Analyst: The stock market under Trump is similar to that under Ronald Reagan – Now follows a fierce bear market?

bear marketAn analyst has compared the performance of the stock market under US President Trump to that during Ronald Reagan’s term and now fears that investors will have to face a fierce bear market.

Both Donald Trump and ex-President Ronald Reagan did not come from the political establishment when they were elected to the White House. For Ralph Acampora, Director of the technical analysis department at Altaira Capital Partners, this was the occasion to look for other similarities.

Bear market under Reagan

When Reagan was sworn in on January 20, 1981, the Dow Jones index stood at around 950 points. At first, investors could look forward to a six-month “honeymoon” period, with a gain of just under 10 percent, according to Acampora.

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US economy faces first stagflation in 40 years

Stagflation

Apr 13 – Over the past few years, the US Federal Reserve and the world’s central banks have pushed interest rates down with massive money printing and thus the stock markets to record levels. Now, however, the Fed is tightening its monetary policy. British hedge fund manager Crispin Odey warns of the consequences of this policy, especially as US President Donald Trump is fueling the economy.

The S & P500 is well on the way to recovery: there are many reasons for this. The Syrian crisis has eased a bit after US President Donald Trump has described an intervention in Syria as “an option”. At the same time, he is considering re-entering the negotiations on the Trans-Pacific Free Trade Pact TPP. In addition, the US president said that a trade war with China could be prevented if China opened its market more for US products. In the environment, investors are buying heavily US stocks.

Fed slows down the economy considerably
How long the recovery lasts depends on two factors: On the one hand by Trump. Largely due to its tax reform, according to the Congressional Budget Office (CBO), the new borrowing Fiscal Year 2017/18, which ends in September, is expected to rise more than 20 percent to $ 804 billion. For the coming fiscal year, a further increase to $ 981 billion is planned. With that, Trump is fueling the economy, trying to position the Republican electoral chances well into the 6/5 midterm elections.

 

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Stocks set to rally as bond yields dip, Powell to signal direction of rate hikes in the US

powell

A rally in Asian equities looked set to prolong  into a third week after US stocks posted strong gains and Treasury yields dipped with US monetary policy back in focus in a week that includes two appearances from Federal Reserve Chairman Jerome Powell. The yen dropped.

Futures in Japan, Australia and Hong Kong all signaled equities will rise when Monday trading starts after the S&P 500 Index rose 1.6 per cent Friday.

Powell will address the House Financial Services Committee tomorrow and the Senate Banking Committee two days later to give his Humphrey-Hawkins testimony.

Bond traders are pricing less than the three quarter-point rate hikes that Fed officials  havesignalled as likely this year.

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