Inflation fears? Who cares. Record-high debt? Whatever. Right now, Wall Street’s got a one-track mind: just keep pumping cash into stocks until Donald Trump’s in the White House.
This rally’s got legs until February, and don’t be surprised if we hit fresh records. The S&P 500 just soared past the 6,000 marks for the first time ever this month, and the next milestone at 7,000 is a mere 17% away.
If there’s one market rule that’s never out of style, it’s this: “Don’t fight the tape.” Betting against the trend right now? You’re asking for a burn. Dips are getting bought, rallies chased and leverage amped up, and it’s paying off big time in the post-election euphoria, says Steve Sosnick, Interactive Brokers’ chief strategist.
Also, maybe don’t go all in on Tesla and Big Tech? Sure, they are tempting but herd trading is a massive risk. Morgan Stanley is showing love to financials, industrials, and commodities – cyclicals that’ll ride the economic wave.
Goldman’s traders are calling for 6,300 by year’s end, a target Wall Street thought was more like a 2025 dream just weeks ago.
2016, but make it different
This rally’s gunning for a Trump 1.0 sequel, but let’s get real: it’s not the same show.
Wall Street’s hyped over the new “business-friendly” buzz, yet the backdrop’s looking heavier than a debt collector’s ledger. Big Tech is bloated, the cash inflows are already over-the-top, and national debt? Growing faster than anyone wants to admit. Translation: Trump has some real fires to put out.
- Back in Trump’s first term, the S&P 500 strutted along with a forward P/E ratio of 18x. Today? We’re floating at 23x, well above the 10-year average of 18.2.
- Oh, and the debt-to-GDP ratio has ballooned from 75% to a whopping 125%. We have a market propped up on more than just fundamentals.
With valuations peaking at three-year highs and debt stacking up, this rally’s partying on the edge of a cliff – one little push is all it will take. Wall Street’s already priced in most of the Trump buzz, which means any disruption could throw a wrench into the works.
Here’s a cheery stat: the last time we saw the S&P at these lofty valuations was in 2021. The following year? A 19% drop.
