Amid the Dow Industrials hitting a tenth record high since Donald Trump won the election, some investors are growing anxious over the rapid rise. However, JPMorgan Chief Economist (NYSE:JPM) Anthony Chan said investors shouldnâ€™t be concerned.
â€œIn the first year of a presidential termâ€¦ you certainly donâ€™t get a lot of correction. Only 4% of all the market corrections weâ€™ve gotten since 1946 occur in the first year of that term. If you look at bear marketsâ€¦ Weâ€™ve had 13 bear markets since the 1940â€™s, only one bear market or 8% of the bear markets occur in the first year,â€ he said during an interview with the FOX Business Networkâ€™s Maria Bartiromo.
Even though more than 60% of all recessions occur in the first term of a presidency, according to Chan, fiscal policy will reduce the risk of an economic downturn.
â€œWe are going to have fiscal policy in a world where we have a 4.6 [percent] unemployment rate, so this means the probability of a recession is much lower and the equity market is going to do a lot better,â€ he said.
Treasury Secretary Nominee, Steve Mnuchin, last week, told the FOX Business Network he expects 3% to 4% percent growth over the next couple of years.
While Chan says, this is a â€œlittle aggressive,â€ reducing regulations, and lowering the corporate tax rate, will drive earnings and lead to 2% to 3% growth .
â€œIf you lower the corporate tax from 35% to 15%, as itâ€™s been promised, it will raise the S&P 500 earnings over a 12-month period between 19% and 20%. Even if you go down to 20% it will raise S&P 500 over a 12-month period between 10% and 11% above whatever the consensus is,â€ he said.