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11/10/2016 10:20 am  #1


Investors exuberant as Trump signals shift from austerity era

Investors exuberant as Trump signals shift from austerity era

https://www.yahoo.com/news/asia-shares-rebound-trump-turnaround-astonishes-004057955.html


LONDON (Reuters) - European stocks rose on Thursday following extraordinary gains in Asia and the United States, as exuberance shot through markets and reversed initial dives in reaction to Donald Trump's U.S. presidential victory.Investors focused on Trump's priorities - including tax cuts and higher infrastructure and defense spending, along with bank deregulation - and set aside for the moment longer-term worries about whether he will slap punitive tariffs on Chinese and Mexican exports, risking a global trade war.

European stocks hit a two-week high, with the pan-European STOXX 600 index up 1.3 percent in early dealings, and "safe haven" government bonds sold off after Trump suggested he would spend billions on infrastructure.This marked an abrupt change from the sharp recoil on markets on Wednesday after the Republican candidate's triumph.Investors saw signs that Trump will ditch the budget austerity policies that Western governments have pursued since the 2008 global financial crisis after he takes over in January."Trump's speech following the victory was hugely influential in yesterday's sudden U-turn, as he focused more on unity and the need to spend to get the economy growing again.

These policies combined with his desire to deregulate and lower taxes are all very market-friendly," said Craig Erlam, senior market analyst at OANDA."The stance he takes on trade will likely determine how vulnerable the markets are, but in reality these are very long-term policies and for now, markets are more focused on the prospect of lower taxes, fiscal stimulus and less regulation."The three major U.S. stock indexes rose on Tuesday and the dollar index against major currencies recovered from a trough of 95.885 plumbed on Wednesday to around 98.778 on Wednesday morning.In a remarkable session for Japanese shares, the Nikkei jumped 7 percent at one point after sinking 5 percent on Wednesday.


 “We hold these truths to be self-evident,”  former vice president Biden said during a campaign event in Texas on Monday. "All men and women created by — you know, you know, the thing.”

 
 

11/10/2016 10:57 am  #2


Re: Investors exuberant as Trump signals shift from austerity era

Till Trump does or doesn't do some of the things that he proposed (ie-renegotiating trade deals, etc) the stock market is still humming. Don't expect that to last depending on exactly what he does with some of the things he has proposed. It all might turn out well. Let's hope. I for one have hedged my bets as they say and feed comfortable with it. 

 


"Do not confuse motion and progress, A rocking horse keeps moving but does not make any progress"
 
 

11/10/2016 10:57 am  #3


Re: Investors exuberant as Trump signals shift from austerity era

Let's see what happens with the markets as time passes and legislation proposed by the administration start taking effect.

Talk to me when 1st quarter 2017 financial results start being reported. Or, how about 2 years down the road as Drumpf continues to vilify and attempts to dismantle the Federal Reserve, and tries to force manufacturers to bring their overseas plants back to the U.S. or face penalties, or goes forward with high tariffs that will inevitably result in trade wars with other countries as he has proposed. Some of his proposals, if truly initiated, will not result in more jobs and higher wages for U.S. workers . . . In fact, they may have a detrimental effect on corporate stability and growth by making U.S. goods and services more expensive in the global market.

Let's wait and see what happens with his administration's ideas on business operations and fiscal policies and how the direction he sets will effect the domestic and international markets.

Last edited by Rongone (11/10/2016 10:59 am)

 

11/10/2016 11:00 am  #4


Re: Investors exuberant as Trump signals shift from austerity era

BTW, the lower taxes will be welcomed with open arms by Congressmen and the voting publilc, but if all his plans do not generate extra tax revenues we could see a dramatic rise in the deficit which the CBO has predicted IF he gets his way. Again, we will know soon how this all will play out. There were a lot of promises made. 


"Do not confuse motion and progress, A rocking horse keeps moving but does not make any progress"
 
 

11/10/2016 5:39 pm  #5


Re: Investors exuberant as Trump signals shift from austerity era

Hold on to your hats . . . Could be a roller coaster ride coming up.


Here’s the Big Threat to the Stock Market’s Trump Surge

President-elect Donald Trump.

The realization of that moniker threw financial markets and most of the world into confused chaos on Tuesday night as American voters delivered a heavy blow to the socio-economic establishment. The initial response was cold terror, sending U.S. equity futures plunging overnight. Then, a concession by Hillary Clinton and a tempered victory speech by Trump removed the threat of a contested outcome, started the healing process and focused attention on the consequences to come — namely, the prospect of a huge fiscal stimulus of tax cuts and infrastructure spending.

The result has been a historic reversal, pushing the Dow Jones Industrial Average to a new high on Thursday.

But the evidence suggests the post-election volatility isn't over yet.

For one, while Wednesday’s rally was flashy in its intensity it was disappointing in its underlying strength. Incredibly, there were only 310 net advancing issues on the New York Stock Exchange. That's down nearly 30 percent from Tuesday's modest advance and well below the nearly 2,000 net advancing issues seen on Monday. Popular tech stocks like Apple (AAPL), Alphabet (GOOGL) and Amazon (AMZN) have fallen.

