Need To Know: Why Trumps Trade Tirade Wont Get In The Way Of S&P Hitting 5,000

Investors couldn’t really ask for a more-action-packed week — or more stress — and that’s what’s headed our way.

The North Korea summit, a Federal Reserve rate call and possible QE unwinding news from the ECB are all jammed into the next five days. That’s after a whirlwind weekend of President Trump pretty much annoying every other G-7 leader, with no signs of a slowdown in the barbs as he readies for his meeting with Kim Jong Un.

While the market seems ready to shake off geopolitical spats for now, the Fed is looming large. A rate hike is roundly expected, so it’s signs of more aggressive moves that could derail stocks bigly.

Which brings us to the call of the day, from Kevin Matras of Zacks Investment Research, who urges investors to look past this week’s big events. That’s because the S&P 500 will double within five years, if not before, on stronger U.S. economic growth, the Zacks president forecasts.

To do that, the S&P would have to reach 5,500-plus from current levels — and that means annual gains of 14.9%, Matras says in a blog for Talk Markets.

However, he notes that’s exactly what the index has been doing since the bull market began in 2009, and on U.S. GDP growth of only 1.5% (before 2017).

Growth is key to the S&P doubling its fortunes, says Matras, who believes Trump’s pro-expansion policies will be “transformational” for the U.S. economy. Companies will use extra cash from lower corporate taxes not only on share buybacks, but also on major investments, such as bringing some foreign operations back home, building plants and hiring workers. And when people have jobs they spend, and that helps U.S. growth.

Opinion: Trump economy is doing fine, to the chagrin of the dismal science

Second-quarter GDP is already forecast at over 4%, and even with the sluggish growth before the recent boom, stocks have produced a total compounded return of over 126% in the last five years, says Matras.

“So it isn’t hard to imagine that if GDP were to double, or more (and it already nearly has), earnings would soar, and stocks could easily gain another 100% over the next five years, and likely a whole lot more,” he says.

How to prepare for that even-bigger bull market? Stick to the winners, advises Matras, who notes that stocks that make new highs tend to go on to make even higher highs. (Netflix NFLX, +0.76% and Amazon.com AMZN, +0.51%  are just a couple that could qualify.)

Also, he suggests small-cap stocks, which have historically outperformed the market. Note the Russell 2000’s RUT, +0.12%  not-so-shabby nearly 9% run this year.

The markets

The Dow DJIA, +0.24% , S&P 500   SPX, +0.38%  and Nasdaq COMP, +0.41% are all moving up modestly. That’s after an upbeat Friday and a week that ended with the best gain since March for the Dow, and solid wins for the S&P 500 and the Nasdaq.

Asia ADOW, +0.10% had a mixed session, while Europe SXXP, +0.73% is being led higher by rallying Italian equities I945, +3.42% The euro USDEUR, -0.1765% is up, and the dollar DXY, -0.01%  is dipping a bit. Gold GCQ8, +0.15% is ticking higher, while crude oil CLQ8, +0.69% is lower. The loonie USDCAD, +0.4874%  is taking some hits over that U.S.-Canada spat.

Check out the daily Market Snapshot column for more.

The chart

Here’s a pretty painful looking chart for bitcoin BTCUSD, +0.30% which tumbled more than 10% Sunday night . The slide to a two-month low below $6,700 came after it emerged that South Korean cryptocurrency exchange Coinrail had been hacked.

There’s speculation that more than $40 million worth of altcoins may have been stolen. It wasn’t just bitcoin — Ethereum ETHUSD, -0.21% Ripple XRPUSD, +0.26%  and bitcoin cash BCHUSD, -1.56% also all took pretty big hits.

Bitcoin bull Ronnie Moas said over the weekend on Twitter that he wouldn’t sell on the hack of an exchange he has “never even heard of”:

Plus : U.S. regulators want trading data from bitcoin exchanges in manipulation probe

The buzz

Officials on both sides are racing to get ready for Trump’s summit with North Korean dictator Kim Jong Un. POTUS, who reckons it’ll take one minute to work out whether Pyongyang is taking denuclearization seriously, has been keeping busy tweeting fresh insults at Canadian PM Justin Trudeau and NATO after a dismal G-7 meeting.

Elsewhere, at the Tony Awards on Sunday evening, actor Robert De Niro launched the F-bombs the G-7 leaders may well have been biting down.

Envision Healthcare EVHC, +2.37%  is getting a bump on reports KKR & Co KKR, +1.17%  is nearing a deal to buy the provider of physician services for around $5.5 billion.

Read: Potential Comcast-Fox deal awaits Tuesday’s ruling on AT&T-Time Warner merger

Just ahead of the Electronic Entertainment Expo in LA this week, Electronics Arts EA, +1.36%  rolls out subscription services for its best games.

WPP’s WPP, +1.37%  board is reportedly looking into whether ex-CEO Martin Sorrell used company cash for a prostitute.

HSBC HSBC, +0.09% HSBA, +0.01%  plans to invest up to $17 billion in growth and technology and turn around its U.S. business.

Tesla TSLA, +2.98% CEO Elon Musk’s Boring company has delivered 1,000 flamethrowers customers, along with some Dr. Suess advice on how to use them safely.

There is lots of data coming this week, with consumer prices and retail sales among the highlights. See our preview here.

Read: Fed goal is to signal an ‘unhurried’ pace of interest-rate hikes

Random reads

National Archive workers are spending time taping together documents that POTUS routinely tears up

Italy and Malta argue over who should accept 600 stranded migrants

9-year old reportedly in rehab for Fortnite addiction

Fox News accidentally refers to “two dictators” over Trump-Kim meeting

North Korean leader goes nowhere without his own toilet

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