The Flinchum File
Thoughtful Economic Analysis and Existential Opinions

Over-reacting to a Reaction ?

11/11/2016

How can the stock market have a strong Clinton rally, followed by a strong Trump rally?

One explanation of stock market behavior is uncertainty.  When the market thought Clinton would win, uncertainty decreased, driving up the market.  But, didn’t uncertainty increase with a Trump victory?  Maybe not?

Another explanation is the “true-believer” argument, i.e., that Republicans are rushing to put their money back into the stock market, after sitting out the Democratic administration.

Another explanation is that the market is getting sucker-punched into believing all the “come-together” platitudes from both parties.

Another explanation is that the market is celebrating the death of gridlock.  Who cares how infrastructure improvements are financed?  There is a lot of money to be made, before the infrastructure bonds have to be paid.  The miracle of capitalism is being reborn in America, and everybody better get on the train now, before it leaves the station?

Personally, I think this rally is getting too far ahead of the economy and hope that President-Elect Trump will begin managing expectations.  He never promised to make America great TODAY!

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