President Trump is currently taking the credit for the stock market hitting all time highs. However, during the campaign he often referred to the market highs as a bubble. So is he trying to have it both ways?
As President he needs to be a cheerleader for the economy and he is proud of his accomplishments in the job market. He is loosely tying that in with the stock market hitting all time highs. But he may be setting himself up to be the fall guy if the market comes back down to earth.
And there is reason to believe that there are currently several catalysts brewing that could trigger a correction or recession.
The Swiss National Bank has been in the thick of the currency wars for the last several years. They have taken an enthusiastic weak Swiss Franc approach to their policy making. They have printed significant amounts of Francs and have decided to invest those Francs in the US stock market.
The Swiss National Bank owns $2.7 billion in Apple stock. They have invested the equivalent of $350,000 per Swiss household invested in a portfolio. The Swiss people actually voted against their national bank holding gold in favor of speculating in the stock market.
The bottom line is so far the Swiss have received their wish. The Franc is at a multi-year low against the Euro, now that fears have eased in Europe. So at best they will stop buying into the US stock market. At worst they will start to liquidate their positions if they believe inflation is running a little too hot on the Franc.
Onto the second potential catalyst for a market correction.
That is a small snapshot of the IPO market. However, in this booming market, it is important to pay attention to the potential cracks in the dam.
The Federal Reserve will try and swoop into the rescue and blame the crash on Trump’s attempts to minimize regulation. They will point to the Obama era of Keynesian economics as the catalyst for all time highs in the market. They will ask that the United States return to easy money policy in order to restore prosperity.
Although Trump is an extremely skilled politician. He has placed bets on both sides of the potential outcome. He could slither his way out of the blame and point to the Democrats unwillingness to cooperate. And he could also point to the Democrats obsession with the Russian scandal, rather than issues that truly affect American’s pocketbooks.