E Words For Wednesday: Farewell To Trump And Hail To The Chief

Donald Trump is set to leave Washington and the Presidency, prior to the inauguration of President-elect Joe Biden and Vice President-elect Kamala Harris. With the nation's capital and those of all 50 states braced for possible violence, U.S. market futures are currently green. While the Nikkei closed the day down - 0.38%, in Europe both the FTSE and DAX are up in morning trading. Tuesday the S&P 500 closed at 3,799, up 31 points, the Dow closed at 30,931, up 116 points and the Nasdaq Composite closed at 13,197, up 199 points.

TalkMarkets contributor David Vomund in his article The Roaring '20s remains optimistic about the market's direction as Joe Biden takes office despite signs of inflation and higher government deficits. Here are some of his thoughts:

"More and more there is talk of this decade being very much like one a century ago.  After World War 1 and the Spanish flu pandemic, Americans and people across the globe were ready to spend, buy, invest and even speculate.  Businesses did their part as well.  What a time!  But it didn't end well.

Pure speculation (is what is going on in the markets now).  Not a good sign.  The valuation levels alone should be cause for concern, not for many stocks, including industrials, banks and energy companies, but for some of the large tech companies.  The same is true for IPOs, most of which have attracted a great deal of interest unrelated to company finances or realistic earnings prospects.

Investors anticipate a strengthening economy thanks to the vaccines, stimulus, the Fed...What could be a better environment for stocks? It was true last spring, it is true now.  When will it not be true?  Maybe rising inflation and with it higher interest rates...will change the outlook. 

The yield on the ten-year Treasury is 1.1 percent, more than double its 2020 low, but not tempting...That is about to change."

In honor of Inauguration Day, TalkMarkets contributor Paul Schatz takes a historical look how the stock market has fared on this day. Writing in How Stocks Fare On Inauguration Day & Beyond, Schatz says, "Intuitively, you would think that with all the positivity around ID, stocks would rally on the feel good mode...the data doesn’t support the claim. (It happens that)  Donald Trump broke a 48 year ID losing streak." Schatz illustrates Inauguration Day market performance in the following chart:

Schatz continues with additional anecdotes about recent past inaugurations and market behavior and concludes with this prognosis: "...my takeaway is that if an incoming president takes power when all is well and stocks are humming, the stock market will continue heading higher over the coming few months or so on balance."

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Angry Old Lady 1 month ago Member's comment

I'll be impressed if we don't find Trump meddling in politics over the next 4 years.

Duke Peters 1 month ago Member's comment

The country will be worse off as a result. We may not always like hearing what Trump has to say, or how he says it, but if often needs to be said.

Dan Richards 1 month ago Member's comment

Agreed. This new cancel culture and Big Tech censorship is a real problem and will silence opposing views. I bet DRM would agree with us too.

Duanne Johnson 1 month ago Member's comment

I would have thought so too. But with Twitter effectively kneecapping Trump by banning him, they've managed to neuter/silence the guy. He's harmless without his pulpit and bullhorn.

Angry Old Lady 1 month ago Member's comment

Maybe, but there are many other ways for him to get his messages of hate out there. God helps us if he starts Trump TV.