In our previous reviews, we have repeatedly spoken about the bubble that swelled in the US stock market and that the sale of shares of American companies or the stock market as a whole is a unique trading opportunity that happens 1-2 times in trading life. Accordingly, to miss such an opportunity is simply a crime against trading.
There are more and more signs of impending collapse (see our previous reviews). The stock market has not fallen yet, because the Fed is taking completely desperate steps to keep it afloat (referring to the sharp inflation of the Fed's balance sheet due to operations in the repo market of up to $ 500 billion this is an injection of money into the US financial market). The scale of cash injections is horrifying - the Fed is serious about increasing its balance by 10% soon. This cannot go on for long. We will talk about the consequences of such a policy in our next review.
Today we will focus on the main event of the current week, the consequences of which can affect for years. We are talking about the impeachment of Trump and a successful vote on this issue in the US House of Representatives.
We want to note that there will be no immediate effect since this whole procedure does not aim to remove Trump from the post of President, but rather is an act to discredit Trump and the Republicans as a whole. The majority in the Senate are Republicans. Not a single Republican voted for, the Senate will fail to vote. That is, in terms of the current Presidency, Trump is not in danger.
But the damage to his image and the image of the Republican Party, which he represents, will be colossal.
That is, the chances of the Democrats winning the US Presidential election are sharply increasing.
For the US stock market, this could be the verdict and the end of the bull market era.
Recall, the US stock market owes much to its growth to Trump and his policy, starting from lowering corporate income tax (from 34% to 21%, which led to a sharp increase in company buyback programs and provoked an increase in demand in the US stock market) ending with upholding the interests of US producers (trade wars were unleashed for this purpose). And in general, the Republican agenda is to protect big business, which plays into the hands of the stock market.
The advent of the Democrats means a sharp turn in public policy, which will lead to the disappearance of favourable conditions for the US stock market. Against the backdrop of an overbought market, this will be enough for a reversing and the start of sales.
Thus, the impeachment of Trump is a kind of time bomb laid under the US stock market. According to Stanley Druckenmiller, one of the most successful American investors, “a change of leadership in the White House will mean the advent of anti-capitalists. Which will trigger the transition of the US stock market to the bearish phase. ”
Recall that we consider 2019 the last year of unjustified growth in the US stock market. Already in 2020, it will begin to adjust. The scope of the correction ( rather the bearish phase of the market) is from 50% and above. Given that in recent years, shares of technology companies in the US stock market have grown by an average of 7-8 times (and some issuers have shown growth of 10 or even 20 times), the US stock market will become the object of massive sales. We recommend participating in this process, selling both the market as a whole (Nasdaq index) and the shares of individual issuers (Apple, Microsoft, Alphabet, Oracle, etc.).
Howdy folks!
I agree with everything your saying!
A matter of fact AAPL is one of the major stock market cheer leaders!
Heck it's about 4% of the entire stock market cap!
That's extremely high in all respects.
AAPL is also at its 40 year trend line right now.
That's not a good sign.
I think we start the recession sooner then most people and traders expect!
The repo market will have a trillion dollars injected into it over the next 4 months. Total amount of course.
I will have to say, I believe you are on the money 110%, on half of your conclusion. You have the market analysis completely correct IMO, I see exactly what you see. Its the underlying backdrop for the causes of the market analysis that, IMO would cause the same results except for 1 one thing, the 2020 election. The Fed is explicitly trying to tank the economy before the 2020 election, in hopes to destroy Trumps 2020 bid and allow room for dems to win. Why do you think trump is pushing how great the economy is doing, trying to bolster it up to stop the Fed's games at least until after the election. The powers at the Fed are not in favor of Trump and would do anything to keep him from winning in 2020. In my opinion Trump will be bringing the FED's games to LIGHT soon, and after his victory in 2020 will push to fully restructure the FED so they will not have the amount of power they hold over the Global Economy as they do now. They did it in 2008 to ensure the victory of Obama, and they helped soar the economy all the way through to help him in 2016 and to help Hillary in 2016. Look at the rate hikes under Trump compared to Obama. They are doing all they can to ruin the economy to ensure a political switch in the white house as they do in every election. They don't care who's in power DEM or REP, as long as its their guy, and Trump is not one of their guys. Your market analysis is perfect up until the 2020 election where Trump will win, and restructure the FED, and do as much damage control as possible to limit or mitigate the losses for the public at large.
Trade24Fx
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@jhough319, Thank you. Doing my best. As for the elections I have a little bit different view. Impeachment looks like a black PR move from DEMs. And it might be very efficient. The damage has been done. FED's independence is some sort of taboo. I don't think it will be possible to reshape the system.
I agree with everything your saying!
A matter of fact AAPL is one of the major stock market cheer leaders!
Heck it's about 4% of the entire stock market cap!
That's extremely high in all respects.
AAPL is also at its 40 year trend line right now.
That's not a good sign.
I think we start the recession sooner then most people and traders expect!
The repo market will have a trillion dollars injected into it over the next 4 months. Total amount of course.