What’s Really Driving the Market Surge

The left is inevitably sad, because stock markets have completely bounced back from their early-spring slump. March and April are traditionally weak months in the first place (taxes are due after all), but that didn’t stop the left from celebrating economic stagnation.

Their part is over, and rational Americans are happy to see that their investments are once again on track for record highs. Economics are complicated, and everyone has ideas why stocks are soaring high.

The French Election

Mainstream media continues to show that they aren’t ready to abandon their old ways. They have almost unanimously reported that global market surges are solely the product of the first round of the French election. In it, the centralist Macron took the lead, and this introduced stability to the Eurozone that is reflected in the market surge.

There are a few problems with this analysis. First, Marine Le Pen is the other finalist, and she is the populist candidate that the left fears. Their rhetoric around her campaign is almost identical to what they said about Trump. She also was only 1.5 points behind Macron in the first round, showing that France is in for a vote that will be just as close and historic as those in Britain and the U.S. last year.

The second problem is that the French and European economies are not demonstrating the confidence mainstream media is portraying. The Euro still hasn’t returned to early April values, and the European Union in general is seeing stagnation across the board. The only stocks surging in Europe are strongly tied to American interests. This forces us to ask the question: what is really causing the renewed market surge?

Trump’s Tax Plan

Trump has finally announced details of his proposed tax plan, and it’s the most developed proposal that he has put to Congress yet. The plan calls for comprehensive reform that would simplify tax code considerably, incentivize easier filing and provide tax breaks across all brackets.

In the outline Trump explains that the tax reform is focused on injecting money into the economy and anticipates that it could raise the GDP by trillions of dollars in a few years. One of the boldest numbers in the outline was a new corporate tax rate of 15 percent. This would be a huge break for major companies in the U.S., and it has bolstered S&P 500 values accordingly.

Ultimately, Congress is unlikely to pass reform that is identical to Trump’s proposal, but there are a lot of encouraging signs that members of both parties are willing to use the template as a starting point for negotiations. Even if the final product is less extreme than Trump’s goals, it still promotes economic growth and increases the value of American corporations.

It should come as no surprise that these concepts are reflected in the stock markets. The real source of renewed investor confidence is having concrete numbers and ideas to analyze, making it easier to anticipate where the government will take us next.

Tech Companies

While the tax plan is probably the biggest factor, it is not the sole proprietor of stock gains. Independent of the government, tech companies have had a great 2017 so far. Twitter, Amazon and Apple are just a few of the big names that have eclipsed projections, and they are leading GDP growth in America.

If you recall, leftist rhetoric said that Trump would kill the tech sector in America. In contrast, they are doing better than ever, and even though many of these companies champion anti-Trump activism, his presidency is the best thing that has happened to their companies. The tech surge is so strong right now that it has completely overwhelmed the poor performance of brick-and-mortar retail since February.

Donald Trump

The final key issue in stock gains comes back to Trump himself. Even his most ardent supporters have to admit that his prior government experience was severely lacking. Despite his intelligence, education and understanding of government at the outset, he needed time to see how things work from the inside.

As any hiring manager can tell you, there is a difference between understanding a topic and having experience in it. With only a hundred days under his belt, Trump has made impressively fast progress, and even some of his worst critics have been forced to acknowledge his growth in the role.

As he gets better at the execution of being a president, his ability to bestow confidence to the American people grows. This has also been reflected in markets, and it is why you can expect the long-term outlook to remain excellent.

~ American Liberty Report


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