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As the Band Played On . . .

07/26/2017

Bob Doll is the Chief Equity Strategist for Nuveen, and I try to study his thinking whenever possible.  His latest weekly commentary remains bullish.  As long as corporate earnings remain positive and consumers remain financial healthy, he sees the bull market continuing.

I have mused that, if the “Trump Bump” really existed due to the expectations related to healthcare, tax cuts, and infrastructure, then why hasn’t the market suffered, now that far fewer people expect legislation to actually accomplish that?  Apparently, as belief in the Trump stimulus faded and support for the market weakened, corporate earnings have improved enough to maintain support of the market.

He also commented on the strong consumer, with increased spending, increased credit card usage, continued relatively low interest rates, and a strong labor market.  As consumer spending is the single largest component of GDP, economic growth is dependent on their health.  Subsequent to his latest commentary, the Consumer Confidence Index for July rose to 121.1, up from 117.2 the previous month.  That is the second highest level of Consumer Confidence ever recorded.

If the stock market can flirt with new record highs on almost daily basis WITHOUT an underlying belief in the Trump stimulus, then imagine how high we could go WITH the stimulus.

As a former CEO of Citicorp said in 2008, just before the global financial crisis, “as long as the music is playing, we’ll keep dancing.”

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