The Market’s Future Under Trump’s Presidency

The Market's Future Under Trump's Presidency

“America First,” said then Republican presidential nominee Donald Trump last year, as he promised his voters a prosperous new era of hundreds of thousands of new jobs and a flourishing economy, should they chose him to be the 45th President of the United States of America. And indeed, since his surprise victory in November, the job increase has exceeded forecasters’ expectations with 227,000 added jobs versus the predicted 180,000—stocks have also been on an incredible and seemingly unstoppable upswing, with the S&P 500 rallying nearly 10%. But looking more long-term, what is the market’s future under Trump’s presidency?

The S&P 500, Dow Jones industrial average, and the Nasdaq all hit all-time highs for five straight days, making for the longest such streak in 25 years. The Dow and Nasdaq are up 13 percent since Trump’s win, and the S&P is up 10 percent. Stocks have not witnessed a 1% decrease since October 11, which is the longest streak since 2006. Consumer confidence is the highest since over a decade as retail sales picked up a 0.4% gain in January, which in turn exceeded the expected 0.1% gain.

What Does the Future Hold?

The S&P trades at about 27 times earnings, well above its long-term average of around 16, and at its highest level since June 2004. The S&P is 9 percent higher than its 200-day average, however, this is often a signal that a correction is ahead. The view on Wall Street is that Trump will deliver tax cuts and unshackle corporate America from regulation, but running a country is different from running a private business and changes may not take effect that quickly. Investors may already now treat stock prices like a cut in the corporate tax rate to 20 percent or lower within the year, together with a growth to 3 percent or better by next year, while it’s not guaranteed to happen that quickly.

In fact, global investors are are questioning if the rally is exhausting itself, as they already see markets as overpriced. Some are cautious since the president is know to be unpredictable, which in turn may favor investments in bonds or stocks from other countries over the U.S. stock market. Concerns have grown enough to cause the committee steering T. Rowe Price’s target-date retirement funds and other balanced funds to view stocks as less attractive investments than bonds.

This shift is significant because it’s the first time this has happened since 2000, when the dot-com bubble popped. In all fairness, the trend has been moving in that direction for years, since stock prices have risen faster than corporate earnings, which in turn makes them look more expensive. Still, it was only very recently that the committee decided to favor bonds instead of stocks. Then today, February 24th, today, U.S. indexes were falling modestly, ending Dow Jones industrial average’s 10-day winning streak.

Strategy Shifts Looming

Some strategists are also worried about the result of Trump’s constrictions in international trade. He not only killed the President Obama-backed Trans-Pacific Partnership, but also had tough words with Mexico, Japan, China, and Germany about their exports. If U.S. loses its place in international trade, someone else will fill it. China, for example, may end up replacing the U.S. as a big trading partner for other nations. This will hurt the U.S. economy immensely in the long run.

A 20 percent tax on imports will likely hurt trade in the long run, even ff it doesn’t apply to exports. If the dollar adjusts by rising sharply, it will head off any inflation from a new tax on goods. But if the dollar doesn’t adjust, the new costs will end up hitting consumers.

Conservative media outlets, however, have pointed out how Trump managed to reduce the US national debt by a staggering 12 billion dollars during his first month in office. On February 21st, just a month after Trump taking office, the US debt load stood at $19,935 billion instead of of $19,947 billion. It’s the first time in decades the debt clock is turned backwards.

Time will tell how the market will turn out during the next four, possible eight years, of a Trump presidency. Right now the stock market is seeing an incredible upswing, and new jobs are being created just as promised. However, we might be in a stock market bubble right now, which will burst soon. There are also concerns of how taxes on international trade will affect the economy long term. Stay tuned!

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5 People Who Started Small and are Now Big

dhoni

Everyone requires a little something for inspiring them- to achieve greater things in life. Not all personalities we know today have had a nice start. There are many who started from humble beginnings. These are people who’d acknowledge the fact that they had nothing to start with and this very fact inspired them to achieve greater things in life. Here is a look at five such people.

