Donald Trump lately acknowledged that the Dow may attain 100,000 by the top of his presidency, and the same old crowd instantly rushed to both cheer or ridicule the assertion with out understanding why such a quantity is even attainable. The issue with fashionable evaluation is that it assumes markets rise as a result of governments are doing one thing proper. Historical past reveals the precise reverse. Markets rise to excessive nominal ranges when confidence in authorities is collapsing worldwide, and the US has turn into the final protected haven for capital.
The USA stays the final functioning protected haven for international capital as a result of each various is worse. Europe is imploding underneath regulation, battle danger, and Marxist ideology. Asia is fragmented by capital controls and demographic collapse. Rising markets stay structurally unstable. That leaves the USA by default.
Capital is fleeing authorities debt globally. Sovereign bonds are not risk-free belongings; they’re political devices backed by bancrupt stability sheets. As confidence erodes, capital migrates into personal belongings like equities, actual property, commodities, and something that isn’t a authorities promise.
A rising Dow on this setting just isn’t a celebration of prosperity. It’s a warning sign. We have now seen this repeatedly all through historical past. Inventory markets rise sharply in periods of financial debasement and political instability as a result of cash is being repriced downward. The index rises as a result of the foreign money falls, not as a result of actual wealth is increasing.
The Financial Confidence Mannequin has by no means proven a clear growth cycle into the late 2020s. What it reveals as a substitute is rising volatility, sovereign stress, and geopolitical fracture. That doesn’t cease markets from rising, however it adjustments why they rise. Capital concentrates, participation slims, and volatility expands. Governments reply with dangerous insurance policies, resembling taxes, controls, and rules, which solely speed up capital flight.
Dow 100,000 in a collapsing confidence setting doesn’t imply the typical particular person is best off. It means cash has nowhere else to go. The USA is the perfect of a nasty bunch of countries ,slowly dropping off as a result of sovereign debt disaster. We are able to look to the Dow because the true indicator of world capital on an institutional foundation, whereas Nasdaq is extra retail, and the S&P incorporates a little bit of each.
Markets don’t transfer in straight strains. Even when capital continues flowing into the U.S., there shall be sharp corrections, political shocks, and coverage errors alongside the best way. So the true concern just isn’t whether or not the Dow can mathematically attain 100,000. The query is what situations would produce that end result. Based mostly on the pc, the wrongdoer shall be international confidence collapsing to the purpose the place capital is compelled into the final remaining open market.
