12/14/2016
By Charles Payne, CEO & Principal Analyst

Don’t look now, but the United States stock market has added $1.59 trillion in Market Capitalization (market cap) since November 8, one of the most remarkable spurts we’ve seen in a long time.  At 23.59 trillion dollars, the market is trading at a 1.21 ratio to Gross National Product (GNP), which is historically high. Normally, this would be a major cause for concern (in 2000, the ratio peaked at 1.4).

I would like to point out that I am not throwing shade on the rally, but I was the first to talk and to write about these animal spirits. To underscore (on the eve of) the first and only interest rate hike this year, the market is showing amazing growth potential. In fact, everyone has bought into the idea there’s a new morning in America where opportunity is within everyone’s grasp.

The key will be executed by Donald Trump and the GOP.  That means a serious compromise on things such as the national debt while building that wall, and implementing programs such as the federal child care support.

Until then, pinpointing some kind of ‘exact top’ would be folly.  Since that March 2009 bottom, there have been many times when investors thought and/or were warned to head for the nearest exit, only to watch the party continue; but now, they are  on the outside, looking in.

In fact, the market has been stuck in a sideways trend since early February; it grappled for direction and  yearned for a catalyst.  Fed stimulus (central bank money-printing around the world) no longer worked magic for equities, in part because Main Street never bought into the notion of a virtuous cycle when their wallets were virtually flat. 

So, this breakout could be the start of something remarkable, not unlike the breakout in early 2013 that got some folks back into the market for a nearly unstoppable two-year spurt.

Charles Payne
Wall Street Strategies

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