Equities Hit the Ground Running, Resulting in a 21,000 Dow

Trading up over 325 points and gaining 1 ½ percent on the day, the Dow Jones Industrial Average advanced above 21,000 today for the first time in history. As we go into the close, the Dow has settled at 21,115, after trading to an intraday high of 21,169.

This milestone is a continuation of a long-standing rally that went parabolically immediately following the presidential election results in November of last year. Traders and investors are bidding up equities as their confidence increases regarding economic growth both in the United States and globally.

Trump Doubles Down on Promises but Offers No Specifics

Speaking in a subdued presidential tone, Donald Trump’s demeanor portrayed a distinct pivot, void of petty insults and, just as important, stayed on point. His address to Congress yesterday was well received as he reiterated his campaign promises and laid out his vision for the revitalization of the American economy.

In his first speech to the joint members of Congress, he called for unity as he proposed major tax cuts, the development of major infrastructure projects, and a massive budget increase in military spending. Add to this his commitment to repeal and replace the Affordable Care Act, and it is quite clear that he wants to tackle the vast majority of commitments and promises he made on the campaign trail.

What the president’s speech lacked last night was any substance as to the specifics of how he would go about accomplishing these tasks. Not only did he omit any specifics on how these goals would become accomplished, he failed to mention how these projects would be funded. Nonetheless, in classic Trump style, he was able to deliver exactly what investors and traders wanted to hear: unbridled optimism. Apparently, it was enough to sustain the US equities rally.

Gold Just Able to Overcome Dollar Strength and a March Interest Rate Hike.

Fed futures is now predicting an 80% likelihood that there will be a rate hike in March. Both equities and the precious metals complex seemed to shrug this off. More so, in light of this incredible risk-on environment, gold was able to hold its own, trimming losses from early in the trading day. The price of spot gold gained $1.50 today. However, a closer look reveals that the strong US dollar accounted for a $4.50 decline, with buyers bidding up gold approximately $6.00. According to the Kitco Gold Index (KGX), the result was a net change of plus $1.50.

Wishing you as always, good trading,