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Stocks break record again. But is Trump the reason?

The Dow, S&P 500, Nasdaq and Russell 2000 hit new all-time highs on Monday.

Investors are enthusiastic and clearly believe that both the large blue-chip multinationals and the smaller companies that do most of their business in the US will continue to prosper.

So is this Donald Trump’s rally? Or the Janet Yellen rally?

Some strategists believe that Trump’s stimulus plans and talk of ending many onerous regulations are the reasons stocks are soaring.

Or is this perhaps better characterized as a continuation of the Barack Obama rally?

It could be argued that POTUS 44 has given POTUS 45 a good hand.

The strong job market and overall economy that Trump inherited may be why consumers and businesses are so confident.

But investors (and financial journalists) are often quick to give the president more credit — and blame — than he probably deserves for the performance of the stock market.

RBC strategist Jonathan Golub pointed this out in a report on Monday, which was aptly titled “Message to the market: It’s not just about the Donald.”

Related: Trump Isn’t Killing the Bull Market

Golub noted that the S&P 500 rose nearly 7% from late June through Election Day, a time when most polls predicted Hillary Clinton would be the next president.

But stocks have continued to rally ever since, up another 8% since Trump’s surprise victory (at least for the mainstream media and Wall Street).

You can’t have it both ways. It makes no logical sense to suggest that stocks rose because investors believed Trump would lose and that they continued to rise because Trump did not lose.

Bond yields have also been rising since Trump won, a phenomenon many investors have attributed to the likelihood of stimulus from the president and the Republican Congress.

However, Golub notes that the 10-year US Treasury yield also rose in late summer.

Of course, many investors also expected stimulus from Clinton.

Yet again, many investors are claiming that Trump is the catalyst for something that was not only happening before he was elected, but was happening because many thought he would lose.

Related: Stocks have avoided a 1% drop for an unusually long period of time

So it’s strange that Trump is mentioned as the main reason for a market rally that started months before anyone felt they could win.

What is really going on? The only constant over the past few months is the Federal Reserve.

yes the markets are reacting to Washington. But they are paying more attention to Janet Yellen, not the White House.

The Fed made it abundantly clear before the election that it would likely raise interest rates in December and do so a few more times in 2017, regardless of who won the race for the presidency.

The good news for investors is that the US economy appears to be growing steadily, but does not appear to be in danger of overheating.

Related: Here’s Why The World’s Biggest Money Manager Is Worried

The most recent jobs report showed wages growing at a decent 2.5% a year. But that’s not high enough to spark fears of runaway inflation and prompt the Fed to hike rates aggressively.

Even if Yellen and the Fed raise rates three times this year, they are likely to do so by only a quarter point each time. That would push the Fed’s key short-term rate into a range of 1.25% to 1.5%.

That is still extremely low. At those levels, stocks would still be more attractive than bonds. Corporate earnings should be able to continue to rise at a healthy pace. And consumers would likely continue to spend.

Investors would therefore do well to keep a close eye on Yellen and not just have a myopic focus on the president,

With that in mind, Yellen will testify before Congress on Tuesday and Wednesday. And what he says about the timing and magnitude of future rate hikes could end up sending the rally going full steam ahead, or stopping it in its tracks.

CNNMoney (New York) First Posted Feb 13, 2017: 12:30pm ET

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