Despite misguided economic policies and rising geopolitical tensions, the long market expansion has prevailed. But times may be changing.

With the Trump fiscal policies and rearmament, America is taking more debt than in decades, even though its sovereign debt now exceeds $21.2 trillion, or 106 percent of the GDP. As fiscal stimulus kicks in (read: Trump's tax cuts), the deficit will widen.

The US is now the only major advanced economy that's expected to see a rise in the debt-to-GDP ratio over the next 5 years (almost 10%!). The huge leverage relies on the continued willingness of other countries to finance America's imbalances, even as US debt held by other countries already hovers around $6.4 trillion.

Meanwhile, the Sino-US bilateral friction continues, along with talks on the North American Free Trade Agreement (NAFTA) with Canada and Mexico, and on tariffs with the EU. In Europe, political winds are rising, despite cyclical recovery. In Germany, Chancellor Merkel's rule is more constrained politically. Italy is heading to elections in which the old center has been played out. In France, May riots indicate Macron's liabilities. And volatility is escalating in the post-Brexit UK.

Multiple international geopolitical flashpoints – from the new Cold War against Russia, the unilateral effort to “renew” Iran sanctions, the escalation of violence from Gaza to Syria, the nuclear talks in the Korean Peninsula, and so on – will ensure that geopolitical risks will prevail, along with brickering about the Mueller investigation and mid-term elections in the fall.

And yet, US dollar has strengthened, while Dow Jones remains over 24,200. Is the market mispricing the risks, once again?

Uneasy markets – and gold

Since the Cold War, there have been several conjecture points as investor optimism and booming markets have given way to pessimist sentiments and bear markets, as evidenced by two decades of Dow Jones and gold prices.