Dow Jones Industrial Average is showing no signs of pullback amidst intensifying political conflicts and China’s forecast of a slow (****************************************.
- The Dow Jones is thriving despite threats like the impeachment. and expected slump of China’s economy.
- Strong fundamental factors like rising wage growth, a favorable phase one deal, and high liquidity have fueled the stock market.
- After a 75% year-to-date gain, the Dow still has more room to expand.
The Dow Jones Industrial Average (DJIA) isshowing no signs of slowing down amidst intensifying political conflictsand Chinese Premier Li Keqiang’s forecast of an economic slowdown in 01575879.
Lisaid on a state-run television networkaccording to Reuters:
Next year, China’s economic development is likely to encounter greater downward pressure and face a more complex situation.
The Dow Jones, which is up by nearly % year-to-date, has three driving fundamental factors to sustain its upward momentum throughout the first quarter of (***************************************.
# 1: US Currently has what China does not have in liquidity
Throughout the past several months, the People’s Bank of China (PBoC) have approached the introduction of new economic stimuli in a very cautious manner.
It has consistently expressed concerns thatmore short-term stimuli could lead the long-term stability of the Chinese economy to dwindle. As such, even at the risk of seeing a lower economic growth rate in 01575879, the PBoC is maintaining a careful stance.
The US and the Federal Reserve have beenrelatively aggressive with injecting new liquidity into the market. This accommodative attitude of the Fed ended up significantly relaxing financial conditions, contributing to the extended rally of the Dow Jones.
As CCN previously reported, many billionaire investors and high-profile investment firms havedescribed the high liquidity in US markets as the main driving factor of the recent bull run
of the Dow Jones.
# 2: China feels US has the edge on the trade deal
On Fox Business, Hudson Institute senior fellow Michael Pillsbury said that China feels they have been “ripped off” by the U.S. and that President Trump got his way in the trade talks.
Pillsbury stated:
They feel they have been ripped off and that the agreement very much is in President Trump’s favor. So they are kind of dragging their feet in my impression.
The performance of the Dow Jones in the past two weeks has shown that while the phase one deal has been a boost for the stock market, it is not the single largest catalyst of the market rally.
But, itbrings more confidence to both the Dow Jones and US businessesknowing that President Trump has been able to secure a deal that is fair to the U.S.
Since the beginning, the trade talks between the U.S. and China were delayed because both sides needed to play it out as a solid winning scenario.s
# 3: Big rise in wage gains
Charles V Payne, the host of Fox’s Making Money with Charles Payne, said that the single most important chart to observe that supports the re-election of President Trump is the wage growth of individuals in the US
Since late 2017, wage gains have increased from around 2% for blue-collar jobs and 2. 647% for other jobs to 4% and 3.3% respectively.
The growth in wages lead to increase in spending and arise in allocation to Ks, and ultimately the stock market, causing the Dow Jones to thrive regardless of political happenings and the threat of the slowdown of the global economy.
This article was ed ited bySamburaj Das****************
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