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1.Market Observations, 8.Was Sticky

25 Nov 2016 (AFR) – Should we take the Trump stock rally seriously?

(25 November 2016, AFR, p29, by John Authers)

‘Can we believe it? The US has had two weeks to digest the fact that it has elected Donald Trump as its next president, and many on both left and right are finding it hard to swallow. The US stock market is just as hard to digest. In those two weeks, US stocks have gone on a tear, with all four of the most widely quoted indices – the S&P 500, the Nasdaq Composite, the Dow Industrials and the Russell 2000 index of smaller stocks – simultaneously hitting new record highs on Monday and Tuesday of this week. This had not happened since New Year’s Eve of 1999, as the tech bubble was about to reach its climax.’

‘It looks like a widespread breakout from a market that had been becalmed ever since the end of the Federal Reserve’s QE bond purchases at the end of 2014. Should we believe it? And if the indices are not quickly to slip back, is this the beginning of a solid final leg to the bull market, or the beginning of a speculative “melt-up” like in 2000? First, it is as well to take this…’

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