13 November 2017: Trump bump debunked

In the year following the election of Donald Trump as President of the United States, the S&P 500 rose 21.5%. Trump has taken credit for this rise, a.k.a. the ‘Trump bump’, and has considered it his personal achievement. (It is debatable whether or not he would have blamed himself in case the 21.5% rise would have been a 21.5% decline, but that aside.) The question is: Could Trump himself really have been the decisive factor that pushed up the stock markets, like he wants us to believe?
According to Ken Fisher, founder and executive chairman of Fisher Investments, the answer is no. In an article that was published in USA Today yesterday, he compares the rise of the stock markets during Trump’s first year with that of other modern presidents in the first twelve months after their election. It appears that at 21.5%, the ‘Trump bump’ pales versus the ‘performance’ of three other modern presidents: Bush-I (1988, 22.2%), Obama (2012, 24.4%) and Clinton (1996, 33.1%).
In another article, published last Friday at CBS MoneyWatch, financial editor Larry Light takes a similar angle on the matter. According to Light, the stock market rally was already running full steam at the time Donald Trump was elected. Also, according to him, the tax cut promise had little impact. Strong earnings propelled the market, not Washington. “Stock are rallying worldwide, which has nothing to do with Mr. Trump.”
If Fisher and Light are right, it is reasonable to assume that this recent bull run would have happened anyway, with or without Donald Trump. But also: that what will happen next, will happen anyway. Despite Donald Trump. And that there is nothing Donald Trump can do about it.

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Something happened last Friday that didn’t happen in the nine weeks preceding last week: the Dow (-0.17% for the day, -0.5% for the week) and the S&P 500 (-0.09% for the day, -0.2% for the week) ended the week lower. Investors got confused by a tax plan that was released on Thursday by US Senate Republicans. The plan didn’t meet their expectations, as it was not in line with the version presented earlier by the House of Representatives. Reports of a possible delay in corporate tax cuts worried them in particular. Thanks to strong tech earnings, the NASDAQ (+0.01% for the day, -0.2% for the week) managed to squeeze out a tiny gain Friday, not enough though to prevent it from closing the week lower as well. Volatility remained subdued during the first three trading days of the week. The VIX continued its smooth ride along the level of 10 points up to Wednesday’s close. On Thursday and Friday, volatility picked up significantly, the VIX averaging around the level of 11 points and closing at 11.29 points on Friday (+7.52% for the day, +23.5% for the week). The rise in volatility did UVXY ETFs good. They went up by 4.56% on Friday. XIV ETNs lost 2.3% for the day.
Danny Daredevil advanced for the second day in a row. He saw his RSS rise by no less than 9 percentage points in just 2 days. It now stands at 32%. Adventurous Anny is still holding cash. Her RSS is just over 15%. Solid Suzy and Lazy Larry had to take a step back amid the rising volatility. Their RSS is just over 63%.
None of our models gave a trading signal at the end of Friday’s session, though there may be one just around the corner.

Model Holds Start date

RSS

YTD

QTD

AAR

Danny Daredevil UVXY 1 January 2016

31.90%

-67.28%

-5.32%

16%

Adventurous Anny Cash 6 March 2017

15.37%

15.37%

6.34%

23%

Solid Suzy XIV 6 March 2017

63.21%

63.21%

11.57%

104%

Lazy Larry
XIV 6 March 2017

63.21%

63.21%

11.57%

104%

RSS = Return Since Start | YTD = Year-To-Date | QTD = Quarter-To-Date | AAR = Average Annual Return

 

Meanwhile in Japan

A young girl in kimono. Picture taken in front of Hiroshima’s Tōshō-gū shrine at the foot of the city’s Peace Pagoda. The reason why the girl is dressed up in kimono, is to celebrate Shichi-Go-San.

Shichi-Go-San (七五三, lit. “Seven-Five-Three”) is a traditional rite of passage and festival day in Japan for three- and seven-year-old girls and three- and five-year-old boys, held annually on November 15 to celebrate the growth and well-being of young children. As it is not a national holiday, it is generally observed on the nearest weekend. — Wikipedia