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Report: Trump's Expected Policies Already Moving the Markets

By NexChange
Capital Markets

We’re still about two months away from Donald Trump being sworn in as the 45th president of the United States, but don’t tell that to the always rational and clearheaded markets, as investors are already jumping the gun based on Trump’s expected polices, the Wall Street Journal reports.

As the Journal notes, the risk-on, risk-off market strategy has now been replaced by “Trump-on, Trump-off,” which means “stocks swing in tandem according to how exposed they are to the expected policies of President-elect Donald Trump.” Accordingly, investors are getting bullish on stocks that will be helped by Trump’s vow to spend more on U.S. infrastructure and defense, while turning bearish on stocks they think will be hurt by the president-elect’s expected policies, like those in the technology sector.

The Journal explains:

A strong link has emerged between stocks that have little in common other than that they seem to be favored by Mr. Trump’s policies: Suppliers of construction materials, weapons manufacturers, biotechnology companies and Navient, which services student loans. There is another group, which would usually follow the biotechs up but is instead going the other way. It comprises the big Silicon Valley growth stocks, led by Amazon, Facebook and Google.

The big market storyline since Trump’s surprise victory has, of course, been the sell-off in the bond market as investors anticipate higher inflation over the next four years. This has also “hit the price of safer bondlike stocks such as utilities and the consumer staples sector,” the Journal notes

Here is a chart, via the Journal, showing how stocks are moving since Trump’s election night victory.

trump-off

These all seem like sound, reasonable investment moves, right?

Ehhhh…

Somewhere, Jack Bogle awaits for you to come crawling back, money in hand.

Photo: Thomas J. O’Halloran

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