Friday, February 2, 2018

If You Live by the Dow, You Die by the Dow

President Trump, anxious to find a credible metric that records his success and which he can translate into political influence and personal popularity, has chosen the rapid 14-month run-up in the stock market.

Unfortunately, the Dow dropped 540 points in two days (177 and 362) last Monday and Tuesday (State of the Union day). While this appears to be a short-term blip and a possible buying opportunity, it reminds traders and investors that a pricey market, negative signals from the Fed (rising interest rates) or some geopolitical event could lead to more volatility and decline.

Trump hasn’t as yet been able to improve his own approval rating from the glow of the economy and the Dow. It may be possible, but, as of now, Trump’s approval rating appears more dependent on his tone and language and less influenced by regulations cancelled and tax cuts passed.

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