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No matter what the Trump Administration and its many critics keep throwing
at us, the market usually focuses more on corporate earnings than politics. Since we are in the middle of earnings season, stocks with strong sales, earnings, and forward guidance will likely continue to lead the market.
The comments above and below are excerpts from an article by Louis Navellier (Navellier.com) which has been edited ([ ]) and abridged (…) to provide a fast & easy read.
The good news is that the earnings environment is likely going to get better as 2017 unfolds, especially if corporate tax reform is passed. The only wild card is just how much a strong U.S. dollar may impede GDP growth, like it did in the fourth quarter. Obviously, the Trump Administration is striving for 4% annual growth, which is very ambitious, but high consumer and business confidence could deliver 3+% growth.
For the first four days of last week, there was a rotation out of “Trump stocks” (like financials, industrials, materials, and energy stocks – which have done so well since the election). Some of this exodus appears to be caused by Congressional grumbling about healthcare reform, tax reform, the new Supreme Court pick, and other Trump moves.
The fear that more bottlenecks in Congress might slow some key parts of the Trump Administration’s agenda have “spooked” the market, but I’d say that the main reason why these Trump stocks were spooked is that many of them are simply not characterized by strong enough sales or earnings.