Last year was an epic one for America’s stock market, with the Dow Jones increasing by an astounding 35% while experiencing relatively little volatility. It was the exact opposite of what liberals predicted.
The liberal economics Nobel Laureate Paul Krugman predicted that the stock market would crash and “never recover” if Trump was the presidency, while CNN advised readers against investing in the Trump stock market.
Then again, whoever thought getting investment advice from CNN was a good idea?
As we entered 2018, markets surged a historic 10%+ in January, before having their first noticeable correction under the Trump presidency in February. The Dow Jones and S&P 500 have recovered enough to be at a “break even” point for the year, while the tech-heavy NASDAQ has surpassed its prior peak in January.
While the markets are hardly as exciting this year, they’ve held steady while the rest of the world has seen their markets declining. According to a new report in the Wall Street Journal, “U.S. foreign policy has driven sharp swings in European and Asian markets this summer, drawing investors into the safety of the U.S.”
“U.S. stocks have beaten foreign stocks in part as investors seek a more stable market during the rocky period, analysts say. Strong U.S. economic and earnings growth has helped. While the S&P 500 has risen 4.5% this quarter and is trading within roughly 1% of its all-time high, the MSCI AC World ex-USA Index has fallen 1.3% this quarter and is down nearly 7% for the year so far.” The “MSCI AC World ex-USA Index” mentioned is an index composed of the stock markets of 22 developed countries and 24 emerging markets. Put in different terms, the index represents 85% of all non-U.S. based stocks.
As you can see below, American and foreign stocks moved in lockstep during the first half of the year, but have since diverged as Trump has gotten increasingly tough on trade.
According to data from the Institute of International Finance, fund managers (mutual funds, hedge funds, etc) have increased their allocations of U.S. stocks and bonds near post-election highs, reflecting more optimism in America than any other country.
In absence of a crash within the next week, August 22nd will mark the date that this bull market becomes the longest running in U.S. history.
