Back in the fall of 2015 I was asked to do a segment on CNBC's Closing Bell. I had been on the show countless times over the years and found myself fighting bearish sentiment as the market climbed higher and higher. I remember getting into 'loud conversations' with my good friend Rick Santelli about the bond market giving investors the wrong signal for stocks thus keeping investors out of equities. But this day was different; It was the first time in years I became openly concerned and called for caution.
There were certain variables coming into play which were creating, in my mind, the perfect storm. Not only had the market been fighting the anti-business sentiment coming out of DC but it had to deal with high valuations, an expanding multiple and a strong, unhealthy correlation to crude oil. As crude started to become a larger problem for the market, it became clear that the capital markets were going to experience serious volatility. Eventually, we witnessed equities lose almost 20 percent in a couple months.
It was the Trump election that transformed me back to the 'Optimistic Armenian' (As the late Mark Haines called me!) once again. A week later I was asked to do Closing Bell yet again and called for the 'all clear' for the stock market. The sweep in DC changed everything overnight and the market was poised to move significantly higher, and it did. We were all waiting for the return of Ronald Reagan and supply side to save the economy! But now we find ourselves at an inflection point. The question we should now be asking is; What if DC is the problem, not the solution?
As I write this piece, congress has 60 days left this year to legislate. That means they have 60 days to carve out a tax reform bill, work out a deal for repatriation of capital and reform health care. Assuming health care gets pushed out another year, that still leaves two huge pieces of legislation left with very little time.