The markets are generally higher but appear to be splitting up as the NASDAQ was down today while the Dow hit a high. The Dow closed up 218 points to 18,807 on volume that was about the same as yesterday’s big spike. NASDAQ volume was also higher and it appears that money is rotating out of tech and into banks and more mundane stocks like healthcare. IBD moved its market indicator to “market in rally”.
All the big investment houses are putting out research trying to assess the effects of a Trump Presidency. The big concern expressed by these well-meaning folks are the negative effects caused by a possible shift in trade policies. Some are concerned that these policies will be protectionist but others feel they will be renegotiated so that goods will receive fair treatment. For instance, cars from America to Europe are hit with a 10% tariff while cars from Europe to America pay only a 2% tariff. Why this is and could it be corrected hopefully will be discussed. Credit Suisse had a note on US corporate taxes saying that should the rate be lowered from 35% to 15% as per the Trump plan then S&P 500 earnings would get an 18% boost. Analyst Jeff Saut on CNBC also reiterated this point.
Market action continues to support the thesis of higher interest rates and perhaps a jump in the inflation rate. While this is conjecture I did notice that the Japanese stock market shot higher by a whopping 6.7% after the election. A jump of that magnitude might cause the Japanese citizens to move Donald Trump ahead of Abe on their Christmas card lists. Global central banks have been fighting to inject growth and inflation back into local economies and the US election just might have unwittingly provided a boost to that effort.
Gold however gave up ground falling about $17 an ounce to the $1,255 price range. This pullback is strange since most analysts feel that the US dollar will weaken after the election but Mr. Market is in obvious disagreement with this line of thinking.