This week’s news that Donald Trump Jr., the protégé, was clearly conspiring with the Russians along with Paul Manafort and Jared Kushner has been treated, just like every other bit of information pertaining to Russian influence in the US election, with complete indifference by financial markets.
US markets – led by Amazon, Facebook, Google, Netflix, Nvidia and perhaps Apple, Tesla and Microsoft – continue to storm higher.
Anyone who is older than 30 years old and has a recollection of 1999 and 2000 cannot help but wonder how long a market driven by only a very small number of tech heavyweights can continue to storm higher. I’ve already proffered my belief here that markets have been celebrating the Democrat’s loss and I have questioned repeatedly whether this can continue indefinitely.
The truth is that there is no way to know how long a market that is driven by extraordinary tailwinds can continue to go up in what now seems like a parabolic manner. One needs only to remember that Alan Greenspan spoke of irrational exuberance in December 1996, and that the stock market didn’t reach its top until over 3 years later. Neither I nor anyone else can call the top.
But, what I can say is that the euphoria we see now cannot continue to shake off the reality that we had a coup in the US last November, driven by an outside power adverse to the best interests of the US. The reality is different from that Greenspan was speaking about in 1996, 1997, 1998 and 1999. While this reality is still not a factor in containing market multiples and values assigned to individual stocks, it will be a factor at some point and that will occur without warning. Caution is warranted here.