The Dow Jones Industrial Average crossed the 20,000 threshold yesterday in the United States, as the The Toronto Stock Exchange‘s S&P/TSX composite index also soared. The TSX closed up 33.15 points, or 0.21 percent, at 15,643.84, just off its September 2014 record peak of 15,685.13.
There are no shortage of opinions on what it all means.
“You have to back to 1999, when the Dow Jones hit 10,000; you have to back to 1966 when the Dow Jones hit 1,000 and it was the 25th of January, 2017 that the Dow Jones hit 20,000”
While many say it is just a psychological lift, there’s little doubt, it is a milestone. David Blair, CBC national business reporter, says “it is a monumental day from an historical perspective”.
“You have to back to 1999, when the Dow Jones hit 10,000; you have to back to 1966 when the Dow Jones hit 1,000 and it was the 25th of January, 2017 that the Dow Jones hit 20,000, so this day will always go down in history as the day that the Dow Jones broke that psychological barrier.”
David Blair says what it really reflects is what’s being called the “Trump Effect” or the “Trump Bump”. This is the optimism businesses are feeling with the Trump presidency. Trump’s promises, from investing heavily in infrastructure improvements, to loosening regulatory frameworks, to lower corporate taxes has corporate America feeling rejoicing.
ListenBlair points out that It’s also the middle of earnings season, and many companies’ results are beginning to come in quite positively. “It looks like shareholders, investors, traders are all looking at this information and they’re saying, you know it’s a pretty optimistic outlook from a business standpoint and that’s what’s pushing the markets higher.”
And while some argue the Dow doesn’t matter that much, Standard & Poors 500 is a better index, but it too is up into record territory.
At the beginning of the week there was great anticipation about the protectionist policies of the Trump administration would mean for Canada. Would we be losing out in the upcoming North American Free Trade re-negotiations?
“So the insiders are beginning to say these are pretty lofty levels”
Very quickly, however, Canadian politicians seemed to have their biggest fears assuaged. Stephen Schwarzman, the CEO of Blackstone Group and a senior policy adviser to Trump, was at Prime Minister Trudeau’s cabinet retreat in Calgary, Alberta, with reassurances that the new Trump administration holds Canada in very “high regard”.
On the second day this week, Trump revived the Keystone XL pipeline. This is Trans Canada’s proposed pipeline to transport Canadian oil down to refineries and storage facilities in Oklahoma and Texas in the southern United States. This was very good news for the Prime Minister while in the economically battered province of Alberta, where the collapse in world oil prices has had a devastating effect.
Meanwhile, the Wall Street Journal issued a report earlier this week that suggests this may be the peak.
“Some of the top executives in the banking sector in the United States, have started selling their stocks in their own banks, and so the insiders are beginning to say these are pretty lofty levels” David Blair says. He cites the example of Morgan Stanley, the big American bank’s stock is up 23 per cent since Donald Trump was elected on November 8th, 2016.
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