Letter to President Trump

cropped-bob-shapiro.jpg   By Bob Shapiro

I sent a note to President Trump via http://www.Whitehouse.gov. Let’s see if he takes it to heart.

Dear President Trump,

The Dow Jones Average just passed 20,000 and it sounded like President Trump was taking credit for it. I think that was a mistake.

During the campaign, candidate Trump said, in no uncertain terms, that the stock markets were a great big bubble, and he was very right. The FED has continued to pump up the money supply. Though the FED stopped QE3 in 2014, it has been buying stocks with its printed money ever since.

After two rate increases, in Dec 2015 and in Dec 2016, interest rates still are historically low, causing massive distortions in our Economy. One distortion is that ultra low rates incentivize corporate bigwigs to buy back the company stock, pushing up the stock price and increasing the value of officers’ stock options.

The markets still are in a major stock bubble, even if there is some euphoria over President Trump’s moves so far. Part of what this means is that a major correction is not very far down the road.

I would suggest that Mr Trump “amplify” what he said about Dow 20,000. He should acknowledge that market players correctly are viewing his actions so far as bullish for the markets, but that the markets still are in a bubble. He could say something like, “The Dow easily could fall in half before the effects of my policies actually become apparent. So, the markets are going higher, but first they have to work off the froth caused by the FED’s stupid policies during the Obama years.”

It would be a shame for this Administration to take the (stock market) fall due to mistakes made under POTUS 44.

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