MARKET-ALERT – Rumblings Up, Down, and Around Wall Street – Issue #417 dated January 23 , 2017 – with Ray Dirks of RAYDIRKS Research and his team of securities analysts and money managers, along with the internationally-followed Web Sites – www.CorporateProfile.com and www.CPreports.com, where Fashion meets Finance, and where Stocks meet Blonds.
Well. Well, Well….What a Week it Was – The third week of January – with the inauguration of our new
President of the United States – Donald J. Trump, on Friday, January 20, 2017.
Almost all of the news centered around the inauguration and the efforts of President Trump to name and obtain approval for his appointees despite fervent disapproval from most Democratic party legislators.
The acceptance speech by President Trump was only 18 minutes long, and apparently did little to change the prevailing view that President Trump is the least liked president on inauguration day in over 150 years.
The stock market last week was largely ignored by the media – accordingly, trading volume was very low, and U.S. shares sold off modestly.
Rumblings’ Top Stocks for 2017 did all right, led by Apple, Inc. at $120.00 and Aflac at $70.08. Later in this article, we”ll discuss Rumblings’ Favorite Stocks for 2017, but first – let’s quote from tomorrow’s “The Trader” column in Barron’s, The Dow Jones Business and Financial Weekly, where the headline reads : “Stock Rally Pauses to Ponder Trump Presidency”
The column starts off “The inauguration of a President who has promised so much change brought surprisingly little of it to the stock market last week.
The Standard & Poor’s 500 index fell 0.1% to 2,271, while the Dow Jones Industrial Average fell 58 points, or 0.3%, to 19,827. The Nasdaq Composite sank 0.3% to 5,555.
Evidently, there were no fireworks in Donald Trump’s inauguration address. Sure, he highlighted his “new vision,” one that will make every decision “benefit American workers and American families.” He promised to bring back jobs, build roads, and “follow two simple rules: Buy American, and hire American.”What his speech lacked, however, were the details, leaving investors to wonder exactly how those changes would be brought about and what the impact will be.
“The tone of the speech was “change is in the air,” says Barry Kupferberg, director of research at Trilogy Capital Management. “But people are still trying to figure out what exactly will change.”
It isn’t that we don’t know the broad outline of what Trump would like to do. He’s pledged to spend billions on infrastructure and to cut taxes – policies that stand a good chance of boosting economic growth – but also initiating other policies that sound like protectionism, though he would call it “free and fair” trade. Hopes for the former were responsible for the S&P 500’s 8,1% rise since the election. The latter, however, could be a major source of consternation. “There are expectations that some positives are going to come out of the Trump administration, says Jeff Rottingham, portfolio manager of the T. Rowe Price U.S. Large Cap Core fund. “If they don’t, the market susceptible to a correction.”
Or simply volatility. Yes, the major indexes have been quiet, but we might have gotten a glimpse of the future last week as individual stocks reacted to the confirmation hearings for Trump’s nominees. United States Steel soared 8.3% on Wednesday when Commerce Secretary nominee Wilbur Ross said the U.S. might need “more tariff activity” to head off China’s dumping of steel and aluminum. Fannie Mae, however, tumbled 4.3% on Thursday when Treasury Secretary nominee Steven Mnuchin said he didn’t support a plan to recapitalize the government-backed enterprises and make them independent.
That could take stocks on a roller-coaster ride during the first 100 days of Trump’s presidency. Brian Belski, chief investment strategist at BMO Capital Markets, believes the new president is aware of recent history – how easy it is for a united government to become divided again at the mid-term elections – and will try to get a lot done quickly, That’s “setting the stage for surprises in both directions,” Belski says. “But the market is making a big mistake if it bets on gridlock.”
Change is coming…whether the market likes it or not.
Rumblings continues to think that the stock market in the United States will move up by about 20% over the next 12 to 18 months. We suggest that readers/investors purchase shares in Rumblings’ Favorite Stocks for 2017. The list of these Favorite Stocks is available in previous articles of Rumblings. We believe shares of he larger companies, such as Apple, Inc, Aflac, Hartford Financial Services, Avis Budget Rent-A-Car, and Hertz Financial Global will rise by 50% or more in the next 12 to 18 months. We think that shares of the smaller companies could rise by 200% or more in the next 12 to 18 months.
Rumblings suggests that readers/investors do their due diligence, check with their investment advisers, and then purchase shares in one or more of Rumblings’ Favorite Stocks at or around current prices.
Rumblings also suggests that readers/investors place no more than 1% of the funds they devote to common stocks in the securities of any one company. It pays to diversify…!
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