Economic optimism hits a two-year high among investors as Trump gets ready to take office

[The Nature Boy 7,659]

http://www.cnbc.com/2017/01/17/economic-optimism-at-two-year-high-as-trump-prepares-to-take-office.html

 

Professional investors entered the new year — and a new day for U.S. politics — with high expectations, tempered with caution over what could go wrong.

Optimism for economic growth hit a two-year high among those responding to the latest Bank of America Merrill Lynch Fund Managers Survey.

The biggest bets among respondents are on banks, the U.S. dollar and real estate investment trusts, while some of the biggest areas of scorn are emerging market stocks, industrials and commodities. A record level of respondents indicated small-cap stocks will outperform.

 

 

Marriott CEO: Watching Trump's policies on immigration and trade  3 Hours Ago | 02:12

However, investors also are keeping cash on hand as a buffer against what could go wrong. Investors believe the three biggest risks to be a trade war, U.S. policy error, and China problems including a currency devaluation or a real estate bubble.

Donald Trump takes office as the 45th president Friday amid expectations that his promises of lower taxes, less regulation and higher spending will spur the economy, which has seen steady though lackluster growth since the financial crisis and accompanying recession.

"Ahead of the U.S. presidential inauguration, investors are positioned for stronger growth and inflation, but are not willing to turn fully bullish with China-related risks on the horizon," Michael Hartnett, chief investment strategist at BofAML, said in a statement.

Cash is at 5.1 percent of investor portfolios, up from 4.8 percent in December and above the long-term average of 4.5 percent. BofAML believes cash allocations serve as contrarian indicators, with balances above 4.5 percent indicating a "buy" for stocks. Equity allocation was at a 13-month high in the survey.

Also notable: Investors believe the most crowded trade is the U.S. dollar "by a country mile," BofAML said, with the percentage of respondents who think the greenback is overvalued the highest since November 2006.

The trends point to investors of a positive mindset but reluctant to press the accelerator.

"If managers are mostly in 'wait and see' mode when it comes to future investments and strategic action, it could delay the impact Trump's and Congress's policies have on corporate earnings."-Jeffrey Saut, chief investment strategist, Raymond James

"Investor sentiment seems to have greatly picked up since the election, but it will be interesting to see how companies feel given the uncertainty that exists with all the policy speculation," Jeffrey Saut, chief investment strategist at Raymond James, said in a note Tuesday morning. "If managers are mostly in 'wait and see' mode when it comes to future investments and strategic action, it could delay the impact Trump's and Congress's policies have on corporate earnings."

Investors expecting the global economy to expand over the next 12 months hit a net 62 percent — the difference between those believing the economy will grow against those who think it will contract — while inflation expectations were at the fifth-highest on record. Similarly, the portion of investors looking for above-trend growth and inflation is at a 5½-year high.

Respondents also took on a question that has become more pressing lately: namely, what yield the 10-year Treasury note would have to hit for it to trigger a strong negative reaction in stocks. Of those surveyed, 53 percent picked a 4 percent yield, 20 percent said 5 percent, while just 16 percent believe it would be as low as 3 percent.

Bond gurus Bill Gross at Janus and Jeff Gundlach at DoubleLine recently gave opposing views, with Gross believing 2.6 percent to be the critical level while Gundlach put the number at 3 percent. Portfolio mangers, then, believe stocks could sustain considerably higher bond yields before slipping into a bear market.

[Dakine10 5,452]

   Optimism is great, but since Trump appears set on doing his best to recycle Reaganomics, optimism may be unfounded. We've already seen how that works.

[Voice of Reason 10,298]

Works better than the sharp increase in unemployment we had under Obama.  Hopefully we will see a downturn in debt and an increase in jobs.  Only time will tell...

[ready4ONE 5,400]

5 hours ago, IDWAF said:

Works better than the sharp increase in unemployment we had under Obama.  Hopefully we will see a downturn in debt and an increase in jobs.  Only time will tell...

The unemployment rate has gone down under Obama. 7.2% December 2008 down to 4.7% December 2016. Do you simply make up facts or are you just unable to deal with them? Trump is of course an enigma and no one can honestly say what he will actually do besides Tweetflame anyone who fails to recognize his personal vision of his bigly greatness, but he seems to be promising to increase the debt exponentially and I don't think that will be great for creating jobs.

 

[Voice of Reason 10,298]

7 hours ago, ready4ONE said:

The unemployment rate has gone down under Obama. 7.2% December 2008 down to 4.7% December 2016. Do you simply make up facts or are you just unable to deal with them? Trump is of course an enigma and no one can honestly say what he will actually do besides Tweetflame anyone who fails to recognize his personal vision of his bigly greatness, but he seems to be promising to increase the debt exponentially and I don't think that will be great for creating jobs.

