Right now is one of the best times to buy stocks in years. The past few years have not been conducive to stock market gains. 2014 saw world economies get rocked by crashing oil and commodity prices. 2015 saw emerging markets (namely China) experience rapidly declining economic growth. 2016 saw political uncertainties. But now, the long-term picture is finally clear again.
All the political uncertainties have disappeared.
With Macron winning the most votes in the first round of the French election, it is almost certain that he will beat Le Pen in the 2nd round on May 7. Le Pen is dangerous to the markets because she wants France to leave the EU. If France were to leave the EU, the EU would disintegrate because France is the EU’s second-largest economy. The EU’s disintegration would cause global economic growth to collapse.
But with a Macron victory pretty much guaranteed, the threat of the EU disintegrating has disappeared.
This news is bullish for the European economy and European stocks in the long run. A lot of French investors and businesses were putting off investments in France until after the election. With this fear gone, European economies can get back on the track to growth.
Any news from Trump will be good news
From November 2016 to January 2017, investors had insanely high expectations about what Trump could do (major tax cuts and infrastructure plans). Then by March 2017 investors did a 360-degree turn and came to believe that Trump would be unable to pass any major policies through an internally conflicted Republican party.
Thus, expectations are very low right now! So if Trump does manage to pass any pro-growth policies, regardless of how small the tax cut or infrastructure plans are, it will be a positive surprise for U.S. investors. It is likely that the Republican party will at least pass some pro-growth policies, otherwise, they will get killed in the 2018 midterm elections. Hence, this will also be bullish for U.S. stocks.
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