Tuesday, December 13, 2016

Trump rally could mark biggest postelection stock market rise since Hoover!

marketwatch.com ^ | December 13, 2016 | Sue Chang 

If the postelection stock market rally continues at its current pace it could be the largest stretching back to the gains scored in the wake of Herbert Hoover’s 1928 election victory.
Major indexes are trading at record levels with the S&P 500 SPX, -0.11% up more than 5% and the Dow Jones Industrial Average DJIA, +0.20% rising 7.8% since Nov. 8 over optimism that President-elect Trump will usher in a new era of economic boom on the back of higher fiscal spending and pro-growth policies.
Blogger Macro Man on Monday noted that the Trump surge is already among the biggest following an election going back more than a century. For historical context, the blog looked as far back as 1896, tracking the market’s performance between election day and inauguration and then the following 12 months after a new president has been sworn in.
“The Trumpflation rally is already quite a bit bigger than average, though there have been postwar rallies that have been bigger (Clinton, JFK, Ike.). Then again, we’re only halfway between the election and the inauguration; if the market keeps this up, it will be the biggest postelection rally since [Herbert] Hoover,” according to Macro Man.
Like Macro Man, Joe Abbott, chief quantitative strategist at Yardeni Research, also found the near-term portents encouraging.
Among Trump’s many pledges, the one that is easiest to implement, by Yardeni’s reckoning, is the proposal to lower taxes on repatriated earnings to 10% from 35%, which could trigger an inflow of up to $2.4 trillion to the U.S.
“Using that money for stock repurchases would provide a brand new and even stronger buyback incentive,” said Yardeni. “Companies could buy back their shares without using funds that first have to be borrowed in the bond market.”
(Excerpt) Read more at marketwatch.com ...

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