Wall Street's post-election jubilation will be tested once Donald Trump takes office and Americans get a clearer picture of his administration's actual policies on taxes, interest rates, regulation and trade.
Fact is, investors are euphoric over brash campaign promises that haven't been kept yet.
Trump already is backing away from promises that were highly impractical to begin with. Notably, it turns out that Mexico won't pay for the border wall; our friends South of the Border will just be billed for it (good luck with that). Indeed, an undercurrent of growing investor nervousness is reflected by the increase last week in activity in options markets used largely for hedging stocks.
Nonetheless, one bullish trend seems to enjoy sustainable momentum: the upward trajectory of bank stocks. Resilient economic growth, falling unemployment, rising wages and home prices, a recovering energy patch, and tightening monetary policy all add up to healthy earnings and revenue for the financial services sector.
This past week, the Dow Jones Industrial Average came within one point of 20,000, a technically meaningless but psychologically powerful threshold. The "Trump rally" has somewhat faded but it could get new juice from the quarterly earnings results of money center banks scheduled for Friday. Their report cards are expected to be strong, but that also means their shares could take a hit if there's a whiff of disappointment in the numbers.