Dow on Fire! Is Trump Debt Delirium Burning the Stocks Bull Market?
Stock-Markets / Stock Market 2017 Mar 02, 2017 - 06:17 PM GMTBy: Nadeem_Walayat
The Alt-Reality President Trumps' election victory induced delirium rather than dissipating is clearly intensifying. Whilst personally having partially succumbed to the Trump delirium hot on the heels of Britains' Brexit which implied that the approaching 8 year Dow stocks bull market target of Dow 20k was far more probable than the highly vocally often repeated view by the crash is always coming crowd. So in the run up to the probable Trump election victory my view of Dow 20k as being the most probable outcome. Even going a little further could be rationalised to to 20,150 which is about as far as I could extend a rationale post Trump election trend in the face of growing alarm at the real world consequences of a 'Trump Reset' Presidency, namely one of literally the US trending towards WAR with China!
However, since early February the stock market has detached itself from that which has transpired over most of the preceding 8 years, to a a state that is beyond my perception and this is from someone who has been clearly strongly bullish on stocks for the bull markets 8 year duration!
And so my view not based on technical analysis for the 'Trump Reset' implied that the usual technical tools are not going to prove reliable for at least the first few months of a Trump Presidency and probable for longer, i.e. a coin flip would probably prove more reliable at this point in time. So the only way to gauge probability is by focusing on aspects of the 'Trump RESET'. So with this in mind my view was stocks following achieving 20k were probably in for some pain before later gains i.e. before the markets realised the positive aspects of Trump increasingly military spending and dumping a load of debt onto future generations.
Yes we can with the benefit of hindsight point to 'reasons' such as future inflation from future borrowings to say that the stock market is discounting a Trump debt fuelled deficit spending spree. But we already knew Trump was going to do that which is why Stocks rallied to Dow 20k, after all Trump is the KING OF DEBT!
No this stock market rally from 20k to beyond 21k is more akin to a market literally being on FIRE. Literally burning the bull markets Foundations! And as is the case with all fires they do eventually simmer down and even go out! What form the stock market fires simmering down will take has yet to be deduced, i.e. will the market plunge or just flat line as it did along Dow 20k for over a month, one things for sure today's runaway burning bull run is NOT SUSTAINABLE!
So no, I am not going to pour additional fuel onto this stock market fire. Instead I am content to calmly watch for when the Trump fire dies down to evaluate what damage has been done to the health of the stocks bull market, and then tentatively dip my toes back into a more rational technical view point, and probable trend forecast, for at this point in time a coin toss would likely prove more reliable.
And as for the trend towards War with China, well President Trump requesting Congress to increase US defense spending by 10% is definitely a step along that path, as a, Alt-Reality delusional Trump only sees that which he wants to see in over seas wars that will make George Bush's illegal war on Iraq based on WMD / 9-11 lies look like a picnic, for where Trump is concerned anything other than America winning a war will always just be FAKE NEWS, FAKE INTELLIGENCE, FAKE FACTS! Which as Vietnam and Iraq demonstrated is a recipe for disaster.
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By Nadeem Walayat
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Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.
Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.
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