Thursday, 15 June 2017 00:00

Why Stocks Don’t Need Washington

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(New York)

Much of the stock gains of the early part of this year were attributed to a “Trump bump”, where changing politics was seen to be giving a boost to stocks. However, stocks may not need politics at all in order to keep rising. Major companies have hundreds of billions more Dollars on their balance sheets to invest than what Trump is proposing, and can borrow money more cheaply than almost ever. That view is part of the reason that investors may be starting to see companies as more stable than countries, an evolution that could explain why stocks have continued to rise despite political turmoil, contends CNBC.

FINSUM: This is an innovative argument that blends investor perception with asset prices. Perhaps the new risk-free rate of return is the the dividend from a big tech company instead of a US Treasury bond.

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