A lot has happened since the last post, so I will just try to sum it all up…..Here goes…
$1 The banks did release their results and they were generally very good (save for Wells “phantom accounts” Fargo). Bank of America, Goldman, Morgan Stanley, and others showed good bottom line results, beating most estimates. Bank of America did miss on the top line, but I didn’t see much concern about that on Wall Street. Our fiscal policy looks like it will range from favorable to extremely favorable for banks in 2017, given the Fed’s intent to raise interest rates (even more so if Trump is extremely generous with stimulus and tax cuts). Financials have a frothy outlook going forward.
$2 Markets have continued their retreat from post Trump election highs. The flirting with 20,000 from the Dow that I wrote about previously is a bit of an afterthought now, given the slow but steady retreat by the markets (DJIA 19,732.40 as of 19 Jan). Some are legitimately concerned that the market was overbought and we will not return to the recent highs that we have enjoyed. My position is you just don’t know until Trump and Congress have real policy debates and pass some laws. Make sure you are liquid enough (hold enough cash) that you are able to pivot if things go left.
$3 Trump proved once again that his tweets or words can shift whole markets. Human nature says that eventually folks will stop reacting as forcefully to each and every headline (you can only sell so many wolf tickets), but for now we get gyrations. The latest headline was that the dollar is overvalued and bad for business. He is absolutely right about this, but this traditionally is not a position a president will take in a public forum (say what? what’s decorum? hahaha.) After these comments of course the dollar dropped against foreign currencies. Potentially good for companies if the trend continues, but bad for us travelers looking to head to Europe, China, Australia, Canada, Mexico….you get the picture.
The final word is that this is the official last day of President Obama’s tenure as leader of the free world. He leaves behind a record of amazing market returns, those only rivaled by the Reagan and Clinton presidencies. Investors would have to hope very high to see similar returns during Trump’s presidency as the market is already expensive, but only time will tell. The businessman may have some tricks of his own.