Why CNBC Thinks the Trump Rally may Continue a Loooong Time

[william the wie]

CNBC is the furthest left of the business sites/TV Channels I check out with the possible exception of Boom/Bust on RT. So, their analysis being more or less in line with everyone else's struck me as strange.

There is too much money on the sidelines.

There is too much money on the short side mostly in the form of puts.

Regulatory drag can be addressed by Executive order and that is at least half the reason we are not yet at 3-4% sustained GDP growth.

Tax decreases will also help speed up growth.

What was not mentioned by CNBC is that:

Private pipelines will increase prices at the well head causing energy deflation while providing jobs in the oil patch and at the pipelines. That will provide a positive swing to X-M (exports-imports) and net new investment. both of those GDP components have larger non-inflationary multiplier effects.

Coal fields can also provide diesel fuel and natural gas at market prices is most cases. Coal itself is likely to continue its slide in usage.

If current food deflation and energy deflation continues inflation will stay low for a very long time. That in turn means larger exports.

Dow 30,000 anyone?

 

[Toro]

Stocks trade at 22x earnings, the highest in history outside of the tech bubble.

That doesn't mean stocks can't go higher.

I expect they will over the next year or two.

The central banks have created enormous liquidity.

Creating bubbles is all they know.

But when the long bond gets to 5% or so, I wouldn't hang around.