Skip to content

Stock Market Mystery

…Will It Become Stock Market Misery?…..

Historically when there has been a slow-down in economic growth and corporate profits, the forward -looking stock market declines. But so far, this has not been the case under Trump.

In December, 2018, the Dow Jones dropped about 2,100 point or 8%. Investors were concerned about five negative factors:

  1. World economies are slowing
  2. Exports are declining. Other countries hate Trump and the republicans. Their citizens, especially China, have been boycotting USA made products and services.
  3. Corporate income and profit growth are declining
  4. There are record government budget deficits, corporate debt levels and individual debt levels
  5. The Federal reserve was raising interest rates

And it looked like a market meltdown was underway. But the following month, the Federal Reserve announced they would no longer be raising interest rates and hinted they may even cut them. Trump also announced that a trade deal with China might soon occur. And many Wall Street investment advisors, told investors not to panic, saying that lower corporate profits are okay because the Federal Reserve would be lowering interest rates. The market fully recovered over the next two months. The same scenario was repeated in the mid-April to May time-frame of his year, when the market again fell 8%. only to recover in June for the same reasons. Now the market remains near new record highs.

Sure job growth has been good, unemployment is low, and inflation appears to be under control. But those factors were in place in December and April when the market was plummeting. And world economies are still slowing, exports are declining, and record budget deficits still exist. The only factor that has changes since December is the that the Federal Reserve is obeying Trump and reducing interest rates. Does this justify these lofty stock prices? Or does it have something to do with the Presidential Power ‘That Nobody Has Ever Seen Before” that Trump claims he has.

Published inUncategorized

Be First to Comment

Leave a Reply

Your email address will not be published.