Business guru Ken Langone predicts that President Donald Trump will easily be re-elected to a second term if the economy continues to strengthen and the stock market surges to record highs seemingly on a daily basis.
“Guess what, if this economy continues to strengthen and it strengthens over the next three years, like it or not Trump’s going to win again,” Langone told Fox Business Network.
Trump took to Twitter to trumpet his success in delivering an economy that just witnessed the blue-chip Dow Jones Industrial Average close above the 22,000 mark for the first time.
The Dow eclipsed 22,000 for the first time Wednesday, part of an 11 percent increase thus far in 2017.
Trump himself claimed credit for the surge, noting on Twitter Tuesday that the Dow stood only at 18,000 points around Election Day and crowing Wednesday that "we have a lot of things happening that are really great."
But leading analysts attribute the market's latest push higher primarily to strong results from blue-chip companies, most recently Apple, by far the biggest gainer in the Dow Wednesday rising 4.7 percent, AFP reported.
The more than eight-year-old bull market in U.S. stocks got a second wind after last year's election of Trump as U.S. president, on expectations that his business-friendly policies including tax cuts and deregulation would boost corporate gains and economic growth.
For his part, the Home Depot co-founder praised the president for conquering opposition in the Democratic Party, Republican Party and within the media.
“[Trump] beat three dynasties: Obama, Bush, Clinton. The American people have spoken loud and clear. Like it or not, he won fair and square and the American people are fed up, and these people in Congress ought to get off their butts and get something done. Shame on them,” he said.
Langone also urged Congress to accept that the nation’s healthcare system in beyond repair.
“I don’t know if there is a solution to Obamacare but I do know that the Republicans in Congress look like fools, stumblebums, they don’t know where they’re going or how to get there,” he said.
“You want to know the dark secret? You can’t fix Obamacare. It’s too late, it’s too late, you can’t take back from I don’t know how many millions of American people. Can’t take it back, it’s done, it’s over, move on.”
Langone also praised Trump for "attacking some of these insane regulations."
Langone said "business people are feeling better about an environment that is less hostile to them," as Trump has eliminated red tape in a bid to reward success and innovation.
Meanwhile on Wall Street, investor fears about the sustainability of the gains took the shine off the round number Dow milestone because some technical indicators were flashing warning signs, Reuters reported.
"The market gain has been built on a narrow group of issues. That typically is not indicative of great health," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia. "I would not be shocked ... if we saw a pullback."
And with the Dow industrials at a record high, Dow theory suggests that the Dow Transportation Average index should also hit a record in order to confirm the market's march higher. But that index trails the Dow industrials' year-to-date performance by almost 10 percentage points and is nearly 6 percent below its own July 14 record high.
Naeem Aslam, chief market analyst at Think Markets in London, said the Dow milestone was "a remarkable thing for investors ... but at the same time, this could also be a trap if the momentum does not follow."
But tax cuts and other parts of the Trump agenda have not materialized, leaving earnings growth as the real engine of the market.
"Earnings growth allows the market to be patient about Washington. It allows the market to be patient about fiscal reform," said Steven Chiavarone, portfolio manager at Federated Investors in New York, who said they would "be buyers on any weakness."
Fundamentals remain strong. With 350 of 500 companies' reports in, the S&P 500 index is on track to post back-to-back double-digit quarterly earnings growth for the first time in almost six years.
Still, the market is expensive by historical standards. Investors are paying $18 for every $1 in expected S&P 500 earnings over the next 12 months, near the highest since 2004 and above the long-term price-to-earnings average multiple of 15.
"The market isn't without issues as it relates to valuations which are full if not somewhat expensive," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia. He expects the Dow to go beyond 22,000, however.
(Newsmax wires services contributed to this report).
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