2016-11-21

MacroView: 12 Days Post-Election, the "Trump Effect" Takes Hold (video)

MacroView |  ©2016 DomainMondo.com
Domain Mondo's weekly review of  macro economic and investing news:
 
MacroView Feature •  12 days since the U.S. election on November 8, 2016, and the "Trump Effect" on markets is opposite of what so many had predicted, the S&P 500 has risen almost 2% and the Dow Jones Industrial Average (DJIA) is up 3%, setting a new record high:
Dow Jones Industrial Average (DJIA) (source: google.com)
"I'm struck by how many investors and investment-bank econ departments were putting out notes one week before the election [saying] that if Trump wins, the markets will absolutely crash ... amazingly, many of these exact same investors and economists now say Trump is great for stocks."--Jeffrey Gundlach, founder of DoubleLine Capital (domain: doubleline.com), one of the few market strategists to correctly predict Trump would win.
UPDATE Nov 22, 2016:
Gundlach's 4 charts explain why Trump won:
  1. Negative wage growth since 1973 for 50% of working men in the U.S. For many working Americans, things have economically been going from bad to worse, for many years.
  2. Growing disparity of wealth between 90% of Americans and the top 0.1% of Americans. While Washington, D.C., Wall Street, and Silicon Valley keep getting richer, much of the rest of the U.S. languishes. The growth in wealth disparity has been accelerating almost non-stop from the Clinton (NAFTA) administration through the Bush and Obama administrations.
  3. 25% Increase in Average Monthly Premiums for Obamacare in just one year (2016-2017), an economically unsustainable government healthcare program that has failed to control health care costs as Obama and its proponents promised.
  4. Median rents have risen to 30% of median income. Another squeeze, just one of many, on workers and the middle class.
And some people are still confused about why Trump won?
Gundlach: Donald Trump won the presidential election because many Americans felt the economy left them behind.  
In fact, those key demographics identified by Gundlach above, are what blew open a hole for the #TrumpTrain in the Blue Wall states of Pennsylvania, Michigan, and Wisconsin, all of which Obama won in 2008 and 2012, and if Hillary had won those same 3 states in 2016, she would be the President-elect today.

And ignore that MSM stream of misinformation about "disarray" in the Trump transition, it's the Democrats that are in disarray, confused, and still "don't get it"--New Senate Minority Leader Chuck Schumer--
The Worst Possible Democratic Leader at the Worst Possible Time | TheIntercept.com: "He possesses the same impressive political acumen as Hillary Clinton’s 2016 campaign, sagely explaining “For every blue-collar Democrat we lose in western Pennsylvania, we will pick up two moderate Republicans in the suburbs in Philadelphia, and you can repeat that in Ohio and Illinois and Wisconsin.” Schumer’s done more than anyone except Bill and Hillary Clinton to intertwine Wall Street and the Democratic Party. He raises millions and millions of dollars from the finance industry, both for himself and for other Democrats. In return, he voted to repeal the Glass-Steagall Act in 1999 and voted to bail out Wall Street in 2008. In between, he slashed fees paid by banks to the Securities and Exchange Commission to pay for regulatory enforcement ..."
Back to the markets and the economyTrump-Trade Rally Pushes Dollar to Weekly Surge as Bonds Slump | Bloomberg.com"The Trump-trade has dominated markets this week. The dollar extended its record winning streak against the euro on speculation Donald Trump’s economic policies will trigger faster monetary tightening in the world’s largest economy." See also Why Donald Trump May Actually Be Great for Business | Bloomberg.com (video)"Before the election, the consensus was that a Trump victory would tank the market. Then Trump got elected and the Dow Jones Industrial Average hit a record. Turns out markets and investors are feeling pretty good about a Trump presidency after all. Bloomberg Businessweek's Peter Coy looks at why businesses had a sudden change of heart."

But note that Gundlach also warns that markets are "confused as to what is going to be the real trend from this election," and says beware risk assets such as the "incredibly expensive" FANG stocks (Facebook, Amazon, Netflix, Google), each of which have already dropped 4-7%  since the election. “Those companies [top executives] have been Trump-bashing,” Gundlach said. “It’s ironic that people who hate Trump the most are responsible for Trump winning the White House.” Gundlach also said his FANG thesis was largely based on his belief that the companies were Clinton darlings, relics of the “old machine,” an era that has now ended: “It’s just so obvious to me,” he added.

