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
SPX: Sell The Trump Rally Before The Profit Bubble Bursts
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.
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