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Yale's Robert Shiller: Trump Rally Is 'Based on Illusion'

Image: Yale's Robert Shiller: Trump Rally Is 'Based on Illusion'

(Getty/Chip Somodevilla)

By F McGuire   |   Tuesday, 24 Jan 2017 11:10 AM

Economist and Nobel laureate Robert Shiller warns that savvy investors shouldn't be tricked by the up-until-recent stock market rally following the election of Donald Trump.

“In the US, two illusions have been important recently in financial markets. One is the carefully nurtured perception that President-elect Donald Trump is a business genius who can apply his deal-making skills to make America great again,” he wrote for the UK Guardian.

"The other is a naturally occurring illusion: the proximity of Dow 20,000. The Dow Jones Industrial Average has been above 19,000 since November, and countless news stories have focused on its flirtation with the 20,000 barrier - which might be crossed by the time this commentary is published. Whatever happens, Dow 20,000 will still have a psychological impact on markets."

To be sure, U.S stocks dipped on Monday after Trump warned of border taxes and signed orders to withdraw the United States from the Trans-Pacific trade deal. He has also vowed to renegotiate the North American Free Trade Agreement (NAFTA).

"Whether it is political, economics or earnings, something needs to show up to give investors another boost of confidence that better times lie ahead," Adam Sarhan, chief executive officer at 50 Park Investments, told Reuters.

Other respected economic voices are more certain that Trump will truly indeed "Make America Great Again."

Veteran financial guru Larry Kudlow, who served as the Trump campaign's senior economic adviser, predicts to Newsmax TV that the record-setting stock rally “may go on for years” because the market “likes what it sees” before the president-elect has even officially taken office.

Stocks could drop in a natural turn of events, but for the most part, get ready for more record-high stock-market finishes, he recently told Steve Malzberg on “America Talks Live.”

“The Trump rally may go on for years,” said Kudlow, a Newsmax Finance Insider, radio talk-show host and CNBC senior contributor.

“It's not going to go on uninterrupted, but the market is telling you it likes what it sees regarding new economic policies to help business and to help growth and help jobs,” said Kudlow — host of "The Larry Kudlow Show" and author of  "JFK and the Reagan Revolution: A Secret History of American Prosperity," written with Brian Domitrovic and published by Portfolio.

To be sure, Donald Trump will be a demanding leader who applies the best of his negotiating skills to push for U.S. growth, bestselling author David Horowitz told TheStreet.com.

Trump won’t be an ideological purist like Republicans who support free trade but don't fight for fair trade, Horowitz said.

“If you just say, ‘well we're for free trade and we're not going to look at the deals that we make’ -- that's not a good idea,” he said. “We've had an anti-business president now for eight years who doesn't take a hard-nosed attitude towards these deals. Trump is going to get better deals for us, which is still free trade.”

Horowitz's new book "The Big Agenda: President Trump's Plan to Save America," released just this week, reveals Trump's "first 100 days strategy" to roll back Obama's legislative and executive record.

Horowitz's new book is the first book about the Trump presidency and has soared to the top of the Amazon bestseller charts, becoming the No.1-selling book on the web.
Trump will also lead the way in making infrastructure spending to boost the U.S. economy, Horowitz said.

"Big Agenda: President Trump's Plan to Save America" is available at bookstores everywhere – or get your copy on Amazon – Click Here Now

(Newsmax wire services contributed to this report).

© 2017 Newsmax Finance. All rights reserved.

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Economist and Nobel laureate Robert Shiller warns that savvy investors shouldn't be tricked by the up-until-recent stock market rally following the election of Donald Trump.
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