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.
- Stockman: Trump Sitting On Fiscal Time Bomb by Craig Wilson via Daily Reckoning
- Open Letter To President Trump by Danielle DiMartino-Booth via Money Strong
- Trumps Border Tax Will Drive Up Gas Prices by Rachael Levy via BI
- Cheaper, Better Insurance? Good Luck by David Lazarus via LA Times
- GOP Leads Off With A Tax Increase by John Tamny via Forbes
- Trumps Tax Breaks Will Let You Bring More Home by Jonathon Trugman via NY Post
- How Trump Can Rebuild America At 50% Off by Nicole Gelinas via NY Post
- Trump’s $10 Trillion Stimulus Plan by Stephen Moore via The Washington Times
- Trump Missed His Chance To “Drain The Swamp” by David Stockman via Daily Reckoning
- Trump Doing Just Fine W/O Economists by Diana Furchtgott-Roth via US News
- Could Trump Tank The Economy? by Jeff Spross via The Week
- Infrastructure Spending Deemed Most Important by Ben Ryan via Gallup
- CEO’s Fear A Trump Twitter-Tirade by Andrew Ross-Sorkin via NY Times
- Why Trump Could Fail by Jeff Harding via An Independent Mind
- Can Protectionism Make America Great Again? by Niall Ferguson via Boston Globe
- Caterpillar: Weak Global Conditions by Bob Bryan via Business Insider
- Dow 20,000: Don’t Be Euphoric, Be Cautious by Jason Zweig via WSJ
- Wall Street Analysts Give Investors What They Want by Matt Levine via Bloomberg
- Illusions Driving Up U.S. Asset Prices by Robert Shiller via Project Syndicate
- Time To Change To A Trump Portfolio? by Sue Chang via MarketWatch
- 2nd Largest Bubble In 100-Years by Erik McCurdy via Investing.com
- Biggest Market Risk Is A Policy Mistake by Jim Joslin & Renee Kwok via TFC Fin. Mgmt.
- Is Trump Setting Oil Up For Another Bust? by Nick Cunningham via OilPrice.com
- Trump’s Wall Of Worry Might Be Good For Stocks by William Watts via MarketWatch
- Why The Bond Bloodbath May Not Come by Howard Gold via MarketWatch
- Buy The Bond Market Dip by Abee Crombie via Macro Man
- Why Dow 20,000 May Not Last Long by Anthony Mirhaydari via Fiscal Times
- How The Trump Rally Stacks Up by William Watts via MarketWatch
- Trump Bump To Trump Dump? Not So Fast by Shawn Langlois via MarketWatch
- UBS: Americans Still Lie On Loan Apps by Matt Turner via BI
- 90’s Mantra Of “Strong Dollar” Retooled For Trump Era by Caroline Baum via MarketWatch
- How Obama Made $20 Million While In Office by Dan Alexander via Forbes
- Student Debt Payback Far Worse Than Believed by Andrea Fuller via WSJ
- The Order Of Operation by Jeffrey Snider via RCM
- Stop Rewarding Unimaginative Politicians by Kevin Williamson via National Review
- What Financial Advisors Are Doing In The Trump Era by Paul Katzeff via IBD
- $90 Bil Debt Wave Showing Cracks In Property Boom by Sarah Mulholland via Bloomberg
- Time Is Not On Your Side With Credit Debt by Ann Carrns via NY Times
- Inside Obama’s 235% Return by Nathan Vardi via Forbes
- Inflation: It Won’t Last by Satyajit Das via Bloomberg
- Cool Graphic Shows Jobs Vulnerable To Automation by Julia La Roche via Yahoo
- Reign Of Economic Error Plagues Housing Market by Aaron Layman
- Bernanke: The Fed Shouldn’t Shrink Its Balance Sheet by Tyler Durden via ZeroHedge
- Who Exactly Is The Currency Manipulator by Richard Moody via Regions
- #CrashSignatures Signal Market Losses by John Hussman via Hussman Funds
- The Wait Is Over – NYSE 11,250 by Dana Lyons via Tumblr
- Will Trump Prick The “Big, Fat, Ugly Bubble?” by Jesse Felder via The Felder Report
“Gambling with cards or dice or stock is all one thing. It is getting money without giving an equivalent for it.” - Henry Ward Beecher
Questions, comments, suggestions – please email me.
Lance Roberts is a Chief Portfolio Strategist/Economist for RIA Advisors. He is also the host of “The Lance Roberts Podcast” 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, Linked-In and YouTube
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