In a note from Evercore ISI, titled simply enough “Investors Believe The World Has Changed”, the firm once again confirms that price drives narrative (recall that everyone was bearish should Trump win), and writes that “Post election, investors believe the world has changed. Whether or not Trump’s pro-growth agenda is enacted or succeeds, investors we surveyed yesterday seemed to buy into it. For example, the consensus of investors we surveyed yesterday put the S&P at the end of next year at 2425; a similar survey we conducted on Nov 3 put the S&P at 2087.”
Below is a summary of what the post-Trump survey found – note that a Trump presidency, widely panned by market participants before the election, is now seen at 6.5 on a scale of 0 to 10, with 10 being “wonderful”:
Next, Evercore asks if the world has indeed changed, and points out the following list of recent headlines:
… and yet, Evercore’s surveys paint a different picture at least so far:
The U.S. Economy Not Taking Off
Markets have rallied hard. Many US indicators have strengthened. But judging by EVRISI company surveys, which have been basically unchanged for six months, the economy is hardly taking off. The surveys so far this week are down slightly. And airlines at 41.9 are still quite weak (problem with fares).
So is the market wrong about Trump, or does it even have anything to do with Trump? Perhaps not: as Evercore ISI notes, “Incredible Monetary Expansion Still Going On” and concludes “In any event, US
money growth is almost +8% y/y, or almost an incredible +$1t.”
So is the Trump rally just a monetary expansion in a real-estate billionaire clothing? With the Fed’s second rate hike in only 10.5 yers, we will find out soon.
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