Those who lived through the ‘80s will undoubtedly remember the famous scene from the original Ghostbusters in which Bill Muray’s character goes to see Sigourney Weaver.
Unbeknownst to Murray, Weaver’s character has been possessed by a demonic spirit. And every time he states to her, “I want to talk to Dana” (the name of Weaver’s character in the movie), she responds, “There is no Dana, only ZUL!!!”
Today’s market is a bit like this, with stocks having been complete and utterly possessed by President Donald Trump.
In the last month, it’s become absolutely CLEAR that Trumps’ fiscal stimulus, tax proposals, and even Obamacare Repeal will not be passed soon… if at all.
Beyond this, GDP numbers are coming down. It is evident that the anticipated 5% GDP growth is not coming any time soon either… if at all.
And finally, earnings and other fundamentals are rolling over. Tax receipts and other unmassaged data points are indicating that the US is on the verge of, if not already in, a new recession.
But do stocks care?
All they care about is the hype of Donald Trump. Hype… not reality.
All Trump has to do is tweet that something “HYUGE” is going to happen and stocks hit new all time highs.
This is not a critique of Trump, this is a critique of a market gone completely bonkers on hype and hope, with little to back it up.
This is the sort of environment in which Crashes happen.
And while the odds are low that we get an actual Crash… this environment is more conducive to Black Swan events than any other in the last seven years.
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Chief Market Strategist
Phoenix Capital Research