Backed by a period of extraordinary monetary stimuli followed by generous tax cuts, Wall Street faces another historic moment this week, writes the French press. The US equity market will mark 3453 consecutive days without a decrease of more than 20%.
This makes it the longest "bullish market" since World War II, according to leading Wall Street statisticians.
This is encouraging because it is a sign that there is life in this market, says Sam Stoval, chief investment officer at CFRA Research.
The continued optimism of the market began in March 2009, as soon as BTA remembers that the financial crisis has wiped out more than half of the value of the broad US S & P 500 index.
When quotations drop by at least 20 percent against their previous record, they assume the "bullish market" and enter the "bear market".
The current & # 39; bullish-market & # 39; began in the midst of emergency measures from the Federal Reserve (Fed), which introduced super low interest rates, and sought to further promote investment by buying billions of dollars in a program known as QE.
This & # 39; bullish-market & # 39; began at such low interest rates as in no other bullish market, Stoval said. This has stimulated economic development and increased profits, he added.
Wall Street shares escaped large falls, although the Fed suspended the "easy money" policy.
At the end of 2017, the tenders received extra support when US President Donald Trump and the Congress Republicans managed to aim for a reform that brought corporation tax from 35% to 21%.
This led to a huge increase in profits. S & P 500 companies reported earnings growth for the second quarter of 2018 of nearly 25 percent a share a year earlier, according to FactSet.
Risk & # 39; s for the bulk market?
How long can the rising market continue? "The fake markets are not dying of old age, they are dying of fears," said Stoval, who thinks that the recession is the biggest risk for the "bullish market".
However, many analysts are still convinced that the US economy will remain strong and will prevent it from falling for some time.
For example, the market still seems to be waiting to see whether there will be a possible economic slowdown by Customs, despite Trump's many actions against leading trading partners.
I would be more worried if the financial results of companies or if the leading economic indicators report a delay. Then you can think of the end of the cycle, said Art Hogan, market strategist at B. Riley FBR.
"I am not concerned about the duration of the bullish market," he added.
The main risks for this market are the Fed, which is in the midst of a period of interest rate hikes. This is a cause for concern for analysts, because this can ultimately push up interest rates at troubled levels. One of the concerns is that an unexpected jump in inflation may cause the Fed to speed up its rate hike and thus cause turbulence in the global economy.
Despite the series of increases in rates, American top interest rates are still between 1.75-2%. According to Stotol, interest rates must exceed at least 1.5% of inflation or reach around 4% in order to remove stock prices from the rails.
The high market capitalization of companies is also worrying. Today, the share of equity versus corporate earnings is relatively high historically and is in the same range as in 2007 before the financial crisis.
However, this ratio is well below the level for the dot-com bubble of the late nineties.
These levels look pretty good, much better than at the beginning of the year, said FTN Financial chief economist Chris Lowe.
He notes that corporate earnings have risen after tax cuts, adding that earnings on the stock market are slowing this year, even though the profits of the companies are large.