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Markets Betting on Future Means Getting Defensive Now – Bloomberg

March 31
15:18 2017

I said Nov. 8 that Donald Trump would win the U.S. presidential election and that it was time to buy equities. I repeated that call a day later. The Dow Jones Industrial Average has since risen 11.3 percent.

The gains have been based on future hopes for cuts in regulations that would add to the bottom line of many U.S. corporations, and cuts in taxes that would be godsends to a large amount of companies. In reality, the bet has been on a future that has not yet occurred.

All the fury and political brinkmanship surrounding Obamacare has not been a “market factor.” Certainly, it has affected some health-care companies and some drug companies but the issue has really not driven the markets. Obamacare “may” move the markets at some point if it fails, defined as premiums going to the moon or insurance coverage being lost across a large swath of America, and I am quite aware that this “may” happen.

This is not new. Whether it’s the equity market or the debt market, the markets are generally betting on a future that has not yet occurred. This is not any Trump phenomenon. All of you “political attention-getters” may now return to your seats.

All of this will change when an event, a significant event, rolls onto the playing field and radically alters what I refer to as the Great Game. The Lehman Brothers bankruptcy on Sept. 15, 2009, was one such instance, and Trump’s election was another. The landscape was radically altered.

Continue Reading At Bloomberg

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