Much talk has been given regarding the epic Dow Jones rally. In the closing stages of election day when it became readily apparent that Democrat Hillary Clinton would fail to secure the White House, the futures markets pegged impending volatility. Yet the bears and the naysayers were quickly silenced when, instead of a market collapse, the major indices soared to new, record-shattering heights.
Call it the “Trump rally” — President-elect Donald Trump certainly does. No stranger to self aggrandizement, the former “Apprentice” star bragged that he already positively impacted a country that was headed towards an economic crisis. Given the circumstances, he has every right to do so. The current lame duck administration has boasted non-stop about “Obamacare” or “Obamanomics.” Criticizing Donald Trump for being arrogant — and there have been pointed criticisms — is just plain and simple media hypocrisy.
But there are cautionary tales of taking too much credit for the Dow Jones rally. The investment sector is a fickle bunch. Sure, we’ve enjoyed the benefits of the Trump rally, but enthusiasm has definitely waned. What more analysts are calling for now is a market collapse, perhaps even an economic crisis. From a recent article by CNBC:
The Trump rally is on its last legs, and according to one strategist, that means stocks could see a huge drop in the coming months.
Since the election, the S&P 500 Index (INDEX: .SPX) has rallied more than 6 percent while the Nasdaq hit another record intraday high on Friday. Meanwhile, the Dow Jones Industrial Average (Dow Jones Global Indexes: .DJITR) continues to hover just under the 20,000 level, underscoring what some analysts believe is a market that’s starting to look too frothy.
“The U.S. market, we feel, was already overvalued going into the election,” Mark Eibel, director of client investment strategies at Russell Investments told CNBC’s “Futures Now” last week.
It’s interesting that suddenly — and retroactively — the mainstream media is running stories about how the markets were overvalued prior to the Dow Jones rally. Yet in the eye of the storm, headlines constantly flashed exalting the Trump rally. Donald Trump’s stance on fewer regulations were a positive for the economy, the media cried. Investors everywhere boarded the bullish money position.
But now that the indices have seemingly changed course — they always do — the media has gone the other way and are spreading news of a potential market collapse. This, of course, is just another example of disingenuous arguments.
Here’s the reality check. The U.S. was headed towards an economic crisis well before Donald Trump or even Barack Obama entered the political fray. While I won’t pin all the blame on President Obama, he has done nothing to help matters. The economic crisis of 2008 was just a warning — a severe one, but a warning nonetheless. The outgoing administration took the signs, and ballooned the national debt to untold, and unsustainable, heights.
I’m not particularly a fan of the Dow Jones rally, or the Trump rally to his ardent supporters, because it has the hallmarks of a reactionary movement. I could be proven wrong — in fact, I’d love for that to happen.
But I’m a realist — a fundamental problem like an economic crisis cannot be solved by one man, nor a political movement. It took us decades to get to where we are. It’s going to take at least that long to figure out a way home. Guaranteed, a wholesale solution is not going to be found in a political cycle.
So ignore the media chicanery. Whether the Dow Jones rally holds true, or if we fall into a market collapse, the painful fact of the matter was that this was a setup from the beginning.