Lars Christensen

About the Author Lars Christensen

Lars Christensen (born 1971) is Chief Analyst, Head of Emerging Markets Research and Cross Asset Allocation at Danske Bank. Earlier (until January 2001) Lars Christensen worked as an economic policy analyst at Danish Ministry of Economic Affairs. Lars Christensen has a master degree in Economics from the University of Copenhagen (1994). Twitter: @MaMoMVPY Lars Christensen is the author of the book “Milton Friedman – en pragmatisk revolutionær” (“Milton Friedman – a pragmatic revolutionary”) published in November 2002. He has contributed to numerous other books. Lars is widely quoted by most international financials media – Financial Times, The Telegraph Bloomberg, Reuters, Dow Jones Newswire etc. In 2006 Lars co-authored the report “Geyser Crisis”, which forecasted a major economic crisis in Iceland. As head EM research at Danske Bank Lars has long experience with analysis the Central and Eastern European economics. He is well known in the region among both the wider public and among policy makers – particularly in Poland and the Baltic States. Finally 


Lars also blogs at marketmonetarist.com. His blog The Market Monetarist has since it was started in 2011 become one of the leading international blogs on monetary policy. Lars has coined the name Market Monetarism. Market Monetarism is a new school of economic thought that has emerged primarily in the blogosphere. Market Monetarists like Lars advocate that central banks should target the nominal GDP level (NGDP level targeting). Lars Christensen is also a Senior Fellow at the Adam Smith Institute. Lars is the founder of the Global Monetary Policy Network – an informal network of individuals with interest in monetary policy issues.

SPDR S&P 500 ETF Trust (SPY): Is This The End Of The Trump Rally?

I generally don’t think I can beat the market, however, right now there is something, which worries me and that is that the “Trump rally” in the US stock market could be about to end.

It seems to me that what US stock market investors are really focusing on is the potential for deregulation and tax cuts (and infrastructure investments). And we might of course get that and deregulation and tax cuts and certainly should be welcomed news both for the US economy and the US stock markets.

But if you get supply side reforms then it will be because of the Republican majority in the House and the Senate (might) want this – not because of Trump. Trump continues to pay lip service to these ideas, but he has certainly not be consistent. There is nothing in Trump’s past that tell us that he is a “free market guy”.

Where he has been consistent – even very consistent – is on his protectionist message and his China bashing. Presently the markets are ignoring this and that might not be the wrong thing to do, but I must say Trump’s 35% tariff talk scares scares me a lot and so does his persistent attempt to “pick a fight” with China.

Another factor, which could spell the end of the “Trump rally” is that not only will the Federal Reserve hike interest rates next week, but the FOMC could also send a more hawkish signal than presently being priced by the market.

In this regard I would particularly focus on inflation expectations, which essentially have stopped rising since 5-year/5-year breakeven inflation expectations broke above 2% a couple of weeks ago. Meanwhile the US stock markets generally has continued to trade (moderately) higher. To me that there seems to be a bit of a disconnect.

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Hence, investors expected some Trumpflation as long as (medium-term) inflation expectation, where below 2%, but from here on investors are likely to increasingly think that there will be full monetary offset of any “fiscal stimulus” from the Trump administration.