Two Boosts for the Trump Market


The January jobs report had good news for the Trump Administration and the market, though its surveys were taken before Inauguration Day.

The U.S. economy added 227,000 new jobs in January, the best monthly jobs report since last June. Unemployment ticked up to 4.8%, but the labor force participation rate also rose slightly as more people looked for work.

The one down side was that hourly earnings rose by a mere 0.1% in January and only 2.5% during the past 12 months. That’s more than the 2% annual growth they’ve shown over the last few years but weaker than the 2.9% trend that had the Federal Open Market Committee (FOMC) on track to raise the federal funds rate three times this year.

The FOMC held its ground at this week’s meeting and the low wage increases and weak GDP growth of 1.6% in 2016 have Wall Street believing the Fed might raise rates even more slowly.

That was one reason the Dow Jones Industrial Average was up by about 170 points Friday afternoon, while the Standard & Poor’s 500 index was within a few points of the 2,300 mark and its all-time high.

But there was another reason stocks closed the week with a bang.

On Friday, President Trump signed yet another executive order, this time calling on the Treasury Department to dismantle the Dodd-Frank Act of 2009, which regulated big banks more stringently in the wake of the 2009 financial crisis.

And the head of the National Economic Council, Gary Cohn, told The Wall Street Journal the Labor Department would revise or rescind the recently adopted “fiduciary rule,” which requires broker/dealers and those offering investment advice to retirement plans and their participants to recommend only what’s in their clients’ best interests.

That sounds pretty sensible to most of us, but Wall Street has been up in arms over the changes, because they would add to costs and make the firms more accountable when their bad recommendations go south. Still, former Goldman Sachs president Cohn called it a “bad rule for consumers,” proclaimed that “Americans are going to have better choices and Americans are going to have better products,” and giddily promised this order was a mere “table setter for a bunch of stuff that is coming.” Hallelujah!

Goldman’s stock is up 4% today and has rallied 32% since the election. The other big Wall Street firms and other banks also have surged. (We added a financial services ETF to our GoldenEgg Investing® Best Ideas plan in January.)

Thus far, President Trump has really delivered for Wall Street and the markets. Starting with next month’s jobs report and this quarter’s GDP, we’ll know whether he’s also delivering for the economy and the rest of the American people.