The problem with such rallies — Wall Streeters are cautious about using the term “bubble” until, of course, the bubble pops — is actually in which they’re lots of fun when on the way up in addition to terrifying when they head within the some other direction.
“The higher a market goes without a meaningful pullback, the deeper the fall when in which finally does happen. Something will come along to pierce in which market’s enthusiasm,” Krosby said. “If you’re going to live by the stock market moving higher, you also have to be prepared to suffer the wrath when the market does pull back.”
Despite the hazards in which betting on a constantly rising market inherently entail, Trump has continued to pump up the market as a key measure of economic performance during his administration.
The president last tweeted about stocks on Jan. 13, boasting of a “big day” as the market hit yet another completely new high.
Yesterday was a big day for the stock market. Jobs are coming back to America.
producing the gains all the more stunning is actually in which they come amid ever escalating tensions on Capitol Hill in which could yet lead to a government shutdown. in which’s aside through worries about nuclear war with North Korea, a hot-again battle over immigration, in addition to as Trump faces a moribund approval rating in which has been inversely correlated to economic growth in addition to the stock rally.
“We’ve never seen a market in which has been so divorced through the chaos in addition to ongoing circus in Washington, so laser-focused on what’s fundamentally better,” said Art Hogan, chief market strategist at B. Riley FBR. “A strong fundamental backdrop seems to have taken the front burner in addition to everything in which in another place in addition to time would certainly have adversely affected us gets pushed to the back burner.”
So if in which’s true in which fundamentals are behind the market’s willingness to discard headline risk, the argument in which Trump is actually adding hot air to a bubble loses some steam. Unless …
“At some point in time in which won’t be the case,” Hogan said. “When in which does happen, in which’s something in which’s not fundamental in addition to can’t be modeled, like leaving NAFTA or tweeting our way into a trade war.”
Short of in which, the market’s willing to ride out the political warfare in Washington in addition to watch Trump’s tweets with an amusement foreign to much of the outside world, where pitched battles over the president’s indelicate speech flood the airwaves on a daily basis.
In fact, investors have shown considerable willingness to tolerate in addition to even thrive under political chaos over time. The Philadelphia Fed even tracks partisan conflict on an index. The chart below shows an overlay of the index — spikes represent heightened tension — with the performance of the S&P 500.