Not even Donald Trump's "biggest tax cut" in the history of the United States could excite markets, Wall Street closing flat overnight.
Like many of Trump's radical ideas, investors are sceptical about whether it will actually pass into legislation, certainly in its current proposed form.
I can't say I'm opposed to the concept of simplifying and lowering taxes. But there's always a trade-off.
In Australia, that could mean a higher GST, a removal of negative gearing and the dividend imputation system, less generous tax breaks on retirement income, changes to pensions and benefits…
We've already had a taste of the furore should any government attempt to reform any one of those big ticket areas.
People hate change. Politicians put their own political survival ahead of big, bold changes and reforms.
And so Australia muddles on, tinkering at the edges, politicians governing for votes, not for the national interest.
But not Trump.
He's a true political outsider. He's in for a fixed four year term. He won't be booted out by his own party. He won't care if he doesn't get re-elected. He's not here for a long time. But he is here for a good time. Others can fix his problems — a massive fiscal deficit being the most obvious — once he has sailed off into the sunset.
And in the meantime, Trump will keep pushing his own ideology onto the people of America.
Lower taxes. America first. Massive spending on infrastructure. Less regulation. Abolish Obamacare. Destroy ISIS. Flex military muscle.
What does it all mean?
Up till now, for the stock market anyway, it has been up, up and away. The prospect of lower corporate taxes, higher infrastructure spending and lower regulation has that effect.
But 100 days, and many hundreds of Tweets into Trump's presidency, those effects have largely run their course.
So now it's back to good old corporate earnings.
In the short-term, markets are powered by sentiment. In the long-term, they are powered by earnings.
On Wall Street, the news is good, with The Wall Street Journal quoting Bob Doll, senior portfolio manager at Nuveen Asset Management, as saying…
"What we've seen since the inauguration is an unbelievable earnings quarter…"
According to AMP's Shane Oliver, of the US companies that have reported Q1 earnings, 78 per cent have beaten earnings estimates.
Unbelievable indeed. No wonder Wall Street is trading at close to record highs.
No such joy here in Australia though, certainly at the big end of town.
We've had Coca-Cola Amatil Ltd (ASX: CCL) warning on profits, sending its share price down over 13 per cent in the past week.
Today we've had the Wesfarmers Ltd (ASX: WES) owned Coles post its lowest sales growth in more than nine years, sending the Wesfarmers share price down over one per cent.
And there's no let up for Telstra Corporation Ltd (ASX: TLS) — my recent whipping boy — with respected fund manager Steve Johnson saying that even though the Telstra share price has already fallen 16 per cent in the last six months, "it could get a lot worse yet."
Yet look beyond the popular blue chips, and things look a whole lot better.
Just yesterday, the a2 Milk Company Ltd (Australia) (ASX: A2M) share price soared 8 per cent higher after the group upgraded its full year revenue guidance thanks to ballooning demand for its a2 Platinum infant formula products from Chinese consumers.
A2 Milk shares are up another 2.5 per cent in early trading today, and up over 20 per cent in the past month.
Software solutions business Gentrack Group Ltd (ASX: GTK) recently announced two complementary acquisitions, something that has helped its share price also jump almost 20 percent higher in the past month.
Even the Aconex Ltd (ASX: ACX) share price has jumped 25 per cent higher in the past month, despite the fast growing cloud collaboration software company being one of the most shorted, and therefore most hated stocks on the ASX.
The rise and rise of passive investing means most money is chasing the same old blue chips.
The same old blue chips that are growing earnings at a snail's pace, if at all.
The same old blue chips that are trading at very high valuations.
The same old blue chips that have limited upside potential and plenty of downside risk.
Given the ASX's nice run since Trump's election win, powered almost exclusively by the above-mentioned 'same old blue chips,' the passive investors piling into said stocks should expect mediocre returns between here and the end of the year… and maybe longer.
Meanwhile, small and mid-cap growth stocks are suddenly, and decisively back in vogue.
There's a wall of money out there, stuck in the bank, earning a pittance, looking for opportunities to earn outsized returns.
Money chases performance. And when the money wises up that the blue chips have had their day in the sun, and that growth stocks are now where the action is, look out above.
