Wednesday, November 30, 2016
Small Business Stocks Surge
Since the election on November 7th there has been some interesting changes in the investor sentiment. President-Elect Donald Trump's promise of a strong dollar is coming true without his administration actually implementing any policy. Well of course there is no implementation since he is not yet in office you say, and that just goes to show the power of words and a self-fulfilling prophecy. The market is already showing positives for small businesses and their stock. One example is the Russel 2000, an index for small businesses, that has risen 12% just in the past three weeks. This advantageous jump is supported by the US dollar's over 3% rise in value since the election and the planned policies changes of the Trump administration.
http://finance.yahoo.com/news/small-us-companies-win-big-post-election-stocks-190218390.html
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I think the key thing to note is that these are domestic businesses that are really benefiting. It's a little worrisome how the stronger dollar will decrease exports of businesses that also deal internationally. Those businesses also lose out because they have to exchange their foreign currencies back into U.S. dollars which will be less and less if the strength of the dollar keeps rising.
ReplyDeleteI do agree with Pat that with a strong dollar the exports might be affected. Some companies in other countries might be discouraged since they might lose money on exchanging currencies when they trade with US companies.
ReplyDeleteThis may encourage international businesses to make a stake in the US economy either through heavy investment or moving parts of production into the US. Although that would be expensive it may pay off for them to be involved more directly in the US business cycles.
ReplyDeleteI think Donald Trump's words have always been so influential (good and bad) that during his presidency this sort of affect will happen a lot. He is so popular in the media, and people pay so much attention to what he is doing and what he is saying that he may not have to rely so heavily on policy as other presidents have.
ReplyDeleteRaising the dollar value would ruin the export business of those business and affect the U.S. either positively or negatively. Trump wants to implement trade policies that would raise the U.S. dollar value in a way so i am guessing it is all working as he planned. Although, i think this will damage the U.S. more than it would benefit them.
ReplyDeleteThe short run implications of Trumps presidency are the first reaction of the people. Time will show if the long will be equally prominent.
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