Stock Market Trumpian Euphoria. Is this irrational exuberance?

Yesterday saw all three of the major U.S. stock indexes reach new all time highs, and today the Dow is over 19000 for the first time ever.   The post-election Trump bull continues to run, but for how long? Almost all economic prognosticators expected the market to go down after the election, albeit for different reasons.  Some thought Mr. Trump’s anti-free trade policies would tank the market, while others (including me) thought that the Fed stimulus of the market was on its last legs anyway, and no later than the expected Dec rate hike would start bringing the market back to earth.  Of course that could still happen, but at the moment, the markets are partying–literally–like its 1999.

One of the frustrating aspects of Mr. Trump to many observers during the campaign season was that he seemed to simply make things up.  So, Mr. Trump wanted to cut taxes, and increase spending, and reduce the national debt–all at the same time.  Of course, picking two of the three–your choice–is possible, but usually only with the other going the opposite direction.  Mr. Trump’s response, well we can have pro-growth policies.  I’m as much for growth as anybody, but I don’t think you can have enough growth to accomplish all these objectives.  Regarding the national debt, as I’ve argued before, its not an ideological issue, its an accounting issue.  And while many observers are discussing Mr. Obama’s attempts to hem Mr. Trump in on things like the Iran deal, he has already successfully put a major sabotage in place for the new administration.

On 16 Mar 2017, the federal debt limit of $20.1T is expected to be breached and could cause a major crisis.  Because now the Republicans own all three branches of government, and they can no longer blame Mr. Obama and Mr. Reid (legitimately in my opinion).  They now own the debt.  And if Mr. Trump wants all the Republicans to walk the plank so he can have a massive infrastructure bill, I think we may have some problems–at least I hope so.

conservatives are going to go crazy,” Donald Trump’s senior advisor, Stephen K. Bannon, recently told the Hollywood Reporter about his grand plans for a massive new spending program. “I’m the guy pushing a trillion-dollar infrastructure plan…. It’s the greatest opportunity to rebuild everything. Shipyards, iron works, get them all jacked up. We’re just going to throw it up against the wall and see if it sticks. It will be as exciting as the 1930s, greater than the Reagan revolution — conservatives, plus populists, in an economic nationalist movement.”

While Mr. Obama successfully got his additional spending and gave a big problem to his successor, the Republicans ought to step up to the plate.  After all, they claim to be the fiscally responsible ones.  This will tell the tale.

Another important consideration is how this goes down between Mr. Ryan and Mr. Trump.  Many Berean followers are rightly concerned with Mr. Trump, from both the left and the right.  From those on the right, including some of your Berean posters, if we’re concerned about being tied to Mr. Trump, we need to be encouraging the other part of the government to step up and do their constitutional duty–the House has the power of the purse and should not fold to Mr. Trump.  Will we have a Paul Ryan America or a Stephen Bannon version?

BTW, anybody else think defunding Planned Parenthood ought to be on the agenda immediately as part of this budget deal?


16 thoughts on “Stock Market Trumpian Euphoria. Is this irrational exuberance?”

  1. First the stock market. Valuations are historically high, the main issue is what to do with your cash. Companies as well as individuals appear to be loaded with cash. The great bond rally appears to be over. The dollar is rising forcing commodity prices down. So to get a return there seems no other place to go. Sadly, I agree the end doesn’t look good. On the other hand, investment in God’s kingdom always pays a good return and it ends well for those whose faith is in Jesus Christ.

    Second, Yes, Planned Parenthood ought to be on the agenda immediately as part of this budget deal. However, there is a bigger issue at hand, the absence of good fathers in the home. We Christian men especially, need to step up our efforts to mentor and foster these boys and girls. Without Christ, changing this culture may be impossible.

  2. Good post! I completely agree with the defunding of planned parenthood. How long in your opinon do you think bull market will run?

  3. Watch Republicans to support major increases in federal spending and even more significant spikes in the federal deficit.

    Massive federal spending plus tax cuts (for all, but especially for the wealthy) is quite OK with the GOP, just as long as it is not a Democratic president supporting it. Principle sminciple. Power is what this is about, and using taxpayers money in doing so.

    Has Trump EVER been concerned about debt? Business-wise, to him it has been like rum at a holiday party (not MY party, mind you!).

    Bonds and notes have been cratering. I am looking at government paper as being THE trending market in 2017. Short, not long.

    As for the stock market, Dow 20,000 looks to be in the cards, especially since we are in a seasonally bullish phase. Looking for the election night low on the S&P futures to be tested in early 2017, though.

  4. Good article, it will be interesting to see to what extent Trump’s policies will effect the national debt. The stock market is also fascinating to watch as it reaches new heights. How long this will last, only time will tell.

  5. All I can really say is that I’m excited for the change to come with Mr. Trump as the president elect. I think his business intelligence can help us get out of our current debt. I think he can set us in the right direction. My worry would be that he would use certain loopholes or do things that aren’t ethically sound to achieve his goals.

  6. The stock market goes to show that there is uncertainty in our world and there always will be because we never really know what exactly will happen. Everyone thought the stock market would go down but now it is reaching new heights as Trump is elected President. It will be interesting to see where it goes from here.

    To answer your last question, YES, we should be defunding planned parenthood and it should be on the agenda immediately.

  7. I agree with this article, and completely agree we NEED to defund planned parenthood as soon as possible. It starts with us Christians to make a different in this world. I am interested in seeing what Trump and all his policies will do to the national debt. I think he could do some good to our national debt considering he is a business man.

  8. I’m definitely in agreement with everything you said and as everyone else has said, planned parenthood needs to be defunded as soon as possible. I’m very interested in seeing the effects of Trump’s policies especially since the opposite has happened of what most people assumed would happen. I wonder if the stock market will continue to flourish or if there will be a point where it plummets.

