I hear a lot of doom, mostly around the fed and other people hating Trump. But, rumor isn't everything. What do you fellows think is coming over the next several years, both for the economy and the stock market? How confident are you?
DOOM! This economy won't be able to handle higher interest rates over the coming years because of having to service our HUGE DEBT PROBLEM! Stock market will tank too...8 year bull run that's been artificially inflated by the FED! I like commodities at low entry prices, not stocks at all time highs.
If you read Jim Rogers opinion on Russia, he'll say BOTH currency and equities...I think he likes Russian bonds too! I like Russia for the long term too, but only at lower price entries. P.S. If I was buying Russian stocks, it would be commodity related...especially agriculture.
The only thing the market likes is free money. Unfortunately for every positive there is a negative unless Trump intends to borrow and spend even bigger than Obama. The corporate tax cuts may be offset by the border tax. Tax cuts for the people might be offset by higher health care costs. In the long term the corporate tax cuts will not increase corporate profits, but it may fuel the biggest pump and dump we ever have seen. Even Warren Buffet has visions of free money selling his bloated Apple shares back to Apple.
I think we're in the later innings. If there is a raise next month, I think the curve will flatten further. And then the gray bar will show up.
I wouldn't discount the possibility of the bull market continuing up for another few years. I don't have the charts out right in front of me, but I do believe the recession before the great depression, the lows until the 1929 highs, the stock market went up like 5.5 fold for about a decade, and the stock market also boomed after the 87 crash all the way up into the new millennium manifold. Considering we've never has so much artificial money being pumped into the stock market, and more possibly to come, this could be the biggest bubble that the US stock market has ever seen until the crash. Valuations aren't at bubble levels yet either. I'm not saying that anyone should be counting on a bubble forming, but I am saying don't discount a bubble from forming and short too early.
If there's enough inflation, there's no reason for a doom scenario and there will not be any major issues with the FED raising rates. So... sideways/up for the time being...
Some of you guys are that confident over the next SEVERAL YEARS? If rates don't go up a lot more it's because the economy will suck...bad for stocks. If rates go up a lot more because of high inflation (money printing), isn't that bad for paper assets...stocks and bonds? If rates go up a lot more because of a good economy and modest inflation, we have to once again consider the debt servicing problem. If rates were 5% higher, the annual federal deficit rises by $950 BILLION! A 5% increase in interest payments for the federal government would cause the level of federal debt to rise to $94 TRILLION over the next 20 years because of the compounding of interest (for perspective)...can you smell a currency crises? You can see why the government will want to inflate the debt away, but too high inflation isn't good for the economy, stocks, or bonds. What they really want is high inflation and not having to raise rates very high, but there's no such way to do that...were all screwed...eventually! We can't run away from all this debt...the public has too much debt too! If you're confident these issues won't cause problems in the next few years...then when will they?