Posted By RichC on December 23, 2016
We still have a week of trading before closing the books on 2016, but those last few DJIA psychological points to 20,000 have proven evasive. Thursday’s 23 point decline, after the steady climb since the election, has a few gurus thinking the Trump Rally may be ahead of itself? Some are looking at current corporate earnings and consumer spending with questions and are merely suggesting a pause … while others are seeing a much larger number under a President Trump helped by an agreeable congress. Most acknowledge that some serious change will happen in the first couple years of a Trump presidency and that a friendly, pro-business administration will be rolling back impediments to growth — all changes that are good for investors and business …unless trade policies also changed? A trade war will hurt everyone.
Consider this, the past eight years of President Obama’s anti-business policies pushed large domestic corporations who do business worldwide to sit on piles cash. They park it offshore paying no US corporate tax and continued to move production and even management overseas. Smaller entrepreneurs have had to fight big government’s chokehold which has forces many businesses to layoff, automate, resist hiring or close their doors all-together. All businesses have faced a new mountain of regulation during the past 8 years. Front and center was costly Obamacare, but the high corporate taxes and threat of even bigger government up until a surprise on November 8th has kept the economy from really expanding. With change in the air, it is easy to see why smart money sees improving corporate profits and a better environment for business to expand. These are positive signs for the economy and for investors in the U.S. … that is until "normal" capitalistic pressure of higher wages, inflationary concerns and healthy competition tamps back growth potential.
All in all … it is not a time to bet against business and the U.S. economy, even at a time of huge deficits, a $20 Trillion debt, an underfunded social security program and so much unrest around the world.