Dow, S&P 500, Nasdaq and Russell 2000 hit the highest levels of all time on Monday.
Investors are excitedly stunned and believe that both large blue chip multinational companies and small companies that do most of their business in the US will continue to develop.
Is this Donald Trump rally? Or Janet Yellen Rally?
Some strategists believe Trump’s warning plans and many burdensome arrangements.
Or maybe this is better characterized as the continuation of the Barack Obama rally?
You can argue that Potus 44 is a very good hand of Potus 44.
The solid labor market and the general economy inherited by Trump may be the reason why consumers and businesses are confident.
However, investors (and financial journalists) are rapid to give the president the performance of the stock market to give more loans and accusations than they deserve.
RBC strategist Jonathan Golub said on Monday in a report titled “Message to Sunday: Not all about Donald”.
Related: Trump does not kill the bull market
Golub said that the S&P 500 increased by about 7% from the end of June to the election day – when most surveys predict Hillary Clinton will be the next president.
However, the stocks have continued to gather since then, and Trump has increased by 8% since he suffered the sadness (at least the mainstream media and Wall Street) victory.
You cannot have both directions. Investors do not make sense to argue that shares are collected because Trump will lose and they continue to be collected because Trump has not lost.
Bond returns have been increasing since Trump, a phenomenon that many investors attribute to the possibility of warning from the Republic Congress.
Nevertheless, Golub says that the yield at the 10 -year US Treasury increased at the end of the summer.
Of course, many investors were waiting for a warning from Clinton.
Nevertheless, many investors claim that Trump is not only going to continue before being elected, but also because he thinks he will lose many.
Related: Stocks avoid 1% dive for an unusual long period of time
Therefore, it is strange that Trump is mentioned as the main reason for a market rally that started months ago without thinking that everyone can win.
What really is happening? It has been the only fixed federal reserve for the last few months.
Yes. Markets react to Washington. But they pay more attention to Janet Yellen, not the White House.
The FED announced that it would increase interest rates in December before the election and that it would do several more times in 2017 regardless of who won the President race.
The good news for investors is that the US economy seems to be growing steadily, but does not appear under the risk of overheating.
Related: Here is why the world’s biggest money manager is anxious
The latest job report showed that wages grew by 2.5% annually. However, this is not high enough to fire illegal inflation fears and direct the FED to increase aggressively.
Even if Yellen and the Fed hike are three times this year, they will only receive a quarter points at a time. This will push the Fed’s key short -term ratio to 1.25% to 1.5%.
This is still very low. At these levels, stocks would still be more attractive than bonds. Corporate gains should be able to continue to rise in a healthy clip. And consumers would probably continue to spend.
Therefore, investors are not closely followed by Yellen and not only a myopic focus on the President,
Considering this, Yellen is preparing to testify in front of the Congress on Tuesday and Wednesday. And what he says about the timing and size of future ratio increases can make the rally propose full steam – or he can stop dead on his runway.
CNNMONEY (New York) FIRST PUBLISHED 13 February 2017: 12:30 meat
