"The Trump Impact:" Wall Street stocks advance for a fourth consecutive session

Wall Street is clearly betting on new highs and riches ahead in markets all-in on Donald Trump. This comes in light of Trump's return to the white house and the subsequent surge in asset prices.

But a new and different worry has emerged: investors aren't bullish enough. That sentiment is driving the latest purchasing frenzy in stocks and crypto. An additional $20 billion was poured into market funds on Wednesday alone on Trump's win.

This contributed to a total of roughly $2 trillion added to stocks during the last five sessions. Banks also soared, small-cap businesses increased by over 9 per cent, and bitcoin reached a new record high.

Trump's pro-growth promises of tax cuts and deregulation are fueling this surge. This comes just as the Federal Reserve tilts toward an easy-money stance. However, concerns about the high price tag of such fiscal stimulus remain.

Wall Street is now falling over itself to predict how far the everything-boom goes. Futures markets are betting that the rally in Bitcoin is just a start under a pro-crypto administration.

The industry's staunchest bulls and renowned strategist, Ed Yardeni, is concerned that he has been overly pessimistic in predictions of a "roaring 2020s" that is yet to come. The founder and president of Yardeni Research said, “I keep getting stampeded by the stock market.” he added, “I think we're in a bull market that'll last through the end of the decade."

The exuberance has flooded all corners of Wall Street and global markets. With a 4.7 per cent weekly increase, the S&P 500 reached its 50th record for the year. The benchmark index also briefly topped 6,000 points on Friday for the first time ever. The "fear gauge," or volatility index, saw its worst weekly decline since 2021.

While it's true that momentum breeds momentum, the rally risks blinding investors to lingering economic & high debt concerns. Amy Wu Silverman, head of derivatives strategy at RBC capital markets, said, "We may be getting ahead of our skis longer-term. very short-term, yes, it is definitely a risk-on event." RBC's strategy head added, "That said, I think I just think the tails get 'fatter' in a trump presidency."

The risks are in plain view. More trade tariffs lead to distortions in already-disrupted supply chains, higher inflation & budget deficits. Another top risk is that the FED veers away from policy easing.

However, the fed's latest meeting did nothing to tamp back the positive sentiment in risk markets. For now, the narrative is bullish. A proxy of so-called risk-on metrics saw its biggest weekly inflow since 2016. that is, incidentally, the year Trump scored his first presidential victory.

Amid bitcoin's surge, the largest ETF holding the coin claimed its biggest one-day haul since its inception in January this year. Even Dogecoin, a cryptocurrency created as a joke in 2013 that considers Elon Musk among its most ardent and vocal supporters, hit a new high.

In Asia, investors are chasing trump bets and zeroing in on trade war winners, fueling big jumps in some popular stocks. What's interesting, though, is that despite the trade tension fears, for investors, there are profits on the table for active stock pickers.