 

 

I admire your tenacity and desire to make it all smell like roses under Obama, but here's a chart that says otherwise.  As does the BLS site.  Notice how unemployment was higher for 5 of the past 8 years.  Also, it seems that by changing a few metrics, just as with statistics, one can make the unemployment rate appear lower than it actually is.  But I'm sure your favored administration would never do that, right?  Unemployment is actually higher than the 4.7% you are believing in.  But I'm sure you'll scoff at that too...

 

http://www.washingtontimes.com/news/2015/feb/10/donald-lambro-obama-hides-jobs-failure-by-not-coun/

 

[ready4ONE 5,400]

Dude your chart shows the unemployment rate going down. Is you phone or computer monitor upside down? Exactly how much Kool-Aid did you drink?

 

[Voice of Reason 10,298]

A snippet from the article above, since the pic was so big:

 

Quote

 

Now, Jim Clifton, chairman and CEO of the respected Gallup polling organization, has written a blistering broadside on the devious way President Obama’s Department of Labor defines its monthly job numbers, calling it “the big lie.”

The numbers do not count millions of Americans who want and need full-time jobs but are not defined as among the unemployed. That, as Mr. Clifton knows well, remains the chief reason why the jobless rate has fallen.

Yet Mr. Obama has been going around the country crowing about the unemployment rate falling into the mid-5 percent range, down from its 10 percent peak in October of 2009. The declining jobless rate proves his policies were working and had pulled the economy out of its deep recession, he claims.

The nightly network news shows have been among his principal accomplices and cheerleaders in this shady con job.

The Bureau of Labor Statistics (BLS), the data-gathering arm of the Labor Department, reported that the unemployment rate in January came in at 5.6 percent. Sounds good, you say?

Mr. Clifton tells us “something many Americans — including some of the smartest and most educated among us — don’t know. The official unemployment rate is extremely misleading.”

 

 

But herein lies the rub... under Obama, they quit counting people who were so helplessly unable to find a job, that if they quit actively seeking one for 28 days, they dropped off the roles of unemployed.  Say WHAT??  If you're not working (and actively seeking employment thru an employment center) for 2 weeks, you're unemployed.  If you're not working for 5 weeks, you don't exist?  Statistically, you drop off the chart.  So unemployment goes down.  Hoorah!!  Obama has saved us all!!

 

Ummm, no.  Just no.  Many who tout the low unemployment rates under Obama either don't know about that little factoid, or choose to ignore it.  They just repeat the numbers they see on the news.  4.7%!!  It's lower!!  (Pay no attention to the hundreds of thousands who are unemployed but haven't checked into an unemployment office in 5 weeks.  They just don't count).

[Voice of Reason 10,298]

Just now, ready4ONE said:

Dude your chart shows the unemployment rate going down. Is you phone or computer monitor upside down? Exactly how much Kool-Aid did you drink?

 

Yes.  Right after it was higher for the first 5 years of Obama's reign than for years prior.

[ready4ONE 5,400]

Yes, I am sure under Trump even toddlers and the elderly will have to work.

 

[Transborderwife 4,666]

1 minute ago, IDWAF said:

Yes.  Right after it was higher for the first 5 years of Obama's reign than for years prior.

So let's forget completely how he turned things around and only focus on the negative?  Thank you Mary sunshine.

[ready4ONE 5,400]

Just now, IDWAF said:

Yes.  Right after it was higher for the first 5 years of Obama's reign than for years prior.

Are you suggesting that Obama was President December of 2008?

 

[Voice of Reason 10,298]

2 minutes ago, Transborderwife said:

So let's forget completely how he turned things around and only focus on the negative?  Thank you Mary sunshine.

Other than changing a definition or two, not much really changed.  That downward slide you see in unemployment is over-exaggerated due to how they count unemployed persons.  Ignore that little tidbit, and it does appear as if things got much better under Obama.

Edited January 20, 2017 by IDWAF

[Voice of Reason 10,298]

Just now, ready4ONE said:

Are you suggesting that Obama was President December of 2008?

 

Even as delusional as you are, you cannot show anywhere I said that.

[OriZ 3,157]

Gosh people, I try so hard to stay out of Naitch's threads because I know he does it just to drive the MDL crazy, not to get into a serious conversation, but you've already derailed it so now I have to. This is the U6 unemployment:

 

http://www.macrotrends.net/1377/u6-unemployment-rate

 

While it's trending down(which has nothing to do with Obama) it's still not as low as it has been during most of Bush's term(excluding the recession at the end).

 

Regardless, optimism is what you would expect near peaks, just like pessimism is what you would expect near bottoms, so I would not consider any kind of record(consumer confidence, investor optimism, etc) to be a positive thing necessarily going forward. It's reflects the past and shows maturity of a trend. 

[ready4ONE 5,400]

7 hours ago, IDWAF said:

Even as delusional as you are, you cannot show anywhere I said that.

You seem to be hopelessly unable to make your words match the graph you posted. And it is official we now have a President: