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Once again, the road to 20,000 points was denied. The venerable benchmark Dow Jones Industrial Average failed to hit the all-new and psychologically important threshold. This time around, it wasn’t even close — at 11:20am EST, the Dow Jones breached 19,943 points, but that was all she wrote. From there, momentum simply slipped, with the index actually closing below 19,900.

On the surface, this setback may not appear to be a setback at all. At its present mark of 19,887 points, “Dow 20k” is inside a 0.6% margin. That should be a breeze for the Dow Jones, which has enjoyed a robust rally since Donald Trump became the President-elect. Furthermore, the current Obama administration has touted the economic recovery, and the jobs numbers seem — again, on the surface — to support bullishness towards equities.

But if there is indeed an economic recovery, why is the Dow Jones so hesitant to breach 20,000? Last Friday, the index got to within 0.38 points of crossing the finish line. Again, if the so-called “Obamanomics” is so great, where is pay dirt?

Donald Trump has taken credit for the rally in the Dow Jones, but he might want to back off that bravado a bit. Based on its technical momentum, the index is trending down, not up. Also, U.S. dollar strength is certainly no help here. Because of currency fluctuations from Obamanomics, stocks are richer in value than they normally would be. Dollar strength is therefore a curse, not a blessing.

 

GDP, economic recovery

We must also consider the fact that Donald Trump is fundamentally correct in his overall assessment of Obamanomics. So far in this decade, real GDP growth is averaging a mere 2.1%. That is well off the 3.2% average starting from the 1950s to the last reporting quarter, let alone the 4.5% growth seen in the 1950s and 1960s. Economic recovery? It’s more like an economic recession.

Proponents of Obamanomics may argue that the 2.1% real GDP growth is significantly higher than the 1.7% growth of the 2000s decade. That’s true, but we also have to consider the negative impact of the 2008 global financial crisis, as well as the effects of the internet bubble collapse and the 9/11 terrorist attack. Given such a low bar, the economic recovery should have been much stronger under President Obama. Instead, as Donald Trump has consistently criticized, the U.S. is economically pedestrian.

While no one can predict the future, don’t assume that the Dow Jones hitting 20,000 points is a given. The reason is that the economic recovery is a myth. Unless we address underlying problems, the markets may have already peaked.

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