How long will this powerful stock market boom cycle continue?
The pessimists have been wrong. The grouches have been wrong. The glitch makers have been wrong, will they continue to be wrong?
Profits; the mother’s milk of stocks, have been booming beyond all expectations, the economy is now outperforming, the fed has greased the wheels with ultra easy money, and Washington DC actually lowered tax rates instead of raising them for at least the next couple of years.
Are those the prevailing macro themes, that are driving this market?
This week, everyone is focusing on inflation, and they should step back for a minute and ask themselves why is inflation going higher?
One of the reasons is global acceleration gaining 3 ½ to 4 % growth, and still going on.
The fact of the matter is, there was a lot of money sitting on the side, and no one dared to move until they knew what the tax rates were going to be.
It’s a huge variant weather if you are going to get taxed at 40%, or if you are going to be taxes at 35%.
That’s another 5% of all taxable incomes that are available for investment or consumption.
Another big reason is keeping the capital gains taxes at 15 %, keeping the dividends at 15%, which is going to be a huge part of total return, so they just basically turbo charged what we already had and what we are recovering, they simply gave it another boost to push it to next level.
Supporting the extension of bush tax cuts and moving towards the center has greatly improved Obama’s status, and the fact is free market capitalism is the best path to prosperity, and it looks like the American people have voted for it.
So it just could be, that this bull stock market still continues, and might gain another 20 % by the end of this year.