November 28, 2016

Stocks set another record high on a slow half-day of trading on Friday.  Black Friday has now morphed into Cyber Monday.  I’m not sure what that means any more.  Some retailers started Black Friday promotions around Halloween and everyone was offering Internet specials last week.  The trends have been obvious.  Sales are still moving in the online direction and so much early promotion takes away some of the sizzle of Black Friday itself.  If any investor thinks he can take weekend sales data and make heads or tails out of it, then he is far brighter than I am.  With that said, economic data has been generally positive of late, and I would expect this holiday season to be solid, but not spectacular.

News from Washington and the Trump transition team was generally quiet over the weekend.  While more announcements can be expected over the next few weeks, economic details of early steps to be taken probably won’t go far beyond what we have been learning from YouTube videos and the occasional Tweet until much closer to New Year’s.  Probably the biggest news item over the weekend was an effort spearheaded by Green Party candidate Jill Stein to start a recount in Wisconsin.  Michigan and Pennsylvania may follow.  Ms. Stein has raised more money to count votes once again by a factor of 3 than she raised for her entire campaign.  There remain some disgruntled voters still unable to accept who won.

Maybe the most memorable World Series in my lifetime was the 1960 series between the New York Yankees and the Pittsburgh Pirates.  That was the series won by Bill Mazeroski’s walk-off home run in the bottom of the ninth inning after the Yankees had retaken the lead in the top of the ninth.  This year’s series between the Cubs and Indians might have been just as exciting but it ended after 1:00 AM and I along with 300+ million Americans didn’t see it.  Anyway, back to 1960.   The Pirates won 4-3.  At least that’s how the Series was officially scored.  The Pirates won their four games by a combined 7 runs.  The Yankees won their three games by a combined 35 runs winning 16-3, 10-0 and 12-0.  They hit an incredible .338 for the series as a team.  I can’t remember when just one of our Phillies hit .338 for a week!  Yet when the series was over, no one asked for a recount.  No one screamed that the Yankees outscored the Pirates 55-27.  The rule book says the first team to win 4 games wins the series.

The Green Party and all the disgruntled Democrats can talk about popular vote totals and vote rigging, but there is absolutely no data to support any effort to reverse this election.  Donald Trump, for all his flaws, won the election.  Recounting votes in 1, 3 or 50 states isn’t going to change that.  The popular vote matters just as much as the number of runs the Yankees scored in 1960.  The incremental votes that put Mrs. Clinton over the top in the popular vote all came from New York and California.  But this time the other 48 states count more, and that is just the way it is.  One doesn’t have to like the outcome to accept it.

If you listen to the message of the stock market, the gripes of disgruntled non-Trump backers doesn’t matter one iota.  The possibility of less regulation, lower taxes, and a better way to execute ObamaCare hold promise.  To be sure, the honeymoon being celebrated at the moment won’t last indefinitely.  Indeed, I would expect a pause to happen sooner rather than later.  From here forward, actual initiatives rather than speculation will matter.   Concrete proposals will be needed to replace dreams.  Interest rates and currency markets seem to be settling down.  While the week will start slowly economically, there will be a rush of data toward the end of the week culminating in the big employment report for November on Friday, the last substantive data item before the coming FOMC meeting.

December is normally a good month for stocks.  It is a month when tax selling abates, bonuses are paid and many 401k plans get funded.  It is also a good time to look at 2016’s list of big losers, now victims of heavy tax-related selling, to see if there might be a diamond in the rough, a stock of a company whose 2016 problems may not carry over into 2017.

Futures suggest a slightly lower open.

Today Jon Stewart is 54.  Ed Harris is 66.  Berry Gordy, Jr. is 87.

James M. Meyer, CFA 610-260-2220

Additional information is available upon request.

# – This security is owned by the author of this report or accounts under his management at Tower Bridge Advisors.

Additional information on companies in this report is available on request.  This report is not a complete analysis of every material fact representing company, industry or security mentioned herein.  This firm or its officers, stockholders, employees and clients, in the normal course of business, may have or acquire a position including options, if any, in the securities mentioned.  This communication shall not be deemed to constitute an offer, or solicitation on our part with respect to the sale or purchase of any securities.  The information above has been obtained from sources believed reliable, but is not necessarily complete and is not guaranteed.  This report is prepared for general information only. It does not have regard to the specific investment objectives, financial situation or the particular needs of any specific person who may receive this report.  Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed in this report and should understand that statements regarding future prospects may not be realized.  Opinions are subject to change without notice.

No comments yet.

Leave a Reply