Trump Effect: Stocks Roar To New All-Time Highs Following Presidential Address

How important President Donald Trump's speech before a joint assembly on congress Tuesday night was is not easy to gauge, but, from a Wall Street perspective, he must have hit the high notes perfectly because all major averages were straight up at the opening bell and continued to add to gains throughout Wednesday's session.

The Dow, which blew away the 20,000 Rubicon less than a month ago, added nearly 1.5%, or 303 points, its largest one-day gain since early December. With Industrials leading the way, the other three major averages broke out as well, with the S&P pretty much reaching highs that analysts had been predicting as end-of-year results, yet we're barely two months into the new year.

How this kind of euphoria will eventually manifest itself is still a mystery, especially with stocks tacking higher despite consistent warnings of a valuation trap being set. While stocks continue to ramp on a daily basis, corporate reports are not following the same tune. Additionally, analysts from various houses also revised first quarter GDP estimates lower, with Goldman Sachs and the Atlanta Fed looking for 1.8% growth. JP Morgan and Bank of America are even more pessimistic, at 1.5% and 1.3%, respectively.

In the main, what companies behind the stocks are counting on is a relaxed regulatory environment under President Trump's administration. The President has already issued a variety of pro-business executive orders and his commitment to repealing and replacing the Affordable Care Act (Obamacare) is also being viewed as a positive on two fronts. First, it will free up consumer funds from an expensive mandated coverage nightmare; second, companies will probably get breaks as well in group coverage.

Adding to the speculative high spirits are items currently under the radar such as the President's budget, which includes massive cost-cutting across agencies, a one trillion dollar infrastruture plan that Mr. Trump touched on it in his speech, and trade negotiations with countries outside the framework of international treaties such as NAFTA, TPP and the World Bank.

All told, President Trump's first six weeks in office have been nothing short of miraculous for stocks, though it will take some time to see how it all plays out. Either stock pickers have been set up for a major catastrophe or the enthusiasm and honesty of the new president will indeed guide America and American business interests to new heights.

Lurking in the shadows behind the presidential bluster is the Federal Reserve, which meets in two weeks to decide whether to raise federal funds rates or keep them at current levels. Money is on them keeping the rates at the current 0.50-0.75, though even an increase of 25 basis points would seem to be inadequate to quiet Wall Street's enthusiasm.

At the Close, 3.1.17:
Dow: 21,115.55 +303.31 (1.46%)
NASDAQ: 5,904.03 +78.59 (1.35%)
S&P 500: 2,395.96, +32.32 (1.37%)
NYSE Composite: 11,661.22, +148.83 (1.29%)

The Buy More, Pay More Non-Economy of Oversupply

Rampant stupidity.

Cars and trucks are not the only commodity that is in oversupply.

Went to the local grocery the other day and wanted one of those "salad in a bag" deals. Sign said, "Buy 1 get 2 free." Since I am single, and camping for the summer, one bag is all I needed and the other two would likely go bad within days. Price for the "deal" was $3.89. These bags normally go for $1.25-1.50 each, so no big deal.

Went to the manager and complained. Ended up buying one bag for $1.30, but, but, but, I had to sign a non-disclosure statement and produce my driver's license. Additionally, I was banned from ever shopping in the store ever again upon threat of death or incarceration.

OK, everything after the $1.30 in that last sentence is there for pure entertainment value, but I did have to check out at the customer service desk and received an undeniable, disparaging glare from the store manager (owner). The twithead didn't even have the cajones to introduce himself or talk to me; just a mean stare, as if to say, "you're not supposed to be smart or question our pricing policies."

My take is that the new brand of "Shure-fine" salad bags which replaced the "Dole" bags are in severe oversupply and the store is wishing to unload them ASAP because they don't keep longer than a few days before spoiling. Trouble is, we're deep in farm country here and every other house has a garden and probably are producing more than enough of their own lettuce and vegetables.

So, oversupply from the good folks at Monsnto, Cargill, et. al., and "no salad for you" unless you buy lots of it.

Oversupply is "the" problem of the 2010s. We are in year six or eight of a 15-18-year depression and it's likely to get worse before it gets better.

In 2012, I said I'd wait until silver hit $17 to buy more. Acutally waited until it hit $15. My next purchase will be at $12, then maybe $6, when the bottom falls completely out of the oversupplied commodity market.

In Ameri-whoopie-i-o-yah-Ka, at least, we have too much of everything except common sense (h/t to Mencken).

The soon-to-be-rammed-down-our-throats-job-killing TPP will accelerate the process of bringing American wages in line with the rest of the planet. Cops, politicians, bankers and schoolteachers will be wealthy in coming years, but as many begin to retire, the defaults on pensions will also accelerate.

Can't fix stupid and can't beat math. A rigid dichotomy, for sure.

All the best. Eat well, live well, die hard.

Editor's Note: Fearless Rick has been and continues to spend the summer months camping at a secret location (Sodus, NY) and will be posting irregular snippets about life in farm country.