Podcast Overview:
- S&P, Dow, Nasdaq, Russell all at record highs last week
- BofA Merrill Lynch survey of global fund managers:
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- Expect global real economy to strengthen over next 12 months: In october 19% agreed with this, after election 35% do
- Global inflation expectations vaulted to the highest level since 2004
- Is all this optimism as sign the bull market will continue or that we've reached peak?
- Are current stock market gains stealing from 2017?
- Goldman Sachs strategist expects Trump tax reforms to lead to the repatriation of $200B
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- Could be used to pay down raising company debt levels
- Nonfinancial companies are sitting on $1.6T in cash (12% of assets as opposed to avg of 7%)
- Goldman expects companies to spend $2.6T of cash in 2017
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- 52% on capital exp, R&D, and mergers
- 48% on buybacks and dividends
- Small cap stocks that could benefit from infrastructure spending are stealing attention from multinationals that could be hit by strong dollar
- Market is behaving like Trump will fulfill promises they like and break the ones they don't like
- AAII survey showed bullishness jump from 23.7% to 50% in just three weeks
- Demand for put relative to calls on SPY shrank to July 2016 levels
- Too early for bulls or bears to draw conclusions
- The S&P traded at 28 times earnings in 1999 but "only" 17 times today
- Stock market cap is 200% of GDP (very high) and interest rates are at record lows and rising fast
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- Can things get more favorable?
- Concerns over what Trump will do with trade partnerships continues
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- "Protectionist" policies could harm US economy
- Retaliation from trade partners could be a problem
Find more at Investor in the Family.
