Let’s face it, optimism is one of the most powerful market drivers and, thanks to the President Elect’s actions, Ford (NYSE: F), U.S. Steel (NYSE: X), and United Technologies Corp. (NYSE: UTX), Carrier’s parent corporation, are making moves that have Americans believing that manufacturing jobs are returning to America, in one of the best feel good stories in a generation. The optimism is further fueled in knowing that this trend is just beginning. For most companies, the proposed tax cuts should directly translate into bigger bottom lines and bigger budgets for important needs, so many companies, like Social Reality (NASDAQ: SRAX), should see an increased demand for their advanced ad serving technology and seamless services, which empower their clients to build and run a vertical ad network. From 2010 through 2015 Social Reality hit an average annual growth rate (AAGR) of 170%, while typically running blended gross margins in the 45-55% range, in what was considered to be a pretty rough environment for the space.
The Company was able to uplist to the NASDAQ Capital Market, in October 2016, despite the fact the industry was in the midst of a couple of tough years. Ad tech seemed to be turning the corner prior to the election, and the analysts, who were already calling Social Reality a buy, pegged 2017 to be the first year that SRAX hits positive earnings.
Just knowing that Trump cares enough about the working class to try to save a few jobs was enough to spike this CNBC poll (http://nnw.fm/L1J5l), about optimism in the economy, in historical fashion, and the market has taken notice. The bond market wasn’t a bad place to be when the economic parking break was firmly engaged, but Donald Trump’s victory flipped the script and triggered a quick $2 trillion rotation from debt into the stock market. The massive inflow elevated a number of obvious sectors, with the financials leading the way as the S&P 500’s top-performing sector, and just about anything to do with infrastructure.
U.S. Steel’s CEO, Mario Longhi, stated that they’re ready to accelerate their investments and bring back 10,000 jobs because they, too, believe that manufacturing is returning to America.
“We already structured to do some things, but when you see in the near future improvement to the tax laws, improvements to regulation, those two things by themselves may be a significant driver to what we’re going to do,” Longhi said during an interview on CNBC’s “Power Lunch”.
Bloomberg stated that Ford’s CEO, Mark Fields, credited Trump’s conversation with Ford Executive Chairman, Bill Ford, as influencing Ford Motors’ decision to continue building the Lincoln MKC sport utility vehicle at the Ford plant in Louisville, Kentucky, “because of what he’s talking about in terms of his economic policies, whether it’s tax reform or otherwise,” Fields said.
Trump worked closely with Carrier, after the company announced that it planned on cutting 1,400 jobs in Indiana and moving production to Mexico, but Carrier will now continue to produce furnaces and air-conditioners and will get $7 million in state incentives to keep the work in Indiana. Despite the agreement, about 1,100 Carrier employees in the Indianapolis area will lose their jobs.
The Dow Jones Transportation Average hit new highs and, according to conventional market wisdom, this means that the greater market is going higher. The basis for this optimism is the belief that Trump will be able to get Congress to cut taxes and implement more business friendly policies. If this happens, we could reach levels of real economic growth that we haven’t seen in generations.
Make no mistake about it; Trump is inheriting a financial mess and the corporate media famously predicted that Trump’s win would kill the market, so, unfortunately, far too people missed out on a huge market rally.
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