Despite the clouds of doubt that have been forming over the past some time, America has yet again emerged as a safe haven for investors. With the US stock-markets sky-rocketing to new heights and the Dow up by a staggering 3100 points, it looks like America is still viewed as the safest option by investors. This comes as a stark contrast to Donald Trump’s rather negative expectations of America”s economy. Clearly, investors have not lost their faith in the US as being a stable nation, just as always.
America- stability amidst crisis
A number of turmoils have rocked the world this year such as the Brexit and the recent coup in Turkey. As such, the shooting up of the US stock market comes as great news even as America heaves a sigh of relief. Though America is a well-established market and naturally one with more expensive shares, the investors seem to prefer to trust their money with it. America has gained close to 17 times more than its estimated forward earnings as indicated by MSCI index of US stocks. This is more than even countries like UK and Japan, and also the Eurozone.
Numbers disagree with political claims
The race for power in the US has resulted in opposing politicians each claiming that the nation is headed in the wrong direction. However, even as all the politicians are trying their best to prove that the Economy of America is too shaky to be trusted by the investors, these new statistics actually say something very different. According to David Kelly, chief global strategist at JP Morgan believes that politicians are obviously going to say that the Economy is going bad in order to strengthen their own campaigns. However the trust that is shown by the investors tells the real story.
Future implications: Positive or negative?
Experts warn that though the numbers seem very promising now, it may not really remain the same always. According to them, a pullback is on its way as the market valuations have already been stretched too far. If earnings don’t improve significantly soon, there may be a cause for alarm once again in the near future.
And as far as the race to the White House is concerned, a recent poll showed that support for Trump is rising significantly. This should alarm the investors who were otherwise not very worried about him because they assumed he would not really make it. How the investors react now is a question best left to be answered in the future.