Earnings Call "Trump" Mentions Down: Bullish
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First, Investor Sentiment Makes No Sense
Amazing, incredible, off the charts. Investor sentiment climbed last week to...
"Optimism climbed to an 11-week high, it continues to remain below its historical average."
Source: AAII American Association of Individual Investors
What a minute. Below historical averages? That's not so high is it?
The stock market is at all time highs isn't it? But sentiment is still not up. What are they so worried about?
Investors Have Been Worried About Political Risk But That's About To Change
Factset had an amazing stat. They reported that so far of the companies that reported, the number of times "Trump" was brought up in earnings transcripts dropped... Big time!
By how much?
Since Q4 Trump-complaining dropped 87.5% and since Q1 Trump-complaining dropped 75%. CEOs are less worried about Trump in a material way. Why? Because business is doing just fine and nothing really that bad happened yet. How much can they continue complaining about something that never really materialized.
As companies have less Trump-complaining (official stat) investors are going to worry about that a lot less also.
If the companies you are invested are less worried, why should you still be so worried?
And That Can Let The Cap Off The Market To Go Higher...
So even with all this pessimism the markets have had no problem hitting new high after new high.
What's going to happen as all that pessimism unwinds?
A) The stock market will go higher
B) The stock market will go higher
C) The stock market will go higher
D) The market's going to be going a heck of a lot higher
Which did you choose? Take your time on this one and remember always trust your first guess (SAT rules 101).
We chose D. (answer in comments).
There are no wrong answers to this one.
Happy and profitable trading!
By: Chaim Siegel, Elazar Advisors, LLC
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