The Strategist

Analyst: Dow Jones will soar by 1000 points if Trump resigns

05/18/2017 - 15:08

Collapse of US stock exchanges due to the ongoing scandals around Donald Trump caused a stormy reaction among analysts. One of them, professor of the Wharton business school at the University of Pennsylvania, Jeremy Siegel, believes that if President Trump resigns, the Dow Jones index will soar by 1,000 points.

bfishadow via flickr
bfishadow via flickr
Consequences of scandals, which continue to shake Donald Trump’s administration, have reached the stock markets. The dollar’s rate has been suffering from these disturbances for already many days, and the gold market has experienced invasion of investors seeking to secure their assets. As for the stock market, there have not been any great upheavals in recent days. However, following the results of yesterday's trading, the Dow Jones and S&P 500 indexes dropped by 1.8%, and NASDAQ - by 2.6%. This fall was the largest since September last year. Executives from the rating of 500 richest people in the world according to Bloomberg yesterday lost $ 35 billion due to the stock market crash amid the scandal with dismissal of the FBI director James Comey.

Analysts explain the market crash by the fact that investors become afraid of influence of the scandals with Mr. Trump on successful continuation of the reform program initiated by him and the Republican Party. According to the US media, most of all investors are worried about fate of the tax reform, reforms to mitigate financial market regulation and the draft law on infrastructure development. Daniel Alpert, Managing Partner of Westwood Capital, says, "the drop in markets is caused by a reassessment of irrational optimistic expectations." "Previous rise of the markets was a result of very optimistic expectations of what Trump's presidency could bring from the perspective of economic prospects and the taxation system. All this is either living with Trump or will die with Trump", the expert said.

However, Jeremy Siegel of the Wharton Business School, who once predicted that the Dow Jones index could reach a mark of 20 thousand points, said on Wednesday that investors could positively perceive the departure of Donald Trump. In an interview with CNBC, Mr. Siegel noted that the exchange rally, which began after Mr. Trump's victory, can be explained by an economic program of the Republican Party that supported Donald Trump during the election campaign after losing all party candidates for the primaries.

In addition, the expert believes that Republicans, who have a majority in the Congress, have the last word in promotion of the reforms remains. "The key is in the hands of the Republican Party, and this situation will last for at least two more years", Mr. Siegel said. Proceeding from this, the expert suggested that investors could take resignation of the US president favourably, considering this even a signal for successful continuation of economic reforms. "If tomorrow Donald Trump resigns, the Dow Jones index can jump by 1000 points," he said. The US media intensified rumours of impeachment or resignation of Donald Trump after reports that the US president fired the FBI director James Comey allegedly for refusing to stop the investigation against Mr. Trump's adviser Michael Flynn, suspected of excessive contacts with Russian representatives.