There is something to be said for market psychology, at least in the short term.
There are many reasons why the market continues to do well and why the overall economy is doing well, but the biggest reason has to be the feeling that the Obama years, and more importantly Obama’s “legacy” of big government regulation, continues to recede in the rearview mirror. There is optimism. Regardless of one’s economic school or philosophy, that can’t be denied.
The danger now is the degree to which all the money printed over the last 9 years (by central banks) is finding its way into the system now that people and companies feel a bit of confidence. That is of concern.
(From The LA Times)
The Dow Jones industrial average closed above the 25,000-point mark Thursday, just five weeks after its first close above 24,000.
The Dow broke past 1,000-point barriers in 2017 on its way to a 25% gain for the year, as an eight-year rally since the Great Recession continued to confound skeptics.
Strong global economic growth and good prospects for higher company earnings have analysts predicting more gains, although the market may not stay as calm as it has been recently.
The Dow has made a rapid trip since it reached 24,000 points Nov. 30, partly on enthusiasm over passage of the Republican-backed tax package, which could boost company profits this year with across-the-board cuts to corporate taxes.