Whomever it is, the Next US President Faced Recession & a Bear Market
$DIA, $SPY, $QQQ, $VXX
For investors, it does not matter who wins the the US Presidential race, a recession looms and Bear Market in stocks is therefore a certainty.
Today we are in the 2nd longest Bull Market in history, as we approach the 8th year of this anemic economic expansion, and odds are high that whoever the next US President will preside over a Recession, a Bear Market and rising debts and deficits.
“But how the markets react over the next four years may not be that different regardless of who is President. We are in the midst of the third major asset price bubble in the past 15-20 years. Unfortunately this is the biggest one ever, manifest mostly in sovereign and corporate bonds. All assets priced off low rates are thus by extension in a bubble as well. Therefore the behavior of central bankers and the influence of global interest rates will be the main driver of asset prices over the next four years, not the next president,” stock market analyst Peter Brookvar wrote.
“As for the economy, the next President will have to deal with a US growth rate that has now slowed to a run rate of about 1.4%. Any decline in stock prices, among other factors, could easily drive the US economy into a recession as the consumer is the last buffer between expansion and contraction. The next president, far from preventing it, will be left to deal with it and the aftermath,” he wrote.
Mr. Brookvar is not alone in predicting that the winner of the contentious Presidential race will ultimately have little effect on markets. One of the most savvy of not loved financial Gurus bluntly says it does not really matter who wins the White House.
A Donald Trump Presidency will not be the blow to US business that some fear, according to Warren Buffett, 85 anni, Berkshire Hathaway fame and fortune.
“If either Donald Trump or Hillary Clinton becomes President, I think Berkshire will continue to do fine,” Mr. Buffett said at the company’s annual shareholders meeting in Omaha recently.
The outcome of the November 8 Presidential election is unlikely to change the fact that the US is a “remarkably attractive place in which to conduct a business,” said Mr. Buffett. US companies have enjoyed “terrific” returns on equity despite a sustained period of ultra-low interest rates, he added.
Mr. Buffett, who has criticized and scorned politicians’ pessimism about the country, looked past the current voter angst for a longer view of US economic prospects.
“Twenty years from now, there’ll be far more output per capita in the United States in real terms than there is now. In 50 years, it’ll be far more,” Mr. Buffett said. “No Presidential candidate or president is going to end that. They can shape it in ways that are good or bad, but they cannot end it.”
Friday, the US major stock indexes finished at: DJIA +164.70 at 18308.15, NAS Comp +42.85 at 5312.00, S&P 500+17.14 at 2168.27
Volume: EOQ trade was heavy, seeing more than 1.2-B/shares change hands on the NYSE
- Russell 2000 +10.2% YTD
- NAS Comp +6.1% YTD
- S&P 500 +6.1% YTD
- DJIA +5.1% YTD
|HeffX-LTN Analysis for DIA:||Overall||Short||Intermediate||Long|
|Bearish (-0.28)||Neutral (-0.23)||Bearish (-0.46)||Neutral (-0.14)|
|HeffX-LTN Analysis for SPY:||Overall||Short||Intermediate||Long|
|Bearish (-0.25)||Bearish (-0.29)||Very Bearish (-0.50)||Neutral (0.03)|
|HeffX-LTN Analysis for QQQ:||Overall||Short||Intermediate||Long|
|Bullish (0.32)||Bullish (0.33)||Bullish (0.33)||Bullish (0.29)|
|HeffX-LTN Analysis for VXX:||Overall||Short||Intermediate||Long|
|Bearish (-0.27)||Neutral (-0.03)||Neutral (-0.23)||Very Bearish (-0.54)|
Have a terrific weekend