Trump is not killing the bull market. This is why

More and more Wall Street business leaders and strategists are voicing concerns about what protectionist policies and the unpredictable nature of President Donald Trump could do to markets and the economy.

But we all know that action speaks louder than words. What investors are really doing is in stark contrast to what people are saying. The Dow, S&P 500 and Nasdaq hit all-time highs again on Friday.

And the Russell 2000, an index of small-business stocks that tend to do most of their business in the United States, is now only a few points from the all-time high it reached last December in the wake of Trump’s market euphoria.

Furthermore, the VIX (VIX), a volatility measure known as the Wall Street fear indicator, has also fallen nearly 25% this year. If investors were really afraid of Trump, the VIX should be much higher.

AND CNNMoney’s own fear and greed index, which looks at the VIX and six other measures of investor sentiment, shows signs of greed and is not far from levels of extreme greed.

Of course, Trump seems to be unable to avoid tweeting about things that, let’s be honest, will do nothing to help the economy, although Nordstrom investors are richer despite Trump attacking them for throwing away his daughter Ivanka’s brand.

But to give credit where it’s due, it seems that the main reason stocks have been climbing again lately is because Trump has promised to reveal a “phenomenal” fiscal plan soon.

Related: Rare Streak For US Stocks USA: Long stretch without a 1% dive

Trump also pledged again to invest more in infrastructure when he met with airline CEOs on Thursday.

That is what the market wants to hear.

“We still expect fiscal stimulus, lower taxes, and less regulation,” said Matt Lockridge, manager of the Westwood Small Cap Value Fund. “The moment is the big question, but it is coming.”

Lockridge believes that many companies that generate the majority of their revenue from the United States should benefit if Trump’s stimulus ends up boosting the economy at a higher speed.

Likes stocks in a variety of industries, such as movie theater owner Masco (MORE), snack company J and J (JJSF) and aerospace equipment company Kaman (KAMN).

Another money manager said he is also optimistic about small US stocks. USA They could get a boost from Trump’s policies.

Related: Wall Street Has A Powerful Seat At Trump’s Table

Barry James, President and CEO of James Investment Research, said he bought the iShares Russell 2000 ETF (IWM) the day after the election because he is confident that Trump’s stimulus plan will fuel the growth of small American businesses.

“When Trump said the United States first, I really think that is what he means,” James said, adding that he believes the Internet phone service Vonage (VG)Rent-to-Buy Retailer Aaron’s (AAN) and discount chain Large batches (BIG) everything could prosper if Trump’s proposals are followed.

But there is another reason why the US markets. USA They are close to all-time highs. Despite all the uncertainty in Washington, the United States is still seen as a model of relative stability compared to other parts of the world.

Europe’s economy remains a big wild card thanks to Brexit, the rise of populism in France that raises concerns about the so-called Frexit and more concerns about the problem that seems to never go away: Greece’s debt problems.

Japan’s economy also remains stagnant. We are talking about more than just a lost decade now. It is plural. And China’s economy is also slowing down.

Bond fund manager Bill Gross often joked that the United States is like what Johnny Cash and Kris Kristofferson sang in “Sunday Morning Coming Down,” the “cleanest dirty shirt.”

To that end, analysts at bond rating agency Fitch wrote in a report on Friday that “elements of President Trump’s economic agenda would be positive for growth,” but added that “the current balance of risks points to an outcome.” less benign global. ”

Of course, there are two sides to that coin. Trump’s bombing could come back to haunt him.

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His continued penchant for reprimanding companies with which he disagrees on Twitter could affect investor confidence.

And while his proposal to ban immigrants from seven mostly Muslim countries has been revoked by the United States court system for the time being, the President has promised to fight for his reinstatement.

Even if he loses that battle, it’s still clear that Trump is serious about turning inward, with tight border tax and tariff plans that could trigger trade wars with Mexico, China, and Japan. That could harm large multinational companies in the US. USA And lead to job cuts.

But investors still seem to believe / expect that the merits of Trump’s pro-growth stimulus plans and tax cuts will outweigh the impact of isolationism. Hopefully they are right.

Investors may be plugging their noses, closing their eyes, and stuffing cotton in their ears to drown the president. But they are still buying stocks.

CNNMoney (New York) First published on February 10, 2017: 11:55 a.m. ET