Market Update
(all values as of 10.30.2020)

Stock Indices:

Dow Jones 26,501
S&P 500 3,269
Nasdaq 10,911

Bond Sector Yields:

2 Yr Treasury 0.14%
10 Yr Treasury 0.88%
10 Yr Municipal 0.94%
High Yield 5.72%

Commodity Prices:

Gold 1,878
Silver 23.72
Oil (WTI) 35.71

Currencies:

Dollar / Euro 1.17
Dollar / Pound 1.29
Yen / Dollar 104.44
Dollar / Canadian 0.75
 

The Trump Trade

 

The election of  Donald J. Trump as the 45th President of the United States served as an inflection point and a change in market leadership.  Prior to November, the consensus was Secretary Clinton would be elected and would continue the political agenda of President Obama.  Instead we now have a President that will focus on fiscal policy, tax reform, regulation reform, and infrastructure spending.  As a result, Shamrock’s tactical themes shifted from the defensive areas of the market (utilities, consumer staples, health care, and real estate) to more cyclical areas like energy, financials, materials, and commodities.

The market rally has been welcomed by investors, but unlike past rallies resulting from actions from The Fed (QE1, QE2, & Operation Twist), the rally is a result of increasing corporate earnings and a pick up in GDP growth.  The US economy is poised to finally break out of the 2% growth rate we have been stuck in since the end of the Great Recession.  Below are four data points that provide optimism for the stock market’s rally to continue.

 

The stock market is a forward looking indicator and the market believes President Trump will pursue pro-growth policies that will be good for business and the economy.  President Trump has indicated that he will tackle many issues within his first 100 days and if successful will lead to the economy picking up momentum.

Risks to the Trump Rally

President Trump’s message of “Make America Great Again” harks back to the days of President Reagan.  While many believe the market can continue to move higher like it did in the 1980s and 1990s, we are still concerned that a 3 – 7% correction could occur within the first 100 days.  Below are some of our concerns.

The Investment Committee at Shamrock continues to favor equities over fixed income.  Our strategies continue to hold some dry powder (cash) that can be deployed with a market correction or if our economic indicators continue to improve.  Active management can be an excellent choice for investors looking to participate in the industries and investment themes most likely to benefit from a Trump rally or raise cash if the market becomes skittish with the Trump Administration.  We welcome the opportunity to have a call or meeting with you to expand on our thoughts and our outlook for the global markets.  Please contact us at your convenience.