WHERE TO?

Where to? The headlines suggest the Trump agenda might be dead. The President’s approval rating is at a record low, be it his administration or any other administration at this juncture of the term. Sentiment and optimism however are still around a decade high and appears to believe there will be tax and regulatory relief.

Change is always unsettling as most find comfort in the current environment because of familiarity even if the situation is unpleasant. The President is directly confronting the powerful administrative state, an administrative state that is supported by both sides of the proverbial aisle as well as the entrenched establishment.

It is to be expected that any losses — real or perceived — will be met with great fanfare because of the threat the Trump administration is to the established course of business.

As noted many times, in many regards, the cross correlated trade has broken down. The dollar is falling which hypothetically should be oil positive. Oil is down. Hypothetically, Treasury yields should be climbing because of the falling dollar and more dovish FOMC, but yields are around 4 month lows.

According to the WSJ, the Dow has now declined for eight consecutive days, the longest streak since August 2011 and the peak of the European debt crisis. Bespoke Investment Group further added the only other time since 1990 that there has been 8 consecutive down days for the Dow was in October 2008 and September 2001. Prior to 1990, Bespoke commented that it happened three times in the 1980s.

Bespoke stated there have been three seven consecutive day drops in the Dow in the last year.

Earning warning season has commenced. Will the lack of warnings support prices? Or conversely will such warnings hurt shares?

Perhaps the only definitive comment to make about profits is that they will exceed expectations for the gazillionth consecutive quarter, the result of regulatory over reach that in some regards has made this quarterly event questionably meaningless, except of course if one trades via algorithms that are programmed to respond to such events.

I reiterate my long held belief that growth will exceed expectations. Historically, GDP growth correlates to home values. Because of the dearth of housing inventory, coupled by the lowest home ownership in 50 years — partially the result of the lack of inventories — home values should continue to rise.

Most people measure their net worth by the value of their home, not their stock account. Typically when home values rise, so does spending and vice versa.

These rising values, coupled with increased confidence perhaps amplified by tax and regulatory reform and an increase in monetary velocity, all may be the ultimate elixir for annual growth to exceed 3% for the first time in 10 years, the longest stretch on record where growth did not exceed 3% for one year. The previous record was 1930-1934.

Last night the foreign markets were up. London was up 0.01%, Paris was up 0.09% and Frankfurt was up 0.58%. China was down 0.43%, Japan was up 1.14% and Hang Sang was up 0.63%.