Tags: Trump Administration | carl icahn | donald trump | stock market | rally

Icahn: Trump Market Rally Has 'Gone Too Far'

(AP/Spira McMullan)

By    |   Tuesday, 13 December 2016 04:55 PM


Investment guru Carl Icahn thinks the stock market’s celebration since Donald Trump’s presidential victory may have “gone too far” as the Dow Jones Industrial Average nears the 20,000 milestone.

"It's gone too far," Icahn recently told Poppy Harlow on CNN.

The Dow Jones industrial average closed Tuesday at its seventh consecutive record high and moved closer to 20,000 points. The Dow is fewer than 90 points from crossing 20,000. The Dow has climbed about 9 percent since the Nov. 8 election, with gains fueled by expectations that Trump will reduce taxes and regulation and stimulate the economy.

"I personally think it's a little overdone," Icahn said about the stock market rally.

Speculation that fiscal easing in the U.S. will drive growth also is pushing investors into stocks as governments take the baton from central banks that are starting to scale back a decade of stimulus, Bloomberg reported.

With the market assigning 100 percent odds to a Fed rate hike Wednesday, investors are focusing on the path for 2017, and see a two-in-three chance of additional tightening by June.

“There is a strong performance across all equity markets at the moment,” said Andrzej Pioch, who helps oversee $1.3 billion as a money manager at Legal & General Investment Management Ltd in London.

Icahn believes that some investors, sensing lower taxes are coming in 2017, are waiting until January to sell winning stocks when taxes may be lower.

Icahn noted that investors have "perceived" this is going to be a "very pro-business presidency."

Some investors see the 20,000-level on the Dow as a psychologically important signal of broad positive sentiment.

The U.S. stock market's sharp run has also been supported by positive economic data, including a strong labor market and S&P 500 companies' results, which in the third quarter snapped a year-long earnings recession, Reuters reported.

"Investors are encouraged by expectations that Trump and a GOP-controlled Congress will enact pro-growth policies and we're seeing modest inflation creep in while housing remains stable and wages continue to firm," said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management.

But for now, the euphoria in the stock market is "completely related to Trump," Icahn said.

"The world believes things are going to be very bright. Now, is that the case?" Icahn asked.

He admitted there are "many problems" and "bumps in the road" ahead.

Icahn last week said Trump's accomplishments before he has even officially entered the Oval Office point to a "much, much better economy."

So promising, in fact, that the billionaire activist investor admits he should have placed an even bigger bet on stocks in wake of Trump’s defeat of Hillary Clinton. "All the things Donald's doing really point to a much, much better economy," Icahn told CNBC. However, he did confess he thought the market "is ahead of itself somewhat," he said.

Icahn, who supported and advised Trump during the campaign, explained that the president-elect had consistently said he would slash corporate taxes and roll back regulations, CNBC.com explained.

But after Trump's electoral college win, Dow futures initially tumbled more than 800 points. The brief post-election plunge in the Dow was "completely, totally insane," Icahn said, adding that it made sense to "play the market."

The closely followed investor left the president-elect's victory party early to take advantage of the dip and bet about $1 billion on equities. Since then, the major indexes have continued to setrecord highs seemingly on a daily basis.

"I did buy a fair amount, I guess in perspective, but not nearly what I should have," Icahn said.

(Newsmax wire services, Reuters and Bloomberg news contributed to this report).

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Investment guru Carl Icahn thinks the stock market's celebration since Donald Trump's presidential victory may have "gone too far" as the Dow Jones Industrial Average nears the 20,000 milestone.
carl icahn, donald trump, stock market, rally
Tuesday, 13 December 2016 04:55 PM
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