Thursday, June 29, 2017

Fed Beat Trump To It: Bullish

Fed Chair Janet Yellen crying in
happiness that she took the burden
 off Trump to get all his dereg done.
Let's keep this short and sweet, The Fed news this morning is very bullish.
After yesterday's close the Fed passed all the banks in their stress tests. JP Morgan and Citi came out with big stock buybacks after the close. There will be more.
Why this matters is that President Donald Trump has had difficulty getting support which worries investors that pro-business legislation may not pass. Part of that pro-business legislation is deregulation with the intention to give banks more room to work with less capital.
Well the Fed just beat Trump to it. How bullish is that? 
The Fed allowed banks to do what they want according to each bank's proposals which included using less capital to drive big buy backs. 
The Fed is comfortable that the economy is on steady footing. That steady economy is doing the job that complex political deregulation negotiations would look to accomplish.
This is a huge connection that many may or may not have made.
If you agree, please share. We think the market's headed to new highs.
Disclaimer:  Portions of this report may have been issued in advance to subscribers or clients. All investments have many risks and can lose principal in the short and long term. This article is for information purposes only. By reading this you agree, understand and accept that you take upon yourself all responsibility for all of your investment decisions and to do your own work and hold Elazar Advisors, LLC and their related parties harmless. Any trading strategy can lose money and any investor should understand the risks. #in, $spy, ^GSPC, INDEXSP:.INX, CME Globex: ES

6 comments:

  1. I'm more concerned about the collapse of healthcare and a tax reform that is dependent on savings from the repeal of the ACA (which is bad for Americans). I'm encouraged by the stability in EU and China... so which way to go? Cautious as ever.

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    1. thx for the comment. dont think you need to be cautious as ever. really the economy has been picking up this quarter. earnings had their best quarter last quarter. the globe is picking up. if Trump gets nothing done, thats the trend. if he does get something done its a bonus. many are bearish because the media is keeping people bearish with lots of crash stories that get clicks and pay ad revenues. but the simple trend is earnings are better. nothing more important than earnings for stocks. oh and record low rates dont hurt, they help a lot. rethink why you're cautious. rethink what's driving stocks, earnings, or media or politics. markets at new highs or inches from them despite all the politics. politics wiggle stocks but earnings are the main driver.

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  2. What about the end of easy money and "quantitative tightening" by central banks. Won't that fuel a rise in interest rates and take the wind out of the sails of this market?

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    Replies
    1. Mr. Anonymous, you're asking great questions. I've of course given this a ton of thought. One) baby boomers own a lot of debt. They are not letting go like they normally would to get into equities. two, as stocks continue higher b/c of earnings... then actually if bonds start to go down for the first time in ages, it could be the mother of all rotations from risk-off to risk-on. think about it if your safe-bonds start to lose but earnings (if earnings) keep up, what will you do. you'll switch into stocks. it could go the other way. i think that's what blackrock's rieder was saying but it took me forever to figure out what he was saying. rates moving up can be the mother of all stock rallies. potentially. you have to discount it as a factor into your scenarios.

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    2. The history repeats itself.

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