“When there is a quantum shift in growth expectations, the arithmetic of P-E multiples fails to capture the value in stocks,” argues Don Luskin, chief investment officer at TrendMacro. “Why look at this quarter’s earnings, or for that matter why just look one year ahead, to appraise what a company might earn? If America is really going to be great again, stock prices should look to above-trend earnings growth that could last for several years. That will make stocks appear expensive, but they’re really not.”
Markets are already priced for “No.” But “Si” could be another pro-growth electoral surprise.
The Donald’s America will be a global oil powerhouse. A deal can make OPEC great again.
The market is similarly divided over recent comments by Fed Chair Janet Yellen that there could some benefit to running a "high-pressure economy," with 49 percent saying the Fed should run one and 43 percent saying it shouldn't. "It's hilarious that Yellen thinks, at this point, she has the power to wave a magic wand and 'run a high-pressure economy,'" wrote Donald Luskin, chief investment officer of Trend Macrolytics.
Whether the bullish hype turns out to be the right trade remains to be seen, as Trump has yet to get the keys to the White House or make one of his campaign promises come true.
"Whatever else the future holds, Trump has already made the U.S. stock market great again," Don Luskin, chief investment officer at investment firm TrendMacro, told USA TODAY.
Higher yields point to a better environment for equities, and a falling equity risk premium.