More and more Wall Street business and strategists are expressing their concerns about what President Donald Trump’s protection policies and the unexpected nature of markets and the economy might do.
But we all know that work speaks louder than words. What investors actually do is in stark contrast to what people say. The Dow Jones, Standard & Poor’s 500 and Nasdaq all-time highs again on Friday.
Russell 2000, an index of small business stocks that tend to do most of its business in the United States, is now just a few points away from an all-time high reached last December in the aftermath of the Trump market trance.
What is more VIX (, The Volatility Scale known as the Wall Street Scale, has decreased by 25% this year as well. If investors are really afraid of Trump, the VIX index should be much higher. )
And CNNMoney fear and greed index, Who looks at VIX and six other measures of investor sentiment, are showing signs of greed and not far from their extreme Greem levels.
Of course, Trump still can’t help himself out of Twitter about things, to be honest, he’s not going to do anything to help the economy – although Nordstrom investors are richer despite Trump attacking them to flood the brand for his daughter Ivanka.
But to give credit where it’s due, it appears that the main reason behind the recent recent stock rally is that Trump has promised to unveil a “exceptional” tax plan soon.
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Trump also pledged once again to invest more in infrastructure when he met airline chiefs on Thursday.
This is what the market wants to hear.
“We are still expecting financial incentives, fewer taxes, and fewer regulations,” said Matt Lockridge, Westwood Small Fund manager Cap-Cap Value. “Timing is the big question, but it is coming.”
Lockridge believes that many companies that generate the majority of their revenue from America should benefit if Trump’s incentive to kick the economy to a higher level ends.
He loves stocks in a variety of industries, such as the owner of the cinema Masco (, Snack company )J & J ( Aerospace and Aviation Equipment Company )Kaman (. )
Another fund manager said he remains optimistic about the small US stocks that could get a boost from Trump’s policies.
Related: Wall Street Has A Strong Seat On Trump’s Table
Barry James, president and CEO of James Investment Research, said he bought iShares Russell 2000 ETF ( A day after the election, he is confident that Trump’s stimulus plan will boost the growth of small businesses in the United States. )
“When Trump first said America, I really think this is what he means,” James said, adding that he believed online phone service. Vong (Rent and retailer for rent )Aaron ( And discount series )Great many ( It can all prosper if Trump’s proposals pass. )
But there is another reason why US markets are nearing all-time highs. Despite all the uncertainty in Washington, the United States is still considered a model of relative stability compared to other parts of the world.
The European economy remains a big rigid card thanks to Britain’s exit from the European Union, the rise of populism in France which has led to concerns about the so-called Frexit and more concerns about the seemingly never-ending problem – Greek debt problems.
The Japanese economy is also still stagnant. We are talking about more than a lost contract now. It is the plural. The Chinese economy is also slowing down.
Bill Gros, the fund manager, has often been joking that America is like what Johnny Cash and Chris Christoferson sang in “Sunday Morning Coming Down” – The Dirtiest Shirt.
To this end, analysts at Fitch Bond Rating Corporation wrote in a report on Friday that “elements of President Trump’s economic agenda will be positive for growth,” but they added that “the current balance of risks indicates a less moderate global outcome.”
Of course, there are two sides to this coin. Trump’s explosion may come back to chase him.
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His continued tendency to berate companies he disagrees with on Twitter could hurt investor confidence.
While the US court system abolished his proposed travel ban on immigrants from seven mostly Muslim countries today, the president vowed to fight for his reinstallation.
Even if he loses that battle, Trump is still clearly serious about turning inward, with plans for tariff adjustments and taxes for borders that could spark trade wars with Mexico, China and Japan. This could harm large US multinationals and lead to job cuts.
But it appears that investors still believe / hope that the benefits of Trump’s pro-growth stimulus plans and tax cuts will outweigh the isolationist effect. Let’s hope they are right.
Investors may hold their noses, close their eyes and stuff the cotton in their ears to drown the president. But they are still buying stocks.
CNNMoney (New York) First posted February 10, 2017: 11:55 am ET