More importantly, the stock rally was accompanied by a disorderly selloff in Treasury bonds that caused long-term yields to surge. The iShares 20+ Year Treasury Bond Fund (TLT) fell more than 4.2 percent to plunge to levels not seen since early February — capping a total decline of near 13 percent from its July high.

In fact, the ferocity of the rise in interest rates was a primary driver of the stock rally. Financial stocks as a group have surged on hopes of wider net interest margins and higher profitability. Investors, in their enthusiasm, are ignoring possible downside risks to the economy from higher mortgage and car loan rates.

Why are interest rates on the rise? It’s a combination of expectations of higher inflation and stronger economic growth and chatter about the official selling of Treasury reserves by the Chinese, who no doubt must be worried about Trump's loose talk during the campaign about a possible debt restructuring. And let's not forget the rising odds of a December interest rate hike from the Federal Reserve.

The risk here is that the narrow stock market rally will soon be undone by the rise in Treasury yields. Why would those yields keep rising? Because folks are realizing that Trump's plans, as structured now, are set to massively increase the national debt, per an analysis by the Committee for a Responsible Federal Budget.

Trump's first major policy hurdle will be the need to raise the debt ceiling in March, which will put the budget hawks in Congress in an awkward position. Chinese (and other state entity) nervousness will surely continue as well, at least until there is more clarity around Trump's fiscal, debt management and trade policies. The chart above shows the intense selling pressure that's already been seen as Treasury bonds held in custody by the Fed dwindle away.

Much also depends on the Fed's policy decision next month and how the market tolerates another expected increase in the policy rate.

To get a sense of the seriousness of all this, consider that Wednesday's move in the 10-year Treasury yield was the largest on record going back to 1962. If this is, indeed, the start of a protracted rise in interest rates, it could very well threaten the 30-year bull market in bonds.

President-elect Trump's first months in office, like President Obama's in early 2009, could very well be marked by financial and economic turmoil as long-simmering problems held down by the outgoing administration boil over. Let's see what the self-proclaimed "King of Debt" can do. 


https://www.yahoo.com/news/big-threat-stock-market-trump-202900704.html?ref=gs

Last edited by Rongone (11/10/2016 5:40 pm)

 

11/10/2016 7:20 pm  #6


Re: Investors exuberant as Trump signals shift from austerity era

Ditching the austerity budgets should go over big with the conservatives. 


"Do not confuse motion and progress, A rocking horse keeps moving but does not make any progress"
 
 

11/10/2016 8:18 pm  #7


Re: Investors exuberant as Trump signals shift from austerity era

Rejecting austerity is a good sign.  To avoid the ripple effect of a recession disaster, Reagan did something similar by raising taxes 16 times during his presidency, tripling the national debt, and expanding the government payroll by hiring more people for government jobs.  The R-tribe applauded yet his approach was progressive ............ Republicans cheered.

On the flip-side we had Herbert Hoover who cranked up the austerity approach championed by Republican diehards at the time and then FLOP, the great depression kicked in.

Austerity doesn't work.

 

11/10/2016 8:32 pm  #8


Re: Investors exuberant as Trump signals shift from austerity era

Just Fred wrote:

Rejecting austerity is a good sign.  To avoid the ripple effect of a recession disaster, Reagan did something similar by raising taxes 16 times during his presidency, tripling the national debt, and expanding the government payroll by hiring more people for government jobs.  The R-tribe applauded yet his approach was progressive ............ Republicans cheered.

On the flip-side we had Herbert Hoover who cranked up the austerity approach championed by Republican diehards at the time and then FLOP, the great depression kicked in.

Austerity doesn't work.

However rejecting austerity and cutting both business and personal taxes does not work either which it appears is Trump's plan. 


 


"Do not confuse motion and progress, A rocking horse keeps moving but does not make any progress"
 
 

11/10/2016 9:30 pm  #9


Re: Investors exuberant as Trump signals shift from austerity era

tennyson wrote:

Ditching the austerity budgets should go over big with the conservatives. 

Since when have we been living under an austerity budget.

Yeah, the sequester happened, but that would hardly be considered austerity.


I think you're going to see a lot of different United States of America over the next three, four, or eight years. - President Donald J. Trump
 

11/10/2016 9:36 pm  #10


Re: Investors exuberant as Trump signals shift from austerity era

TheLagerLad wrote:

tennyson wrote:

Ditching the austerity budgets should go over big with the conservatives. 

Since when have we been living under an austerity budget.

Yeah, the sequester happened, but that would hardly be considered austerity.

Correct. The current "austerity" IS the sequester. 

Indeed it is not much of an austerity. 

I get a kick that for years the GOP wanted to keep federal spending at a minimum and NOW I guess this is the NEW GOP ! 

The item actually came up in the article quoted in the opening article by Common that stated "Trump will ditch the budget austerity policies"

Last edited by tennyson (11/10/2016 9:40 pm)


"Do not confuse motion and progress, A rocking horse keeps moving but does not make any progress"
 
 

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