Hope is important while anticipating many things but its not a good life strategy for making critical investments. Donald Trump’s pro-growth is a foundation of hope upon which market highs and gains have been constructed. These economic policies need to take shape from words in order to realize benefits. The rally held in October 2nd in Manhemia, Pa at Spooky Nook addressed Trumps economic policies which most market and financial analysts said were based on hope. It was hard to pin point the exact policies and legislation to be implemented. Investors are really exited about the future as indicated by the market growth just after Trump’s election. All things have a flip side and investors choose to consider only upsides of the economic policies outlined during the Spooky Nook rally.
Since Trumps election, Dow Jones Industrial has gained more than 700 points which is estimated to be 4 percent increase to a new record. Investors who have their eyes on the future may have driven a number of sectors and stocks too fast without before getting all details. These are probably the companies that will gain from infrastructural spending promised by Trump. Many people anticipate this to be the best government in terms of economy. They have literally pushed the wagon let alone getting on it early. Perhaps Trump’s agenda on reduced bureaucracy, tax cuts, and spending will be implemented. This will contribute to positive economic growth and corporate earnings. As a result, the stock market will be steered to sail further.
Most people in wall street are now focusing on the positive part of Trump’s economic agenda. Investors are ignoring the risks involved with views that are harsh to the market like his opposition to immigration and U.S trade deals. They are taking admirable policies and leaving the ones that can create headwinds. Reduced taxes and less trade regulations maybe a sweet song that has put investors into a trance. Trade hostilities, surging dollar and higher interest rates are being highly ignored. Too many assumptions have been made regarding this economic agenda. People who have been flying have been promised to fly high. Investors have started going up and don’t care to look down or within.
There is no guarantee that investors will have a comfortable cruise without things getting rough. The surge in dollar against foreign currencies may dent returns of U.S multinationals. Their sales will be reduced by increased prices because of a strong dollar. The Federal Reserve rate is expected to go up by next month. This will result to higher borrowing costs that can be detrimental to auto sales, housing market and cooperate profitability. The policies proposed during the rally maybe overdone. Investors may have already put out their money before the market starts balancing out. We never know what will happen when U.S increases tax on imported goods and breaks away from trade agreements. The country may seem too un-friendly to have business with 18 Only Girls. Foreign income makes a high contribution to the countries economy and Trump’s economic agenda seems to be a threat to it.
The market maybe getting too much a head of itself due to future expectations. It is wise to consider Trump’s negatives to avoid losses in the near future. The market may have a tendency to overlook things but this forecast indicates that Trump’s economic policies may bankrupt U.S with the rich paying less taxes and withdrawals from trade agreements. The economy may go into recessions and investors will be surprised. People are more focused on fiscal spending, how to boost the economy and getting their jobs back. It may not be that easy to move from a centrally planned economy to a free economy. The market has the right to focus on the pro-growth agenda but it is wise to look at the bigger picture.