TRUMPFLATION

Putting the post-Trump stock market rally in perspective

Since Donald Trump won the US presidential election, stocks have been soaring on the assumption that his administration will boost spending, cut taxes, and reduce regulation. The Dow, S&P 500, and Nasdaq indexes are on track to set simultaneous record highs today, which doesn’t happen very often.

The Dow and S&P have been trading above their previous cyclical peaks, set in late 2007, for some time now (both in nominal and inflation-adjusted terms). The tech-heavy Nasdaq, however, only recently settled above the levels last seen in March 2000, during the height of the dot-com boom:

In inflation-adjusted terms, though, the Nasdaq remains far below its previous peak:

Now that was a bubble. The Nasdaq today bears little resemblance to the one back in 2000; in inflation-adjusted terms even the mighty Apple looks modest by comparison. It will be some time before we see valuations like those again, regardless of Trump’s plans to make America’s markets great again.

Top 10 stocks on Nasdaq, by market cap (in today’s dollars)

March 10, 2000 Nov. 21, 2016
Microsoft ($740 billion) Apple ($587 billion)
Cisco (665) Alphabet (534)
Intel (567) Microsoft (469)
Oracle (328) Amazon (361)
Sun Micro (233) Facebook (336)
Dell (187) Intel (166)
Qualcomm (136) Comcast (164)
Yahoo (133) Cisco (152)
Applied Materials (106) Amgen (108)
JDS Uniphase (98) Kraft Heinz (101)
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