Dow hits record high as Fed meeting starts, Trump talks to the UN
- The Fed is not expected to raise rates following its meeting.
- However, many market participants believe the central bank will announce the unwinding of its massive $4.5 trillion portfolio.
The DOW is up 22% and 4,000 points since the election. No President has more all time closing highs in their first year in office than President Trump.
The rise in the DOW since Donald Trump was elected President in November 2016 is historic! Yesterday was another all time closing high for the 5th day in a row. Americans are seeing this in their retirement accounts!
* President Trump is already the only President in US history to oversee two stock market rallies of nine days or more where the markets set new highs each and every day.
Deutsche Bank: “Global Asset Prices Are The Most Elevated In History”
In an extensive report published this morning by Deutsche Bank’s Jim Reid, the credit strategist looks at the “Next Financial Crisis”, and specifically what may cause it, when it may happen, and how the world could respond assuming it still has means to counteract the next economic and financial crash. While we will have much more to say on this study in upcoming posts, we wanted to bring readers’ attention to one observation made by Reid, namely that “we’re in a period of very elevated global asset prices – possibly the most elevated in aggregate through history.”
Here are the details on what appears to be the biggest asset bubble ever observed, courtesy of Deutsche Bank:
Figure 57 updates our analysis looking at an equal weighted index of 15 DM government bond and 15 DM equity markets back to 1800. For bonds we simply look at where nominal yields are relative to history and arrange the data in percentiles. So a 100% reading would mean a bond market was at its lowest yield ever and 0% the highest it had ever been. For equities valuations are more challenging to calculate, especially back as far as we want to go. In the 2015 study (‘Scaling the Peaks’) we set out our current methodology but in short we create a long-term proxy for P/E ratios by looking at P/Nominal GDP and then look at the results relative to the long-term trend and again order in percentiles. Nominal GDP data extends back much further through history than earnings data. When we have tracked the two series where the data overlaps we have found it to be an excellent proxy. Not all the data in Figure 57 starts at 1800 but we have substantial history for most of the countries (especially for bonds).