SPX: Sell The Trump Rally Before The Profit Bubble Bursts

Nov. 17, 2024 1:53 AM ETS&P 500 Index (SPX), NDX, SP500, DJISH, SPY, VOO3 Comments
Stuart Allsopp profile picture
Stuart Allsopp
6.54K Followers
(9min)

Summary

  • Trump's election victory is certainly a positive for the economy and stocks relative to the alternative, but the market is overlooking the risks of rising yields and declining profit margins.
  • Corporate profits have risen despite a collapse in US savings, but America First policies threaten to reverse this dynamic.
  • At 30x unadjusted earnings and 40x free cash flow excluding stock-based compensation, markets are extremely exposed to a fall in profit margins.

A pin being used to pop a green balloon

BrianAJackson

Trump's America First agenda is infinitely favourable to the Democrats' socialist agenda, of the kind that has undermined the economies and societies of Western Europe. By simply putting US citizens first, the economy is likely to retain its growth advantage relative to

This article was written by

Stuart Allsopp profile picture
6.54K Followers
I am a full-time investor and owner of Icon Economics - a macro research company focussed on providing contrarian investment ideas across FX, Equities, and Fixed Income based on Austrian economic theory. Formerly Head of Financial Markets at Fitch Solutions, I have 15 years of experience investing and analysing Asian and Global markets.

Analyst’s Disclosure: I/we have a beneficial short position in the shares of SPX either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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