Market Commentary, 01/24/17
In the nine weeks following the election (11/08/16 – 01/06/17), the broad market (S&P 500) gained 6.4%, the largest post-election advance for the same period in almost 100 years. That said, and although the S&P was up 15 points (+0.66%) and the Dow 113 points (+0.57%) today, for the past two weeks (i.e., since 01/09/17) the market has been more-or-less flat. This likely indicates the stock market is in a “wait and see” or, “show me” mode where promises of things to come may carry less weight than things actually getting done. Thus President Trump’s first 100 days will be of great significance.
Of particular interest will be implementation of polices – reducing taxes and regulations – that will make it easier for US companies to profit and prosper. Regarding this matter, the President hit the ground running as he kicked off his first week by meeting yesterday with CEOs of a dozen of America’s largest companies, reiterating his America First business blueprint and sending the message that the US economy is a top priority.
He assured companies that if they invest at home instead of laying off workers and building factories abroad, they would reap “advantages” from his administration and he warned that companies that move factories abroad will be hit with a tax when they import goods back to the US.
But his agenda wasn’t just corporate; major labor union leaders were all smiles after meeting with the President yesterday and hearing his plans for workers to share in their employer’s increases in prosperity.
This robust first day could be the reason for today’s market surge.
But Wall Street is waiting for more information, specifically the size of corporate tax cuts, the size of the planned infrastructure bill, potential changes to the North American Free Trade Agreement (NAFTA), specifics regarding relaxing government regulations and details about Obamacare’s repeal and replacement.
We expect both stock market and economic growth as Trump’s growth-centric polices are enacted. The strongest Bull Market in history, during Ronald Reagan’s presidency, didn’t start until August 1982 – nineteen months into his first term. But this was largely because of the time required to get his economic and tax policies through a Democrat controlled House and Senate. Since Trump’s party controls both houses of congress, we believe the delay between the introduction of legislation and stock market response will be much shorter.
Jeremiah Patterson, CFP®
Copelin Financial Advisors
514 Brooks Street
Sugar Land, TX 77478
Phone: 281 240-2902
Fax: 281 240-2856
Securities offered through ProEquities, Inc., a Registered Broker-Dealer and Member FINRA & SIPC Advisory Services offered through Harvest Investment Services, LLC., a Registered Investment Advisor Copelin Financial Advisors, Inc and Harvest Investment Services, LLC are independent of ProEquities, Inc.