So much for those flat markets…
Overnight, Wall Street rallied hard, with all three major indexes closing at record highs.
The spike came after human megaphone President Donald Trump promised a "phenomenal" announcement about his tax plan within three weeks.
You can just imagine him saying…
"It's going to be big. A big plan. A phenomenal, amazing plan. We're going to cut company taxes so hard. So hard that American businesses will be the most competitive in the world. So hard. It's going to be huge. Not only will I make America great again, I'm going to make the World great… just watch me."
Here in Australia, the good news is where Wall Street goes, we follow.
Today is no exception, our S&P/ASX 200 Index leaping 40 points higher, jumping back through 5,700.
Growth is back on the agenda. Global growth. Share price growth.
Even RBA Governor Philip Lowe is on the case, quoted in the AFR as saying Trump's policies of infrastructure spending, reduced regulation and cuts in the corporate tax rate might do the unexpected — deliver an economic boost that the whole world has been yearning for since 2008.
Dr Lowe has even gone so far as to say if Trump's policies serve "as an example to others, it could be very good for global growth."
Are you watching Australia?
Over to you Malcolm Turnbull. And you Bill Shorten. And the Senate. Be damned with the deficit. Cut corporate taxes. Cut personal taxes while you're at it. Let's grow our way out of this malaise.
The RBA doesn't want to cut interest rates any further. On the contrary, it wants to raise them, but in order for that to happen, he needs our economy to be growing at a decent rate again.
In other words, the RBA Trade is dead. The Trump Trade is alive and kicking.
What you say Malcolm? Bring on the Turnbull Trade.
Meanwhile, even in the face of these low interest rates, Australian investors prefer bank deposits over the stock market.
As shown on the ABC News last night, Alan Kohler's chart shows just how cautious Australian investors remain.
Source: The Constant Investor
As a nation, not only did we rush out of stocks right at the bottom of the GFC, we've stayed out, in the process missing one of the biggest bull markets in history.
Buy high. Sell low. Go directly to the aged pension.
Madness.
Madness when you can buy ASX stocks trading on 6% fully franked dividend yields — which grosses up to over 8.5% — AND also have the potential for capital gains. Motley Fool contributor James Mickleboro has three such suggestions below.
Earnings season is about to accelerate, with a whole host of companies slated to report next week.
For me, it's a perfect time to either top up existing positions, or start new ones.
Take Blue Sky Alternative Investments Ltd (ASX: BLA), a stock I already hold in my SMSF. Its share price is on a tear today, up 8% to $7.95 after the asset manager reported continued momentum in revenue, profit and assets under management.
When you get it right — and in the fund management business it mostly starts and finishes with investment out-performance — the returns from investing in such businesses can be phenomenal. Or as Trump would say, truly great, just brilliant, amazing, the best.
Magellan Financial Group Ltd (ASX: MFG) is the poster child of the sector. With a market cap of $4.2 billion, its share price having soared 1400% higher over the past five years.
An investment in Blue Sky Alternative Investments hasn't been too shabby either — its share price is up 675% in the past five years. But with a market cap of $500 million, there could still be blue skies ahead.
