Stocks Rally as Washington Burns and That's Not Odd

Washington lawmakers appear trapped in gridlock, while the Trump administration suffers from daily political crises that threaten its legitimacy and weaken any hope for the policy changes for which it was elected. Yet the equity market has set new highs. This is alternately attributed to complacency or the unrealistic expectations on the part of investors.

Rather, investors seem to have a good grip on market valuation, while critics of the Trump administration and the media seem to relish promoting a pejorative narrative that refuses to recognize the sound basis for the market’s valuation. As the most hated bull market ever, by investors, media and critics alike, there is still a vast pool of cash sitting on the sidelines just hoping for any kind of retrenchment to be able to buy into a market that they have missed. We see little basis for anything more than normal volatility in equities within a positive trajectory. Any unfounded decline would likely prove short-lived, as that avalanche of cash jumps at the opportunity to buy.