  9. “I think he could do some good to our national debt considering he is a business man.”

    Seriously? The man could not even make money running a casino (!) and went into tremendous debt that ultimately wiped out shareholders, and because he has run businesses (into the ground) he should run the country? What ARE they teaching students at the ‘Ville?

    Under President Obama, deficits were tamed. Not all due to him , of course. But watch them rise under Trump.

    1. “Under President Obama, deficits were tamed. Not all due to him , of course.”

      Deficits in billions:
      2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
      $161 $458 $1,413 $1,294 $1,295 $1,087 $679 $485 $438 $587

      Yes the deficits have been “tamed” a bit, but the last ones are still higher than the Bush levels the last two years with the exception of 2015 being slightly lower than 2008. Yes I know the 2009 numbers are partly due to Bush but the stimulus was also passed in 2009 so not totally. The worst years are when Obama had a Democrat Congress to back him. And Bush had to deal with a Democrat congress his last two years as well. Trump may have high deficits or may not, we don’t know yet, you just assume. And to claim Obama tamed the deficits is a lie when he added the most to the national debt of any President.

      “What ARE they teaching students at the ‘Ville?”

      So a student’s personal opinion on a blog automatically means this is being taught in class. Please. Stop the bitterness. Just because someone’s opinion differs from yours doesn’t make it automatically wrong.

      1. The 2009 numbers are due entirely to Bush. That is how budgets work.

        By your own numbers deficits have been doing down. Meanwhile, the economy keeps growing, steadily. My claim that deficits have been tamed is clearly on the mark.

        I am telling the truth. Sorry if you cannot wrap your brain around data. 🙂

        Trump’s plan to increase spending while reducing taxes on the wealthy (under Trump’s plan , my taxes will go up, btw, as it will on many other middle class taxpayers) will almost certainly increase the deficit. Estimates have been the pain at around $9 trillion. If he sticks to his promises to cut taxes on the wealthy (who frankly don’t need it),debt will rise much faster than it has under Obama. Sorry if you cannot wrap your brain around math. 🙂

        Have you checked bonds and notes lately? Do they teach that at the ‘Ville? They are cratering. Have been since the election.

        Any notion that Trump has been a successful businessman who knows how to handle debt is refuted by the facts, some of which I shared. Trump overleveraged his own company (ticker, DJT) and ran it into the ground. Ask yourself this: How can a person go bankrupt running a CASINO? I thought the players were supposed to lose, not the owners, lol. As a businessman, the guy is a fraud. And now he is CEO of the USA. God help us.

        Bitter? Nope. Cognitive dissonance is your problem, not mine. Have a nice day.

      2. “The 2009 numbers are due entirely to Bush. That is how budgets work.”

        So Trump has earned a free pass from you for all of 2017? That’s interesting given your hatred of him.

        Regarding your Trump diatribe, I never said Trump would lower deficits, I just said he may or may not. In case you forgot how to read here is what I said word for word about Trump: “Trump may have high deficits or may not, we don’t know yet, you just assume.” I said nothing else at all about what Trump might or might not do. Don’t put words in my mouth. And don’t state your PERSONAL ASSUMPTIONS about the future as if they were facts already done.

        “I am telling the truth. Sorry if you cannot wrap your brain around data.”

        Like with many issues, data can be interpreted differently. The 2009 deficit was 1.4 trillion, 250 million of which was due to the Obama stimulus.

        So let’s give Bush 1.15 trillion for 2009 and Obama 1.54 trillion for 2010 and exceeding the 1.15 trillion in 2011 and basically equaling it in 2012 (The years he had the largest majorities in Congress and control of the Senate). Again, remember, Bush had a democrat Congress in his last two years. Yes, I said the deficits have been going down but only because they were so high in Obama’s first years. Big pat on the back to him for “ONLY” having deficits around half a trillion these last couple years. Would you congratulate a doctor who shot his own patient then operated on him to make it only half as bad? I sure hope not.

        “If he sticks to his promises to cut taxes on the wealthy (who frankly don’t need it),debt will rise much faster than it has under Obama.”

        The higher income tax bracket is still paying a higher percentage so what is the complaint? If we wanted to truly be fair, wouldn’t everyone have the same tax rate? Trump also plans to cut corporate tax rates, which currently are among the highest in the world. Will that not help economic growth any? Just because they can afford it doesn’t mean the government has the right to take the additional income from them. That’s called stealing. It’s about incentive. The more you tax people or businesses the less incentive they have to create jobs, produce or consume goods and services, or for new businesses to be started.

        “Sorry if you cannot wrap your brain around math.”

        Don’t even go there. Not to brag, but I am confident that my math abilities measure up well in comparison to yours.

  10. In response to your Planned Parenthood question, I do think it should be apart of it, but it should not be a driving force. You said your self that this is an accounting issue, not an ideological one. Will the accounting benefits of defunding Planned Parenthood really outweigh the cost of further dividing the country? This could potentially halt further progress until we get it figured out so I think that it probably should not be the very first thing that they push for in the budget plan.

  11. One can only wonder whether or not our newly elected politicians will actually be any different. In order to cut expenses in any effective means, every age group of America would be affected negatively, and it is these people who elected Trump in the first place. These cuts would have to include college grants, medicare cuts, and such. That will upset every person in the U.S. in one way or another.

  12. It seems as if this Trump candidacy/soon to be presidency will never stop surprising us. It seemed almost a sure thing that the stock market would go down if he won, and yet it is at record highs. It will be very interesting to see when this bull run will end and if the national debt will begin to actually get the attention it deserves.

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