Fewer regulations, tax cuts and an increase in infrastructure spending are the promises from the current U.S. administration, which have fueled the stock market rally.
The current market may have been high, but the global economy is improving. This bullish environment can still provide the power and fuel the stock market needs to continue its uptrend.
“In any case, I do not think the current stock market is cheap. The European Central Bank and the Bank of Japan are continuing their quantitative easing measures. However, looking at the global bullish sentiment, investors should not be bearish, but need to be cautious.”
As for the Fed, it may have the risk of rising inflation, but it also needs to keep the momentum going in improving the US economy.
The Fed is scheduled to hold a policy meeting next week and is expected to raise interest rates. The dollar is also expected to be stronger because the interest rates are moving higher, which will attract more money into the U.S. to invest. This is great for the U.S.
The French election at the end of April is one of the most important international political event to watch. It may cause the instability in the euro zone, which typically is not welcome by the financial markets because investors do not like instability.