massive equity market drop? 40% is cratering, hundreds of billions out into the ether….for what “needed” reason(s) ?

  11. Big Maq Says:

    @Frog – they are way over priced relative to historical forward price to equity. The extraordinarily low interest rates have money seeking higher returns and feeds the demand for stocks.

  12. Big Maq Says:

    Or probably better said, all the corporations in aggregate are very unlikely to grow their earnings to keep up with their expected returns per stock given the price of their stock.

  13. Big Maq Says:

    Think of it as easy mortgage terms (e.g. no doc loans) and how it affects housing prices. We all know what happened with that.

  14. Geoffrey Britain Says:

    So Hillary incessantly beat the drum of “making the rich pay their fair share”. If they believed her, by what calculus could Wall Street support her and then be depressed when she lost? So they knew she was lying because they’d privately been assured that it was all a political dog and pony show for the rubes.

    They’re depressed at the prospect that over the next 4-8 years, Wall Street’s gluttony may suffer, while Main Street may get its fair share.

  15. Big Maq Says:

    @GB – depends on who you mean by “Wall Street” that is getting “depressed”.

    If you are talking about how the stock market took a dive initially, following international markets, but rebounded.

    My guess is that trump’s “unexpected” win represents relative uncertainty, particularly overseas.

    trump’s relatively “gracious” speech last night, followed by clinton’s “gracious” concession speech helped much to smooth those initial concerns out.

    “Wall Street’s gluttony may suffer, while Main Street may get its fair share.”

    Spoken like a true leftist.

  16. Geoffrey Britain Says:

    Objective facts support the assertion that Wall Street has done exceptionally well under Obama. While Main Street has been devastated. That is factual and labeling it leftist propaganda is a low blow, even for you.

  17. parker Says:

    Frog,

    IMO the stock market has been pumped up by QE, rock bottom interest rates, and for many stocks P/E is not encouraging. As someone who has been in the market for a long time, as may be true of you, and I tend to get a bit nervous when the equities market keeps rising and rising with only a few tiny corrections. I like moderate corrections as they lessen the possibility of a major correction.

    We lost 12% in the 2008 drop where the average for most investors was in the range of 20+%. We sold some in very early 2008 without a loss and rode out the crash. Nothing against a rising market per se, provided it does not rise too high too fast. Nothing rises forever.

    I judge the health of an economy by what happens in the commodity markets and by where the Baltic Dry Index is trending as the two are linked. Those are my benchmarks and they tell me the global economy is not doing well. The last two years have hit commodities hard, and the BDI is stuck in low gear. Commodities make the world go round and the BDI measures how fast it rotates.

    YMMV

  18. Big Maq Says:

    “Objective facts support the assertion that Wall Street has done exceptionally well under Obama. While Main Street has been devastated. That is factual and labeling it leftist propaganda is a low blow, even for you.” – GB

    Hold it.

    “Fair Share” – very leftist terminology, that presupposes a fixed pie to divvy up.

    Who does the divvying? Oh, I have my guy in DC so now I get mine!

    Recollections of “obama phones”, anyone?
    .

    Note that pelosi is eager to work with trump on the new massive infrastructure spending bill.

    Yep, more massive debt spending will even things out.

  19. Assistant Village Idiot Says:

    I agree we are heading for a large correction, 20-40%, and that no one will blame Obama, unless it happens pretty quickly. I think in terms of a 2-year delay – It will not be fully the economy belonging to Trump and this congress until Nov 2018. Plus, I consider the congress to be 2x asw powerful as the president in these things, but we like the symboliswm of one guy. Thirdly, it’s still largely factors unrelated to the federal government that drive the economy.

  20. Ymarsakar Says:

    I worry he puts Ivanka in a cabinet role.

    He has no choice to, for who in DC would be personally loyal to Trum other than his family clan?

    If conservatives want Trum to be able to output even 5 of that Gettsburg address promise thing, Trum needs loyalists, household troops. Normal political methods won’t get them even 10 on the list. Reagan had to expend enormous political capital to work within the DC good old boy network, to get even a few things done. Immigration reform wasn’t one of them.

  21. Big Maq Says:

    “I agree we are heading for a large correction, 20-40%, and that no one will blame Obama, unless it happens pretty quickly. I think in terms of a 2-year delay” – Assistant VI

    Who knows, really, the timing.

    I very much believed the housing market couldn’t keep rising like it did, but it kept going.

    I very much believed since 2011 that the stock market couldn’t keep rising so much without the fundamentals behind it to support the rise, yet, here we are.
    .

    Now, I look at Japan and see 200%+ of GDP in debt, having crossed 100% around 1996.
    http://www.tradingeconomics.com/japan/government-debt-to-gdp

    And the US did live through a 100%+ debt level and survived.
    http://www.tradingeconomics.com/united-states/government-debt-to-gdp

    Evidently, screwed up economic positions can sustain themselves for a very long time.
    .

    What is most troubling is really the unfunded liabilities that permeate the federal, state, and local governments. They are economically unsustainable (i.e. impossible to tax enough to pay for them, nor borrow enough – and afford the interest payments even if it could be borrowed). This says the estimate is $127T in today’s dollars (today’s debt is $19T – for comparison).
    http://www.forbes.com/sites/realspin/2014/01/17/you-think-the-deficit-is-bad-federal-unfunded-liabilities-exceed-127-trillion/#7fa55a2710d3

    Peak baby boomer pulling retirement, medicare, medicaid, social security, etc happens in about 10 years.

    If we don’t do something about it all before then (and it doesn’t look like trump is inclined to do so), expect trouble then.

    And with massive infrastructure spending and other big ticket items trump promises, it will only be worse.

    People think they reversed or held back the G-march with trump, well, I very much doubt it, unless the GOP in Congress revert to their traditional economic policies and bring trump along.

  22. Frog Says:

    Big Maq:
    Doubt away. No one wants to touch the entitlement third rail. The sheeple, conned since FDR, won’t hear of it. Ryan got the VP slot with Romney on his plan (so-called) to slow the growth of the Federal deficit monster. Slow it, feed it less. Not an answer.

  23. Big Maq Says:

    “No one wants to touch the entitlement third rail. “

    And, thus, if trump lives up to his “promise”, not much will be solved under him.

    There are various ways to deal with it to mitigate its impact.

    You are admitting defeat before even beginning to attempt to do anything.

    The G-march continues.

  24. Ymarsakar Says:

    And, thus, if trump lives up to his “promise”, not much will be solved under him.

    The Alt Right, will blame that on Republican or Democrat obstruction to their new God Emperor.

    They may be open to disappoint from their God Emperor, but they will first blame everybody around him first.

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Previously a lifelong Democrat, born in New York and living in New England, surrounded by liberals on all sides, I've found myself slowly but surely leaving the fold and becoming that dread thing: a neocon.
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