The Dow Jones Industrial Average topped 25,000 for the first time, almost exactly 12 months after 20,000 was achieved, and excitement trickled down as the record-setting run kept on.
After the phenomenal bull market of 2017 (the second-longest bull run in stocks on record) many have predicted and among them BoA Merrill Lynch that it can’t keep raging through 2018, suggesting the investors should downgrade risk aggresively. Given the performance of US economy and Trump administration’s irritative resilience, this doesn’t seem to happen any time soon.
Yet, a messy unwinding by investors herding behaviour is still on the table and the anticipated repurcussions in this case pose a major risk. In continental Europe, after five years of slow recovery the law of economic cycles will at some point demand its due and veterans or newcomimg policy makers may not be able to buffer the strain still reckoned on whatever-it-takes Draghi and his unprecedented stimulus.
Meager wage gains in both sides of the Atlantic leave no space for consumer spending and stricter austerity patterns will bring further political and institutional destabilization. Moving money into Europe’s desk is out of question for Trump & Co, who blatantly wish to promote US industrial exports against all others. But, trade is still the top priority for German surplus economy as it seeks a biggest share in emerging markets beyond the eurozone while trying at the same moment to catch up with developments in the energy sector.
As far as it goes, the global system prefers to put everything on hold; unless a major event happens; as perhaps the fall itself.
