Opinion: Beware of the ‘Trump dump’ in stocks as rally peters out

MarketWatch | 1/12/2017 | Thomas H. Kee Jr.
Firefang (Posted by) Level 4
Click For Photo: http://s.marketwatch.com/public/resources/MWimages/MW-FD517_trump__MG_20170111125007.jpg

Part of Donald Trump’s fiscal policy targets mainstream America, not asset classes such as the stock market, bond market and real estate as monetary stimulus does.

The stock market has rallied since the presidential election on expectations fiscal-stimulus policies proposed by Donald Trump will benefit the economy. That might be justified, but that doesn’t mean the stock market can continue to rally in the short run.

Influences - Fiscal-policy - Improvements - Monetary-policy - Stimulus

Longer-term positive influences from fiscal-policy improvements, instead of monetary-policy stimulus, are clear. Still, those positives won’t be immediate.

Part of Trump’s fiscal policy targets mainstream America, not asset classes such as the stock market, bond market and real estate as monetary stimulus does. That is largely why fiscal improvements can have lasting influence, though they take a long time to be realized.

Groundwork - US - Manufacturing - Jobs - Time

Laying the groundwork for new U.S. manufacturing jobs takes time; putting money in the hands of working-class Americans takes time; and getting them to spend more aggressively and invest that money takes even more time. That is sustainable, whereas monetary policy stimulus is not. So there is a huge added value to favorable fiscal policies.

The problem exists in the near, not the long, term. On a near-term basis, the hand-off from monetary-policy stimulus to fiscal-policy improvements can have a material adverse impact on asset classes.

Policy - US - Liquidity - Levels - Demand

Furthermore, when monetary policy is tightening, as it is in the U.S., liquidity levels begin to dry up and fabricated demand influenced by monetary stimulus starts to abate. And when demand levels decline, the tolerance for risk in those asset classes drops along with it.

Therein lies the issue at hand. When monetary policy tightens, it has an immediate negative influence on economic growth, while fiscal-policy improvements take a long time to work their way through...
(Excerpt) Read more at: MarketWatch
Wake Up To Breaking News!
Satan's greatest desire is to convince the world he doesn't exist, and he has quite nearly succeeded.
Sign In or Register to comment.

Welcome to Long Room!

Give Us 5 Minutes, We'll Give You The World!

LongRoom Culture
Mother Bear and Cubs Crossing the Road And Elk Crossing the Road! It is a good day to cross the road!  Here are the Bears!  And...
Beautiful Red Streams of Lava Flowing Into Sea In Hawaii! This colorful scene is nature at its most magnificent, the hot lava...
Bear Cub With A Clam Holding On To It's Paw! This cub stands up as if to say "Help! Mom!!"  But the clam holds firmly to his...
8 Year Old Girl Tries Bionic Hand for First Time - Amazing! Bionic technology has come a long way and makes the prospects look...
Rabbit Leaps Joyfully Around His New Sand Pit, Ending By Flopping Over! What a great idea for a bunny sand pit for bunnies...
Extreme Frisbee? Two Frisbee Players Toss and Catch An Incredibly Long Frisbee Throw! The Throw by Brodie Smith.   This...
Why Tying Your Dog's Leash To A Plastic Chair Is A Really Bad Idea! The Chair:  "It can't be bargained with. It can't be...
Man Helping Little Old Lady Across The Road Almost Runs Her Over! This good Samaritan leaves his car in neutral as he goes to...
Love Story - Klepetan the Stork Has Returned to His Crippled Mate Malena Every Year for 14 Years! On a rooftop in the village...
Colorblind Grandfather Sees Color for the First Time! This touching video is the first time this grandfather sees colors with...
A Walk In The Newly Opened Glass Bottomed "Sky Pool" In Houston, Is Terrifying! This infinity pool in Market Square Tower, a...
Incredible "Hole in Two" by Henley at Master's Tournament! This amazing shot actually stayed in the hole and caused enough...
Artistic Rock Creations Shown In A Great Slideshow! These amazing pictures made out of rocks really capture solid images that...
Father Finds Great Solution To Stop His Infant Son From Crying! Father faced with his son crying comes up with a great idea.
Alligator In A Sewer! This alligator in a sewer demonstrates that they really can be found there!  "People don't realize the...
Cowabunga! Great Curl On A Wave! The awesomeness of water is displayed quite well in this gif of a huge wave.
One Of The Most Venomous Caterpillars In The World! If you see anything like this, don't touch it, it can put you in the...
Mesmerizing Domino World Record Set - Most Dominoes Ever To Fall In A Circle! It took 18 expert domino artists ten days to set...
Huge Chicken Emerges From Coop Attracts Internet Attention! The internet has become fascinated with a giant chicken!  When this...
Video Of Massive Shredder For Automobiles Shown In Reverse! This incredible machine has ingested a car, which in this video it...
Coca-Cola Polar Bear Mascot Joking With People During Photography Session! Being a mascot is definitely a skill!  The Coca-Cola...
Adorable Kitten Drinking Milk And Wiggling Ears! Small kittens are so cute when they drink from a bottle because they wiggle...
Dog Digs Shallow Hole And Lays Down In It For A Nap! Caught in the act of taking a nap!  This beautiful dog is so charming when...
Amazing NEW WORLD RECORD Ski Jump By Stefan Kraft!!!! Stefan Kraft literally flies to this new world record!  An Austrian ski...
Closeup View Of A Tire Change During A Pit Stop! You Can See The Brakes On Fire! Pitstops are awesome to watch because the...
Cat Closes Cupboard Door as Baby is Playing in the Cupboard! The cat soundly closes the cupboard door on this baby who is...
Dog Pool Party! Swim Dogs Swim!  This pool party went to the dogs.  It looks like humans can come, as long as they are...
Cat Unsuccessfully Tries To Wake Up Friend With Some Gentle Pats! This cute cat tries to wake up a sleepy friend.  His...