In the current political landscape, the perks of being President are dwindling. Just ask President Trump. The hours are grueling, the salary pales in comparison to that of corporate executives, and you’re consistently surrounded by dubious politicians.
On top of that, the hand towels on Air Force One are comparable to the rough, worn-out versions found in a budget motel. Yet, that’s just the tip of the iceberg.
Attempts to reshape foreign policy to meet 21st-century challenges are constantly obstructed by a highly efficient intelligence community. Before you can blink, the news cycle erupts with the latest scandal, often fueled by leaked information.
For instance, just last week, Trump had to dismiss his national security adviser for engaging in diplomacy with the Russians. Following that, Senator John McCain—whom many might consider a bit misguided—voiced his criticisms from Europe. What an ordeal!
Outside of being a flatulence odor judge, it’s tough to think of a more unpleasant role than that of the President of the United States. Can you?
Privacy is practically non-existent. Global newspapers dissect your every expression, often concluding that you’re not quite right in the head. You can’t even roam the halls of your own residence in a robe during late hours without it being splashed across the front page.
Wild and Wacky Markets
Yet, in spite of all this chaos, has any President ever made the role appear as entertaining as Trump? Honestly, what could be more exhilarating than addressing CNN’s Jim Acosta directly and declaring that CNN will no longer just be termed “fake news,” but “very fake news”? By all appearances, Trump seems to be enjoying himself.
Indeed, publicly challenging the mainstream media—branding them the enemy of the American people—might be one of the few redeeming qualities of the role. However, the benefits of ruling the free world often seem to fall short compared to most other careers.
When it comes to the markets, the initial days of the Trump presidency have brought unexpected volatility. The DOW, S&P 500, and NASDAQ frequently reach unprecedented highs. Just this week, the DOW recorded its 10th consecutive record close.
You would have to look back over three decades to find such a remarkable streak in the DOW’s history. It’s astounding. And that’s not all—the DOW has fluctuated in a manner that defies what market analysts believed possible.
On Wednesday, the DOW closed 2,000 points above its 200-day moving average. For perspective, this has never occurred in the DOW’s 120-year existence. What should we make of such an anomaly?
The Dow Speaks: “In Trump We Trust!”
Every instinct tells us that the stock market should have plummeted by now. All valuation metrics indicate that it is significantly overvalued.
As of yesterday’s market close, the S&P 500’s Shiller price-to-earnings ratio stood at 29.29—well above its long-term average of 16.72. Similarly, the Buffett indicator, which evaluates market capitalization against gross national product, closed the day at 130.7 percent, categorizing it as “significantly overvalued.”
A crash seems inevitable, but is it right around the corner?
We have never witnessed a market so overly optimistic about the capabilities of a single individual as we do today. The rallying cry from the DOW seems to suggest: “In Trump We Trust!”
The market appears to have already factored in anticipated tax cuts, deregulation, and prospects for accelerated economic growth, along with corporate earnings growth, treating them as if they are certainties.
Who knows? Perhaps it genuinely is a done deal. After all, President Trump has achieved remarkable outcomes before. Who are we to doubt his potential for success again?
However, consider the possibility that Trump may struggle to pass tax cuts through Congress. Or what if his attempts to revive American jobs inadvertently spark a trade war?
What will the Dow’s tune be then?
We can already envision the panic bubbling up on Wall Street when investors collectively realize that they have stretched the market far beyond safe boundaries. Our advice: make a swift exit from the party while you still have the chance.
Sincerely,
MN Gordon
for Economic Prism
Return from The Dow Speaks: “In Trump We Trust!” to Economic Prism