  • MS Dhoni

Mahendra Singh Dhoni is the most successful Indian cricket captain having won the World Cup in both the 20-over and the 50-over format and has also taken India to the top of the Test rankings. He is widely regarded as one of the best finishers in limited overs cricket. But many would not know that Dhoni was a Train Ticket Examiner at the Kharagpur Railway Station from 2001-2003. His talent was spotted because of the BCCI’s small town talent spotting initiative.

  • Bill Gates

Bill Gates is an American entrepreneur, investor and programmer who along with Paul Allen co-founded Microsoft which became the world’s largest PC software company. It started in 1975 in his garage where they first created the software which they sold to IBM and led them towards achieving success. Gates’ father was a prominent lawyer and his mother served on the board of directors for First Interstate BancSystem and the United Way. Gates have agreed many times that he did not have any particular study plan while he was at Harvard.

  • Steve Jobs

Steve Jobs in widely recognized as the pioneer of microcomputer revolution as he and his partner Steve Wozniak co-founded Apple Inc. in 1976. They did this in their parent’s garage with a small team of programmers. In mid 1968 when Jobs was 13, Jobs was given a summer job by Bill Hewlett after Jobs cold-called him to ask for parts for an electronics project. Bill Hewlett later recalled, “He didn’t know me at all, but he ended up giving me some parts and he got me a job that summer working at Hewlett-Packard on the line, assembling frequency counters…well, assembling may be too strong. I was putting in screws. It didn’t matter; I was in heaven.” In 1976, Wozniak invented the Apple I computer. After Wozniak showed it to Jobs, who suggested that they sell it, they along with Ronald Wayne founded Apple Computer in the garage of Jobs’ Los Altos home on Crist Drive.

  • APJ Abdul Kalam

Dr. APJ Abdul Kalam was the 11th President of India but before that he was intimately involved in India’s civilian space program and military missile development efforts. He came to be known as the ‘Missile Man of India’. However his early childhood was very tough as he had to sell newspapers to supplement the poor income of his family.

  • Thomas Edison

Thomas Edison was a man of many inventions. He holds a record 1093 US patent in his name. But before his successes, he had many failures and was even told that he was “too stupid to learn anything” by one of his teachers early on in life.

Unemployment down ! the economy heading way, hopefully!

Wow did you see those employment numbers on this weekly economy?  That is fantastic hopefully for the economy we can start seeing the economy on the rebound. It seems like it has been depressed way too long.  Well if any of you out there are reading this and you were one of the ones in this statistic and got a job, Congratulations.  If you do not have one these are good strong signs that you may have a job out there on the horizon.  So keep up the due diligence and your head up and good things will happen and make sure your resume is up to date.

The strong job numbers are a prediction that companies are starting to have confidence in their financial picture that they can take on some additional risk and hire staff.  CEO’s are still timid in their hiring practices because of the economic uncertainty.   I have fortunate enough to have not been laid off but I do know family and friends who were not as lucky.  It is very difficult to see a loved one lose their job due to forces that are beyond their control.

There is a plethora of economic indicators out there that you can give a sense of where the economy is going or the condition of the economy.  This one was recently released and is published monthly by the bureau of labor statistics, I found the information for this article here on CNN Money.

Ever wonder where they got their numbers from?  The numbers come from a sample of the population.  A very small sample, but if you know anything about statistics you can ascertain that if the sample size is large enough you can get a good estimate that would approximate what the population would do.  So every month 60,000 households are surveyed by over 2,000 trained bureau employees on the make up (ie: ages, gender, occupation) of their household.  The sample is large enough to assume that 90 out of 100 times the sample result would be the same as if we had polled the entire population.  Check out the Bureau of Labor Statistics if you want to find out all the nitty gritty on the calculation of the numbers.

So, while this is not a 100% accurate picture of the population, it would be nearly impossible to survey the entire population every month, which is why the census is taken every 10 years.

What data do you look at?  Do you even look at this data?