E Market Briefing For Monday, December 19

Chilling challenges are ahead and not just because the approaching two months of general euphoria from the election of Donald Trump will correct, or increasingly exhaust itself. Even the prospect of short-term realization of a continued (or reentered) 'recession' isn't off the map; though debatable.

Much will depend on how the so-called 'Day One' blueprint lays-out forward thinking; and what issues receive priorities, while others are back-burnered or deferred. The broad market, helped primarily by rotation and re-weighting of sectors, including many dormant for years or decades, primarily accounts for the stamina of our forecast bullishness in the wake of the election. That's mostly 'in' the market for now; as we move to a 'proof is in the pudding' sort of mode; especially as we enter 2017. 

That doesn't mean that it won't go higher. For instance we can still have the classic year-end rebound, perhaps after some brief post-Quadruple Friday Expiration. And you didn't get any specificity on 'retaliation' against Russia, by Obama at his news conference (didn't expect much since he was going to Hawaii immediately after the Press Room disbanded). Little in the story is beyond what was already known: that Putin is a thug and manipulator, and of course that Russian propaganda has achieved 'some' purported results.

To that extent Trump has surrounded himself with a mixed group that holds both promise and risk; something we'll address more in coming days. At this point we are going to highlight several areas to keep an eye on near-term, as how these go (starting with taxes) could determine an investment posture approach, beyond of course selling associated with 2017 tax-date arrivals. 

Consider (and perhaps in-order of priority for now):

1) Speculation that Trump will outline a 'slow as you go to start' tax reform package. That might be a huge mistake, as contrasted to 'go big at the start for tax cuts'. The history of tax reform is that going slow then takes a longer time or even negates the prospect of the full package of tax cuts being very eagerly passed by Congress.

If that were to happen (the slow smaller version) I think the market would be tanking in response; especially if it delayed aspects that would encourage, if not compel, major companies to repatriate money to the United States. If it's a deferral of returning manufacturing; that doesn't happen instantly anyway.  

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Gene Inger 2 years ago Author's comment

Well said and 'close' to what I've said to our www.ingerletter.com 'actual' subscribers for several weeks. I wouldn't worry about 'Trade'; just avoid 'linear thinking' and recognize that China and Mexico realize things have to be renegotiated. As to the market; before the Vote I projected an extreme rally if Trump won; opposite of most forecasts. And now I have another view as we move into the new tax year. I appreciate your interest in my work; and reflections. (The comments here are usually required to be a day or two after shared with our subscribers and do not include my technical chart video analysis... I do appreciate the interest... happy holidays!)

Moon Kil Woong 2 years ago Contributor's comment

The market hopes for growth. It is too soon to expect it besides the growth from Obamas policies. In reality global trade wars have so frightened people there is like a last hurrah mass buying these last months for those trying to get what they can before something disrupts it. Buying before a storm is good for a economy only so much as no storm arises. Those buying seem to differ that all will be peaceful.

A China trade wart would in itself be a mass shock to the market and prices. However, it will cause faster growth of even more price competitive players unless the US decides to block it all which will crash the economy. If you want negative growth that would be a great way to do it. If you want America to stop being a super power that would be a great start. If you want a horrid economy imagine an America with no trading partners besides Canada.