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The increase in US market capitalisation is driven by the tech company sector. An economic policy that is less positive for tech companies in the US (breaking up of monopolies, regulation) or a market correction in the value of these companies would have significant effects not only on the stock market but also macroeconomic effects (demand, capital flows, dollar’s exchange rate), per Natixis. 

Key quotes

“The rise in tech companies’ value generates a global equity wealth effect, and we know that in the US, a rise in equity wealth stimulates consumption drives down the household savings rate and boosts corporate investment (this is Tobin’s q mechanism).”

“US tech companies’ stock market performance attracts capital to the US. The rise in US tech companies’ stock market indices attracts non-resident equity capital to the US. These purchases obviously help finance the US external deficit.”

“The debate is well known: many tech companies (the GAFAM in particular) have dominant positions and levy monopoly rents. It would therefore be logical either to break up these monopolies or, if they are natural monopolies, to regulate them (regulate their profit rate in particular). This would be beneficial for consumers and growth in the long-term, but  in the short-term, there would be a weakening of demand due to the decline in equity wealth and a fall in capital flows to the US and a depreciation of the dollar.”