Podcast Overview):
S&P, Dow, Nasdaq, Russell all at record highs last week
BofA Merrill Lynch survey of global fund managers:
Expect global real economy to strengthen over next 12 months: In october 19% agreed with this, after election 35% do
Global inflation expectations vaulted to the highest level since 2004
Is all this optimism as sign the bull market will continue or that we’ve reached peak?
Are current stock market gains stealing from 2017?
Goldman Sachs strategist expects Trump tax reforms to lead to the repatriation of $200B
Could be used to pay down raising company debt levels
Nonfinancial companies are sitting on $1.6T in cash (12% of assets as opposed to avg of 7%)
Goldman expects companies to spend $2.6T of cash in 2017
52% on capital exp, R&D, and mergers
48% on buybacks and dividends
Small cap stocks that could benefit from infrastructure spending are stealing attention from multinationals that could be hit by strong dollar
Market is behaving like Trump will fulfill promises they like and break the ones they don’t like
AAII survey showed bullishness jump from 23.7% to 50% in just three weeks
Demand for put relative to calls on SPY shrank to July 2016 levels
Too early for bulls or bears to draw conclusions
The S&P traded at 28 times earnings in 1999 but “only” 17 times today
Stock market cap is 200% of GDP (very high) and interest rates are at record lows and rising fast
Can things get more favorable?
Concerns over what Trump will do with trade partnerships continues
“Protectionist” policies could harm US economy
Retaliation from trade partners could be a problem
Find more at Investor in the Family).
