The Dow Jones Industrial Average (DJIA) has once again broken its record high. Until the 2020 presidential election, President Donald Trump will work to maintain the stock market’s momentum as much as possible.
President Trump took to Twitter to emphasize that the “best is yet to come” for the “Trump stock market,” with new trade deals.
Quite clearly, the three main driving factors of the Dow Jones rally in the second half of 2019 have been the injection of liquidity by the Fed , a low benchmark interest rate, and the progress on trade with China.
Throughout 2020, the three catalysts are set to remain unchanged. The repo market, despite predictions of significant instability by the year’s end, has not shown signs of extreme volatility.
The Fed has clarified that it does not intend to change the rates until 2021, and China is working with the U.S. to ensure the completion of several minor deals.
To cap it all off, the Dow Jones has been in an extended rally with no major pullbacks in the past six months heading into 2020.
President Trump can continue to impose pressure on the Fed to maintain rates where they currently are as the repo market takes cares of itself.
With a healthy jobs market and gradually expanding economy as two base fundamental factors of growth, President Trump is confidently predicting a better stock market and a stronger Dow Jones in 2020.
In contrast to the U.S., China’s economy has been slowing down since early 2019. Crucially, the local manufacturing industry slowed and in November, the country’s economy weakened for a seventh consecutive month .
Although the People’s Bank of China is reluctant to introduce stimulus to ensure the long-term stability of the nation’s economy, Beijing released aid to support the slowing economy.
During a period of economic slowdown, China is not likely to be the first to cause conflict with the U.S. on the trade front. In that regards, President Trump holds the key for additional trade deals with both China and other countries in the imminent future.
The narrative around President Trump’s re-election campaign in 2020 will likely revolve around the success of the Dow Jones and the strength of the U.S. economy.
As long as the momentum of the Dow Jones can be maintained until late next year, it will overshadow impeachment efforts by the House.
Earlier this month, the U.S. economy beat analysts’expectations with the addition of 266,000 new jobs .
With relaxed financial conditions and the easing of tension on trade-related issues, another optimistic jobs report in January may trigger a new rally in the first quarter of 2020.