The Trump Rally
Speaking to reporters in the Oval Office this past Tues., Donald Trump praised U.S. companies and said their lower stock prices present an opportunity for investors. “I have great confidence in our companies. We have companies, the greatest in the world, and they’re doing really well. They have record kinds of numbers. So I think it’s a tremendous opportunity to buy.”
According to a Bloomberg report Trump had discussed firing the central bank’s chairman over raising interest rates, but asked about Fed Chairman Jerome Powell, Trump said the central bank is “raising interest rates too fast” but he has “confidence” that the Fed will “get it pretty soon.”
And so what happen the following day, following Christmas, the Dow Jones Industrial Average on soared by over 1,000 points, erasing its historic Christmas Eve losses to set a new record for the most points gained in one day. The S&P 500 was also higher, rising 4.9%, with the Nasdaq also up 5.8% that day.
The S&P 500 was also higher, rising 4.9%, with the Nasdaq also up 5.8% that day.
Trump and Chinese President Xi meet at the Group of 20 summit in Argentina earlier this month and agreed to suspend U.S. tariffs that had been scheduled to begin in January. However, days later, investors and the equity markets got concerned again about the validity of the agreement.
But then yesterday President Donald Trump spoke to Xi on Saturday and had the following to say on Twitter.
So is the Trump Rally from last week, just part of the bear market relief rally? Is this Rally going to continue after Trump's twit on Sat? If the rally continues, the levels I'm watching on the S&P 500 are the Feb and Oct lows and the Dec breakout, all should serve as resistance levels.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
I’m very skeptical. I remember 2008 well when we had a similar 1 day rally of over 1000 points...and then all hell broke loose. Until the government gets spending under control, we’re never going to get out of this. We might find temporary bandaids, but that’s it. Look at the interest on the debt by 2023...eventually we’re going to bleed out unless government stops the insanity.
With the exception of some of Trump’s trade policies, he’s been great for the economy. But you can’t address harmful regulation without also addressing the massive spending elephant in the room. Looking 5-10 years down the road, we’re heading for hyperinflation unless something is done.
Great points, also a big factor is that QE has ended and the feds are tightening, which means there is no money to pump up the equity markets.
You're right, but I do think it's necessary. The fact QE has been artificially pumping the market for the last decade is scary.
I am sure the market will react positively to this but some damage has already been done and we will probably see fairly soon as earnings start to roll out.
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Great point, company earnings should come down...I will be selling the relief rally.
Nice one. How long can Trump jawbone the market higher?
Thanks @buggedout, I think his time will run out sometime in 2019 as corporate earnings start to decline and corporate debt starts to kill off companies.
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