As the U.S. stock market continues its surge, pundits and politicians are trying to hand out explanations for the market’s longest winning streak since the late 1990s. Of course, U.S. President Donald Trump would like to take credit for the recent rally, citing his impending fiscal policies and tax cuts as the primary reason for investor confidence.
While President Trump might in fact be due some level of credit, there are other possible reasons why the Dow currently sits at 20,624 and the NASDAQ is currently flirting with the 6,000 level. One such reason was recently laid out by current Fed Chairman Janet Yellen.
In her recent testimony in front of the House Financial Services Committee, Yellen was asked to discuss the latest trends in the financial markets, which have been coined as the Trump rally. According to Yellen, the answer is quite simple. She stated, “I think market participants likely are anticipating shifts in fiscal policy that will stimulate growth and perhaps raise earnings.”
Since Trump took office, the economy has continued to improve in many areas. While some of the credit should go to the Obama administration, Trump and his people have done nothing to decrease fiscal confidence across the nation. With all the recent improvements expected to continue, Yellen has made clear the Feds may be poised to increase rates as soon as its next meeting in March.
In the past, such an announcement would send some investors into profit taking mode. Such has not been the case up to this point in time. Investors and consumers remain confident that any changes brought about by Trump’s administration will only serve to make the U.S. economy even stronger.
Indeed, the corporate outlook looks very good in most sectors. With impending tax reforms and an emphasis on home grown products, the U.S. economy looks to be in full recovery mode after too many years stagnation.