Trump Rally steps back after Wednesday’s massive Wall Street celebration

Nervousness returns to Wall Street as traders book Wednesday’s gains and ponder future action if the Federal Reserve raises interest rates on the Ides of March.

Screen grab of live video of President Trump's address to Congress, February 28, 2018, via YouTube video.

WASHINGTON, March 2, 2017 – After yesterday’s post-Presidential Address party on Wall Street, more sober (or hung-over) heads prevailed Thursday morning as many stocks, particularly in the financial arena, decided to pull back a bit.

On the flip side, the controversial IPO of Snap, Inc. (symbol: SNAP)—the official corporate name for the popular Snapchat app and its associated features—opened for trade on the NYSE late Thursday morning, powering up from its $17 per share offering price to stand at ~$25 per share. That’s an instant $8+ dollar gain, which, expressed as a percentage, is roughly 47.5 percent above the company’s offering price for its shares.

Of course, no one knows where SNAP will go after this morning’s frenzy of trading excitement. The issue was clearly oversubscribed, meaning that the number of investors, funds and perhaps ETFs clamoring for the new shares was (and is) considerably in excess of available shares.

(We have considerably more to say about the SNAP IPO and IPOs in general in our companion column today.)

But, aside from the SNAP excitement, most stocks in our portfolio are slightly in the red as we write this. We hate that, of course, but after a run like we experienced Wednesday, it’s probably best for markets to cool off a bit.

It’s the financials that are cooling off the most, it seems. After news—rumors, really—trickled out Wednesday that the Fed had virtually decided to raise interest rates again in mid-March, financial stocks, particularly banks, took off like a shot to the upside, given that higher interest rates ultimately tend to increase the profitability of banks, as they get to loan out more money at higher rates.

But a bit of buyers’ remorse apparently set in this morning, given that higher interest rates could also dampen enthusiasm for loans, particularly in the housing and credit card arenas.

Our guess is that these long overdue rate increases will occur in such small increments (likely 0.25 percent a shot) that they won’t have a huge effect, at least yet, on consumer demand. At the same time, higher rates will clearly help banks and lending institutions to achieve greater profitability. Longer term, this will add considerably to price bid for their shares, though it’s a long-term story for those who prefer to buy a good company in an attractive sector and sit on it for at least 3-5 years.

There’s also the usual political buzz for markets to deal with today, including the latest attack by the left on Donald Trump and his cabinet employees. This time, the howitzers are trained on recently confirmed Attorney General Sessions, and yeah, it’s those real or alleged conversations with Russians again. Democrats are obsessed with this, mainly because they planted information and leakers to keep releasing this stuff to stymie Trump’s ability to govern.

A spokesperson for Sessions has acknowledged some contact between then-Senator Sessions and (reportedly) a Russian diplomat. We suspect, however, such contact was routine and didn’t involve the Trump campaign or possible deals over future relations. Nevertheless, the Obama moles in the government will continue to air this kind of material and demand “investigations” (the only thing Democrats are really good at, PR-wise) to keep the Donald Trump reversal campaign against Obama’s business-killing combine from cranking up a head of steam.

It’s interesting that this anti-Sessions material is festooned all over the Washington Post on the heels of Trump’s way-successful address to Congress Tuesday evening. The media propaganda campaign must keep its own official Narrative foremost, and Trump can’t even be allowed a single day of positive press. It’s what we’ve come to today, at least in the Democrat Party, which has loved and admired essentially Marxist states and thug-ocracies for decades until suddenly becoming raving American patriots today. Go figure…

The market, on the other hnad, even on this day off from happy hour, appears to be ignoring the latest political fake news. Sensing a wonderland of future profitability, the Street seems convinced that Trump’s pro-business, anti-regulation campaign will pay dividends. Since it’s money and profits, in the end, that really matter to businesses of any size, the anticipation of less regulation, lower taxes, and less Federal interference are what continues to drive the action on Wall Street no matter what alt-media propagandists are preaching today.

On other fronts, oil, precious metals and some commodities are getting slaughtered in today’s trading action. Higher interest rates dampen enthusiasm for precious metals, and the rumors of another Fed interest rate increase are tackling the commodities sector today, particularly oil and gold, both of which are down well over 1 percent as we write this article.

Silver has been hammered even worse, down nearly 73 cents an ounce to stand at 17.765/oz. That’s a nearly 4 percent drop in one day. It doesn’t generally get much worse. Things could stabilize soon, but drops like this can be sickening.

Stay tuned for the next thrilling Wall Street episode Friday.

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