Stocks went into reverse this week, the SPX sliding by 2.08% and the Nasdaq by 3.15%.
While Trump’s initial picks to lead this team were considered solid, his last few seem to indicate he is more interested in generating controversy, than getting things done. Matt Gaetz as Attorney General, Tulsi Gabbard as Director of National Intelligence, and Robert Kennedy for Health and Human Services all worry investors.
Valuations also are high at about 22x forward earnings.
Trump completed a political comeback of historical proportions and won the election, and the Republicans took the Senate and the House simultaneously. That may be a curse because Trump has no excuse now not to pass all of the crazy promises he made during the campaign, which will balloon the deficit to heights way beyond the current out-of-control numbers.
Stocks loved the Trump victory; US stocks were up by 5.13% for the week, while international stocks were up only 0.21%. The Russell 2000 was up by 8.57%.
The October ISM Services report had the highest reading since July of 2022, and University of Michigan consumer sentiment had the highest reading in six months.
US stocks -1.16%, international -0.74%, bonds -0.57%.
US stocks were down in October by 0.75%, the first monthly loss since April.
Q3 GDP came in at 2.8% for the first read.
Payrolls were up only 12k compared to an estimated 100k, but the hurricanes and the strikes probably had an impact. The unemployment rate remained 4.1%. JOLTS openings continue to decline, now at 7.4 million, the lowest since the beginning of 2021.
ISM Manufacturing of 46.5 was the lowest since June of 2023.
Sixth straight week of gains, US stocks +0.97%, international -0.39%, bonds +0.02%.
WSJ columnist Peggy Noonan noted in her Friday column that the elected has “reached its Oprah phase, you get a car and you get a car and you get a car.” Both candidates just make promise after promise as if they are running for school president in the 5th grade. Actually, 5th graders are probably more responsible than these two candidates. Both continue the recent tradition of completely ignoring the monster deficit.
Torsten Slok, Apollo’s Chief Economist, writes that the current forward p/e “at almost 22” implies a 3% annualized return over the coming three years.
