Dow to win Trump 2020: Nobel Prize

This unusually bullish outlook is surprising because Shiller is a long-standing permanent bear who has been predicting a recession for decades. In fact, Shiller's specialty is detecting financial bubbles. He is therefore constantly looking for signs of an impending recession (even if there is none).

Robert Shiller: "Trump is a pro-business candidate"

Shiller believes, however, that Trump's corporate policies could support the Dow and offset an economic slowdown for several years.

"It's very clear that Trump is a pro-business candidate," Shiller told CNBC. "It also seems likely that when his term as President of the Fed expires, Jerome Powell will appoint one who will control more … who can revive the economy without worrying."

"It's also that Trump is a model of extravagant life and great expense. All of these things stimulate the stock market. "

Fed rates have risen 7 times during the first two years of Trump

Since Trump took over the presidency in November 2016, the stock market has exploded and unemployment has hit unprecedented lows. Even Trump's detractors reluctantly admitted that he had been good for the economy.

In fact, the Dow and the S & P 500 gained 44% and 35% respectively under Trump. These increases came as the Fed raised interest rates seven times over the two years of Trump's presidency (four times in 2018).

In contrast, the Federal Reserve has raised rates only once in the eight years of Barack Obama's presidency.

Whenever the Fed raises its rates, the stock market recedes and fears of a recession invade Wall Street. As a result, it was not surprising that the Dow Jones collapsed in December 2018, after the central bank raised interest rates for the fourth time that year.

Shiller predicts the Dow would be tank in 2019

The Dow had a bullish period during the Trump presidency. | Source: Yahoo Finance

However, Robert Shiller said the exuberant rebounds that had followed the market downturn at the end of December suggested an extremely resilient economy.

"It's the question of how people are turning to the recent correction," Shiller said. "There is another story that says these things are the precursors of a bigger event."

It is unclear why Shiller suddenly became somewhat optimistic about the economy, as he predicted in January 2019 that the Dow would crate a full bear market this year.

"This talk about the bear market has taken a strong hold. There is a feeling that the stock market could be deflating now because it's been a long time. We have seen some clues. And we have not seen the real deflation yet. "

Perhaps Shiller is changing its tone (and its economic forecasts) now that the Dow has not plunged as it originally intended. Of course, there are eight months left in 2019 and anything could happen.