News Flash! The Bull Market Is Quite Rational

Ted

FYI: (Click On Article Title At Top Of Google Search)
There’s a narrative that has emerged from some in the media suggesting that the current stock market seems irrationally complacent and unhinged from reality.

How else, it is argued, can the Dow Jones Industrial Average and the Standard & Poor’s 500 continue to toy with fresh all-time highs while newspaper front pages and cable news programs tell us that the Trump presidency is in disarray, perhaps even under the shadow of an impeachment.

Given such a backdrop, how can the major stock indexes, with their low volatility, fiddle while Washington burns?
Regards,
Ted
https://www.google.com/#q=News+Flash!+The+Bull+Market+Is+Quite+Rational+Barron's

David_Snowball

There are, it seems to me, two arguments at work in this article.

1. Investors routinely ignore politics, unless and until they impact economics. That seems about right.

2. All is well in the market and the economy since profits are at record levels. That seems rather shakier. Three researchers from Research Affiliates, Rob Arnott's firm, released a paper today which argues "the ‘Trump bump’ reveals market expectations of continuing public policies prioritizing stability, inhibiting creative destruction, depressing yields and wage growth, and inflating a profits bubble. If instead the Administration delivers reforms that allow creative destruction, invigorate growth, and raise returns to capital and wages, then the lofty profits of corporate incumbents will be at risk."

Cheers,

David

expatsp

Based on Trump's actions so far and his cabinet / advisors, option one sounds about right. No serious reforms plus a rollback of regulations may not be good for the country, but it's probably good for the stock market.