Posthaste: Why the great Trump stock rally might not be what it seems

financialpost.com:

Is the Trump trade rally really a thing?

Stocks have been on a tear since Donald Trump claimed victory in the United States election last week. The S&P 500 posted its best week in a year, gaining 4.7 per cent and crossing the symbolic threshold of 6,000 for the first time.

“The Trump electoral victory has unleashed a wave of speculative investor behavior that makes a mockery of even the moves we saw after his November 2016 win, which actually did come as a surprise,” wrote David Rosenberg of Rosenberg Research & Associates Inc. in his note this morning.

“Even with far more bloated valuations, the surge in the stock market in the first week after the vote has far more than doubled what we saw in a similar short time frame eight years ago.”

The euphoria reached a fever pitch Monday with one strategist predicting the “animal spirits” unleashed by Trump’s policies would send the S&P 500 to 10,000 by the end of the decade.

Ed Yardeni lifted his targets to 6,100 for this year, 7,000 for 2025 and 8,000 for 2026, Bloomberg reports.

“Stock investors are also thrilled by the regime change to a more pro-business administration promoting tax cuts and deregulation,” Yardeni wrote in a note Monday.

“Animal spirits are back.”

And investors appear to be jumping on that bandwagon. Exposure to U.S. stocks leapt to the highest since 2013 after the election, with the share of fund managers overweight in U.S. stocks almost tripling, according to a Bank of America survey.

Others question the ‘Trump is good for stocks’ narrative.

Hubert de Barochez, senior market economist at Capital Economics, also sees big gains for markets ahead, but not because Trump is in the White House.

Capital believes that Trump’s polices will actually be a headwind