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Weekend Reading: Trump-eting Dow 20,000

Written by Lance Roberts | Jan, 27, 2017
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Well, it finally happened.

After repeated attempts by investors to push the Dow above the psychological barrier of 20,000, it finally occurred during a flurry of executive orders and actions during the first week of the Trump Administration. Between orders for building a wall, orders to freeze regulations and plans being discussed for infrastructure projects, the basic material, technology and industrial sectors pulled all three major indices to historic highs as investors bet on increased spending and growth.

Of course, the push to all-time highs has also led to a further extension of the overbought and overly exuberant conditions of the market. As noted yesterday, the stock-bond ratio is at levels that have previously denoted trouble for the markets.

Furthermore, while interest rates turned up this week after their recent decline, the historic relationship between extremely suppressed volatility and the 10-year Treasury rate suggests a “flight to safety” is likely not too far into the future. 

I can only surmise how this eventually turns out. But whether it is extremely suppressed volatility, extreme long positions in small-cap stocks or historical short positions in bonds, the “rubber band” is stretched very tightly. 

Of course, while “Trump-xuberance” currently reigns, there seems to be nothing to worry about.

But then again, maybe that is exactly what we should be worrying about.

In them meantime, here is what I am reading this weekend as I wear my “Dow 20,000” hat.


Trump


Markets


Interesting Reads


“Gambling with cards or dice or stock is all one thing. It i€™s getting money without giving an equivalent for it.” -€ Henry Ward Beecher

Questions, comments, suggestions – please email me.


Lance Roberts

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Lance Roberts is a Chief Portfolio Strategist/Economist for Clarity Financial. He is also the host of “The Lance Roberts Show” and Chief Editor of the “Real Investment Advice” website and author of “Real Investment Daily” blog and “Real Investment Report“. Follow Lance on Facebook, Twitter and Linked-In

2017/01/27
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