Nicholas Colas (Convergex) tackles the “Trump On, Trump Off” situation that US stocks find themselves in, noting that investors have merely given new names to the old paradigm of “Risk On, Risk Off” from the 2009-2011 markets – or the “Fed On, Fed Off” narrative that had dominated from 2012-2016.
And he reminds us that the sight of protests happening around the country does not necessarily dictate which direction the market will go…
There are other issues to consider that tie these points together. For example, we assume that public protests will only increase as President Trump pursues other parts of his agenda. Will those limit popular support for the economic pieces of his agenda? And how will markets respond to repeated images of mass protest?
At this point, it is important to remember that capital markets don’t play politics. Recall that the S&P 500 was up 10.8% in 1968, a year that was far more tumultuous in American politics than anything we have seen so far in 2017. And US stocks were up 37% and 24% in 1975 and 1976, in the aftermath of Watergate and President Nixon’s resignation.
Not My “Precedent”
Convergex – January 30th, 2017