The Dow Jones yesterday crossed a new psychological threshold by exceeding the 20,000 mark.
During yesterday’s session, he reached 20,082 points. This is 1749 points more than November 8, the day of the surprise election of Donald Trump. The Wall Street barometer exploded by 9.5% in just two and a half months.
The other major Wall Street indices have also hit historical highs. The S & P 500 hit 2097 points and the Nasdaq 5650 points, climbing respectively 7.4% and 8.8% since the election of the Republican president.
How do you explain the appreciable increase in the American stock market?
It is squarely attributable to the economic and fiscal measures that the new Trump administration intends to put forward.
These measures give investors a real craze, pecuniary! They believe that these measures will have a positive impact on the profits of US companies.
Let’s start with the major tax measures that can reinvigorate the US economy:
Reduction in the tax rate of wealthy Americans from 39.6% to 33%;
Decrease in capital gains tax from 23.8% to 20%;
Abolition of inheritance tax, which amounts to 40% on estates in excess of $ 10.9 million;
Substantial decline in middle-class tax;
Strong reduction in US corporate income tax rate, rising from 35% to only 15%.
These tax measures alone would reduce the tax burden on businesses and individuals by about $ 5800 billion over the next 10 years, or $ 580 billion a year.
Investors assume that a large portion of these tax savings would be reinvested in the US economy.
In addition to these fiscal measures, there is a massive reinvestment by the US government in infrastructure, over $ 500 billion.
And, of course, the reopening of NAFTA to American companies and their workers on American soil is currently perceived as a marked advantage for the growth of the US economy. The patriotic “America First” by Donald Trump suggests to the Americans that the next few years under his presidency will be very beneficial.
What does this mean for the next few months? Should we be concerned?
The current bull cycle of Wall Street continues since March 9, 2009, almost eight years.
The current swelling of the indices gives it the look of a stock market bubble.