Tags: Trump Administration | donald trump | markets | investors | economy

CNBC's Insana: Don't Ignore Market's Applause for Trump

CNBC's Insana: Don't Ignore Market's Applause for Trump

(Getty/Howard Wise)

By    |   Tuesday, 13 December 2016 10:54 PM


CNBC’s Ron Insana points out that while you might be tempted to ignore President-elect Donald Trump’s near daily Twitter attacks, a savvy investor shouldn’t ignore “the message of the markets.”

“Since the initial surprise of Trump's election has worn off, stocks, interest rates, the dollar and commodities, have all rallied in tandem, sending an important message about the future shape of economic growth here in the U.S,” he wrote for CNBC.

“One may disagree with the President-elect's platform, as I have, but it would be foolish to ignore the unambiguous messages being sent by the markets over the last five weeks,” he said.

The Dow Jones Industrial Average closed Tuesday at its seventh consecutive record high and moved closer to 20,000 points. The Dow is fewer than 90 points from crossing 20,000. The Dow has climbed about 9 percent since the Nov. 8 election, with gains fueled by expectations that Trump will reduce taxes and regulation and stimulate the economy.

Insana said the overall market rally suggests that Trump's plans to slash individual and corporate taxes; deregulate vast segments of the economy; upgrade the U.S. military; and re-build critical infrastructure, will cause a pronounced acceleration in economic growth. In addition, it could drive inflation higher, possibly even above the Federal Reserve's stated target of 2 percent.

"While a Trump presidency also comes with some unusual quirks, daily tweets about countries and companies that can create unnecessary uncertainty, those may simply end up being background noise," he said.

"It is quite possible that we may see much stronger, much more synchronized, global growth in 2017 than we have seen at any time since 2003,” he said.

“This is a "reflation trade" on steroids. And, this is a trade that could benefit stocks and hurt bonds for quite some time to come,” he said.

Speculation that fiscal easing in the U.S. will drive growth also is pushing investors into stocks as governments take the baton from central banks that are starting to scale back a decade of stimulus, Bloomberg reported.

With the market assigning 100 percent odds to a Fed rate hike Wednesday, investors are focusing on the path for 2017, and see a two-in-three chance of additional tightening by June.

“Individual investors should be quickly adjusting their portfolios to that end, if they haven't already,” he said. “In this regard, one's personal politics don't matter. The markets are telling us what's coming and telling us what to do,” he said.

“You may ignore Twitter at your own peril, but I would not suggest ignoring the message of the markets.”

Insana isn't the only investment guru to warn investors to keep a sharp eye on the market, although others have different reasons.

Investing icon Carl Icahn thinks the stock market’s celebration since Trump’s presidential victory may have “gone too far” as the Dow Jones Industrial Average nears the 20,000 milestone.

"It's gone too far," Icahn recently told Poppy Harlow on CNN. "I personally think it's a little overdone," Icahn said about the stock market rally.

(Newsmax wire services, Reuters and Bloomberg news contributed to this report).

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CNBC's Ron Insana points out that while you might be tempted to ignore President-elect Donald Trump's near daily Twitter attacks, a savvy investor shouldn't ignore "the message of the markets."
donald trump, markets, investors, economy
Tuesday, 13 December 2016 10:54 PM
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