A Reporter's View From the Trump Tower Lobby:

Video above published Nov 18, 2016:  A revolving door of important people have been meeting with President-elect Donald Trump and his transition team at Trump Tower this past week. WSJ.com's Damian Paletta spent a long day observing the commotion in the skyscraper's lobby.

Japan's Prime Minister Shinzō Abe: "Trump is a leader I can trust"

Video above published Nov 18, 2016, by FT.com: Shinzō Abe, Prime Minister of Japan, declared his trust in President-elect Donald Trump after meeting with him on Thursday at Trump Tower in New York City. Abe became the first foreign leader to meet with the President-elect in person following the U.S. election on November 8, 2016. Trump will be inaugurated as the 45th President of the United States on January 20, 2017.

Trump Effect on NAFTATrudeau Tells Trump He’s Ready to Renegotiate NAFTA | ForeignPolicy.com and Mexico Seeks Trump Talks to Modernize NAFTA, Pena Nieto Says | Bloomberg.com"Mexico says willing to open up the two-decade-old trade deal."  See also Canada, Mexico talked before making NAFTA overture to Trump | CBC.ca"Canada and Mexico reached out to each other while preparing similar public messages last week about working with Donald Trump before the two American neighbours both declared themselves willing to talk with the U.S. about NAFTA."

Meanwhile WSJ.com reported on Nov 11"Europe is still reeling from the result of the U.S. election and the new reality of an upcoming Donald Trump presidency. Foreign ministers who were gathering on Monday for a regular council are arriving in Brussels on the eve for an informal dinner looking at what the Trump presidency will mean for Europe, with further meetings during the week – of defense ministers and interior ministers – also likely to informally discuss the unexpected election result."

Trump Effect on Apple: According to Japanese newspaper Nikkei.com, Apple has asked manufacturing partners Foxconn and Pegatron, to investigate moving iPhone production to the United States. Foxconn is reportedly actively considering the possibility, while Pegatron declined due to cost concerns. "One view among the Apple supply chain in Taiwan is that U.S. President-elect Donald Trump may push the Cupertino, California-based tech titan to make a certain number of iPhone components at home."

In nod to Trump, Ford keeps Lincoln MKC crossover production line in U.S.:


Video above published Nov 18, 2016: Throughout his presidential campaign, Donald Trump often accused the Ford Motor Company of sending factory jobs to Mexico. Now, as a kind of peace offering, the automaker is shelving a plan to move one of its production lines there. WSJ.com's Lee Hawkins explains.

Elon Musk: Trump decision on electric car incentives won't hurt Tesla | BusinessInsider.com"The incentives 'are disadvantageous' ... CFRA Research analyst Efraim Levy told Business Insider that ZEV credits are not a big enough piece of the Tesla pie to really determine its future profitability."

Not to be outdoneKanye West: I would have voted for Donald Trump, if I had voted | Independent.co.uk.

Oh no Jack! How Twitter CEO, Jack Dorsey, restricted advertising for Trump’s campaign | Medium.com"We voiced that it was clearly a political move and telling us otherwise was just insulting."--Gary Coby, Director of Digital Advertising and Fundraising for Donald Trump's Presidential Campaign.

One more thingWhy the World Needs WikiLeaks | NYTimes.com Op-ed by Sarah Harrison, Nov. 17, 2016: "... last month our editor, Julian Assange, who has asylum at Ecuador’s London embassy, had his internet connection severed. I can understand the frustration, however misplaced, from Clinton supporters. But the WikiLeaks staff is committed to the mandate set by Mr. Assange, and we are not going to go away, no matter how much he is abused. That’s something that Democrats, along with everyone who believes in the accountability of governments, should be happy about. Despite the mounting legal and political pressure coming from Washington, we continue to publish valuable material, and submissions keep pouring in. There is a desperate need for our work: The world is connected by largely unaccountable networks of power that span industries and countries, political parties, corporations and institutions; WikiLeaks shines a light on these by revealing not just individual incidents, but information about entire structures of power ..."


-- John Poole, Editor, Domain Mondo 

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