Some say that ever 'gainst that season comes
Wherein our Savior’s birth is celebrated,
The bird of dawning singeth all night long:
And then, they say, no spirit dares stir abroad;
The nights are wholesome; then no planets strike,
No fairy takes, nor witch hath power to charm,
So hallow'd and so gracious is the time.”

(Hamlet, by William Shakespeare, Act 1, Scene 1, Lines 172-178)



Interestingly, for everything else he wrote about, William Shakespeare almost never wrote about anything religious – the above passage is one of his few that that even remotely addressed anything theological or spiritual. We don’t know if this is because he was areligious or because he was too savvy to engage in any theological controversy during a fierce Catholic vs. Protestant political regime (we tend to believe the latter).

We share this because the passage above seems to accurately describe current market conditions – “the bird of dawning singeth all night long…no spirit dare stir abroad…the nights are wholesome…[and] no planets strike.

Regardless of your personal or political opinion of Donald Trump, his administration has been very good for business. We’ve regularly shared our opinion that the market “over-priced” the actualities of Trump’s campaign pledges, but the fact is that anti-growth regulations have been rolled back, Congress approved a once-in-a-generation tax reform bill (with tons of flaws and pork, but pro-growth nonetheless – sausage making is an ugly business), economic growth is solidly positive, and the stock market is soaring.

We are reminded of the cliché that “Equity market rallies don’t die of old age, but rather are killed (usually) by Central Banks.” The current robust and multi-year rally in most global equity markets has some investors concerned that it simply cannot continue, but there is little correlation between the length of any given rally and the underlying causal conditions. There is no question that valuations are high, but we believe that is an indicator of reduced longer-term return expectations than a signal of an impending market correction or collapse.

What an investor earns is explicitly a function of how much he/she pays for the investment, and the public markets are expensive, to be sure. But the benign global economic regime we’ve described for the past several months remains solidly in place – solid economic growth (especially in manufacturing), strong corporate earnings and revenues, raging equity markets, low interest rates, and an almost frightening level of market complacency.