From Fox News Sunday interview:

WALLACE: “According to the Washington Post, the CIA has concluded that Russia intervened in the election to help you win the presidency. Your reaction?”

DONALD TRUMP (R), PRESIDENT-ELECT: “I think it’s ridiculous. I think it’s just another excuse. I don’t believe it. I don’t know why, and I think it’s just — you know, they talked about all sorts of things. Every week, it’s another excuse.

We had a massive landslide victory, as you know, in the Electoral College. I guess the final numbers are now at 306. She’s down to a very low number.

No, I don’t believe that at all.”

TRUMP: “I don’t have to be told — you know, I’m, like, a smart person. I don’t have to be told the same thing in the same words every single day for the next eight years. It could be eight years — but eight years. I don’t need that.

But I do say if something should change, let us know.”¹

Wow! If the world wasn’t at stake, the above discussion would be laughable. No wonder those on the left and right are disturbed by the words coming out of the mouth of the 70 year old man-child about to occupy the White House, stubby fingers on the nuclear codes and all. Oh, and by the way, what Mr. Trump forgets is that all his reliance on generals and CEOs mean nothing when (not if) something goes wrong as it is HE and not the generals and CEOs who will be held accountable.

As this relates to investing (yes, it does), if anyone had any doubt as to how Wall Street investment professionals work, the global stock market surge since November 8^th placed up against the purported reasons for the surge – namely one Donald Trump – should put those doubts to bed. Earnings, growth of earnings and a discount rate is all she wrote in professional investor land. Unless and until those discounted cash flow factor inputs are clearly impacted, justifications can and will be found to push prices to whatever level seems justifiable.

I used the word “justify” in two forms in the previous sentence because that is what we are talking about: investment decisions made for actions that can be justified. This is so because valuation is a highly subjective thing. And what goes into the DCF model produces a result that must be justified by those taking action: namely, the investment professional. From this one has to wonder, does anything outside the inputs matters? Has Wall Street gone the way of reality TV with its disconnect from reality? If so, it’s no wonder that the President-elect has more in common with Kim Kardashian than Thomas Jefferson.

Investment Strategy Implications

The equity melt-up phase for US equities is underway. And the one-way out may come to pass: that one-way out being an economic expansion that rises sufficiently high enough to allow for short term rates to rise to the 4%+ level, thereby enabling the US central bank with the flexibility it will desperately need to offset the inevitable next recession BEFORE the next recession hits (while rate are below 4%). Will we get there? Impossible to say, however, the margin for error continues to shrink.

In the meantime, enjoy the show President-elect Kim Kardashian is putting on.

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¹ http://time.com/4597416/transcript-donald-trump-fox-interview/