Daily Times

The White House is in disarray, but the market isn’t scared. Indeed, the Dow is heading toward 22,000.

And for good reason: For all the Trumpian hysterics of the last six-plus months, the fact that Hillary Clinton isn’t president is good for stocks.

Of course, quantifying the Trump premium in the stock market is no easy task, and there are some sound fundamental reasons why we shouldn’t be surprised stocks are weathering the political chaos so well. Economic growth remains modest, inflation and interest rates are low, meaning bonds aren’t that attractive – all good for stocks. Meanwhile, corporate earnings appear stronger, and when companies make more money, stock prices go up to reflect the increased valuations.

But keep in mind, stock prices are also predictive – they tend to price in future economic growth and thus future earnings. So with little movement on tax cuts, at least so far, and health-care reform put off until God-knows-when (hence no repeal of the ObamaCare taxes), you’d think the Dow Jones would be correcting rather than rising.

Trump may like to embellish his crowd sizes but he’s on firmer ground taking credit for the stock-market run-up, as he did Tuesday on Twitter, where he extolled the Dow’s march toward 22,000 under his watch – a fact which, he said, the “Mainstream media seldom mentions!”

For obvious reasons, Mr. President: Most members of the media don’t want to admit what honest sophisticated investors will – that you’re better for stocks and the economy than your vanquished opponent.

Consider: With Hillary Clinton sidelined, there’s no rush to expand the government takeover of health care. With President Trump in the White House, the war on coal and the hesitance to open domestic oil drilling are both over, which means lower energy prices and better economic growth.

Again, even if we don’t get the yuuge corporate and individual tax cuts Trump promised, we’re not getting the huge tax increases on individuals and businesses that Clinton ran on. And who knows, with a little luck, we might, just might, see corporate taxes fall modestly from their federal level of 35 percent – which is one of the world’s highest – to something that helps us compete globally and keeps companies from relocating overseas.

Maybe the biggest place where Trump wins hands down is in regulation. Talk to as many CEOs as I do and they will tell you holding the line or reducing regulations – whether it’s absurdly stringent EPA standards or some of the complex and costly rules in Obama’s Dodd Frank financial-reform law – has a distinctly positive bottom-line impact on their earnings.

Trump has gotten little if any kudos for actually using some of his power as the country’s chief executive to roll back many regulations tying the hands of manufacturers and ending the dopey Obama-era obsession with costly green energy. CEOs say that simply by not creating more regulations, combined with plans to reform laws that prevent banks from lending more, like Dodd Frank, the Trump administration is boosting businesses’ confidence. That translates into increased business activity and, yes, higher stock prices.

For the record, I’m not advocating that you should take this column as a signal to buy stocks. In fact, if we don’t get some tax reform, the conventional wisdom holds that the markets will pull back dramatically. And you never know when the next banking crisis will come our way, or whether China, after years of growth, will finally hit a real rough spot that sets off a global economic tsunami.

But I’ve done a lot of reporting on this market, and it’s pretty clear from investors, traders and CEOs that the hope of a big tax cut or massive health-care reform isn’t fully priced into Dow 22,000; that this market is running higher for several other reasons, including the very real fact that the alternative to Trump in the 2016 election would have been far worse for the economy and stocks. Yes, the sometimes embarrassing, often volatile guy who won is better than the staid, calm quasi-socialist who lost. And that’s why after months of insanity the market is higher than ever.

Published in Daily Times,August 07^th 2017.