It seems the Trump trade is back on. This week, investors were overwhelmingly bullish on Trump’s policies regarding taxes, both corporate and individual. Trump promised a big tax package relatively soon, and with that, equities spent much of the week rallying higher and higher. This rally is a stark reversal of the previous few weeks when traders tried to digest exactly what a Trump presidency would bring.
On the data front, the week was very busy, with most metrics pointing to a very bullish picture indeed. Measures of labor, manufacturing and consumerism all came in higher than previous readings. The only down metrics were related to housing. And given the Fed’s recent stances on interest rates, that was to be expected.
Speaking of the Fed, Janet Yellen’s various testimonies to Congress this week also helped to paint a bullish picture. As did earnings. While so-called profit season is winding down, there was still a flurry of earning activity from some important bellwethers, and profits continue to rise. However, revenues and guidance figures have continued their pattern of coming in lower than expected. That did not seem to bother investors this week, however.
In the end, stocks continued their rally; albeit, it was a bit of a bumpy one.