The market “melt up” is driven by three main factors: Belief that the trade war has peaked, belief there won’t be a U.S. – or global – recession in 2020, and belief that the Federal Reserve has the market’s back. Investors are making a bet that corporate profits will be a bit better next year than this year. They see a future where American consumers keep spending and businesses start investing again as the economy stabilizes and President Trump hits pause on any more tariffs.

The three main stock indexes hit their peaks early in the week, retreated slightly, but regained momentum Friday morning. The stock market is effectively at its highest level in U.S. history, a phenomenon that the White House has openly cheered.

“I am of the opinion that neither the U.S., nor the global, economy are facing a recession through the end of 2020,” said Ed Yardeni, head of Yardeni Research. “The market rightly anticipates Trump wants another term as president and he’s got enough going on with impeachment issues that he wants to put trade on the back burner for awhile.”

But there are a lot of “ifs” in the bullish scenario for next year, especially around trade, which is why markets has already pulled back slightly from its highs. This remains a tip-toe higher market, many analysts say. They point out that while the Dow Jones industrial average is up nearly 20% this year, it is only about 4% higher than it was on October 3, 2018, an indication of the hesitancy that remains among investors.

“It’s a nervous market,” said Howard Silverblatt, senior analyst at S&P Dow Jones Indices. “Everyone is talking a great ball game, but when you come down to it, everyone has their finger just over the sell button. You are one tweet away from concern.”

Goldman Sachs sent a note to clients on November 3 declaring that “tariffs have peaked” and Trump was unlikely to implement any more taxes on China. In a sign of how quickly momentum can shift, the prominent investment bank sent another note on November 19 saying risks of a tariff increase have risen again.

Trump largely credits himself for the recent record highs. The stock market is “through the roof” since election day, he said as cameras recorded his cabinet meeting Tuesday. “That’s something nobody would have thought possible.” Trump adviser Peter Navarro has predicted that the Dow, which broke 28,000 for the first time on Friday, will soon surpass 30,000.

Most market analysts praise the Fed, not Trump, for the rebound in the stock market this year. The Fed has cut interest rates three times, a move that is likely to stimulate the economy well into next year. The housing market is already showing signs of an uptick.

“I believe the stock rally is justifiable because of what Fed Chair Jay Powell said a few weeks ago when he made it clear there is a high bar for raising rates,” said Kristina Hooper, chief global market strategist at Invesco. “This is an environment in which monetary policy is going to be an important support for equities.”

Stocks rallied after Trump enacted the largest corporate tax cut in U.S. history, but his trade war has caused business investment to contract for the past two quarters, a drag on the economy and an indication of how concerned business leaders are. In a new report out this week, researchers at the Federal Reserve Bank of Dallas found that policy uncertainty triggered most of the downturns in the stock market since Trump took office.

“In the absence of such uncertainty, the Standard & Poor’s’ 500 Index would have been about 12% higher over the past two years,” wrote Pavel Kapinos and Alex Musatov from the Dallas Fed.

What’s changed in recent weeks is that experts see less risk of a recession — or near-recession – in 2020. Few outside the White House are predicting an economic surge, but the growing consensus is that the economy will continue to chug along at around 2% growth, enough to keep profits healthy and jobs fairly plentiful.

Yardeni and his research team describe it like this: Corporate revenues were flying high at 9% last year as economic growth ticked up in the wake of the big tax cuts. This year revenues for S&P 500 companies are widely expected to fall under 4%, a weak year but not the bloodbath some feared over the summer. The prediction for next year is revenue growth over 5% — a slight pickup and part of the reason the market has been rallying.

There are a number of factors playing into the market momentum. Historically, the stock market has risen by more than 10% in the six months following the Fed’s first rate cut, said Sam Stovall, chief investment strategist at CFRA Research. The third and fourth years of a president’s term have also had strong market performance, according to Bespoke Research.

A number of key economic indicators have also come in better-than-expected: Businesses in most industries continue to add jobs, consumers keep spending, and even the manufacturing slump appears to be plateauing instead of getting worse. The yield curve, which flashed a major warning sign in August when it inverted, is now back to a normal shape.

Corporate earnings have also outperformed with 75% beating expectations, according to the latest data from S&P Dow Jones Indices. But long-time market analyst Silverblatt remains cautious. He has been pointing out to readers of his popular market emails that most companies cut their earnings expectations a lot this year. They are beating this much lower bar, not the initial bar they set heading into 2019.

Despite the fresh market highs, many investors continue to take money out of stocks and pour it into ultra-conservative money market funds, another sign of unease. In a new report out this week, Morningstar said investors have removed more than $36 billion from U.S. equity funds so far this year, including pulling nearly $15 billion out in October alone. In contrast, money market funds are sitting on the largest pile of cash in a decade.

There’s growing belief the markets and the economy are unlikely to tank in 2020, but debate remains over how much upside is left in a bull market that has been running for more than a decade.

Kobsak Pootrakool, deputy secretary-general to the prime minister for political affairs, said the government also targeted budget disbursement of 92.3 per cent of total budget next year in order to achieve the 2020 GDP growth target.

The council also set export growth target of at least 3 per cent next year and total 41.8 million tourist arrivals. It also aims for private local and foreign investment of at least Bt3.3 trillion next year.

The council urged all state agencies to accelerate budget disbursement of Bt110 billion in this quarter.

The meeting was also briefed on projects faced with slow disbursement, including the the Thai-China high-speed train project.

The 23-million acre National Petroleum Reserve-Alaska, which is roughly the size of Indiana, has attracted relatively little public attention compared with the neighboring Arctic National Wildlife Refuge. But it ranks as one of the most ecologically valuable and promising oil prospects in the country.

The Interior Department’s Bureau of Land Management announced it is considering four possible options for the reserve, from slightly scaling back the 11.7 million acres eligible for development to expanding the leasing area to 18.3 million acres.

The Obama administration had put half of the reserve off limits to development six years ago, on the grounds that specific areas provided crucial habitat for hundreds of thousands of migrating birds and tens of thousands of caribou. But it is also the site of significant oil deposits, and recent discoveries suggest that it could hold as much as 8.7 billion barrels in undiscovered oil.

The bureau did not pick a “preferred alternative” in its new proposal. But its Alaska state director Chad Padgett said the plan, which will be subject to a 60-day comment period, reflects the administration’s emphasis on energy development.

“With advancements in technology and increased knowledge of the area, it was prudent to develop a new plan that provides greater economic development of our resources while still providing protections for important resources and subsistence access,” he said.

The agency’s draft Environmental Impact Statement is required to include an alternative of keeping the existing protections for the reserve in place. Under one scenario, BLM would cut the amount of area eligible for drilling from 11.8 million acres to 11.4 million. But the other two plans would expand energy development significantly, to either 17.1 million acres or 18.3 million acres, which amounts to 80 percent of the reserve.

Under this last scenario, federal officials would allow drilling around Teshekpuk Lake, a 22-mile-wide reservoir created by the thawing of ice-rich permafrost. The lake hosts hundreds of thousands of breeding shorebirds, along with denning polar bears and tens of thousands of molting geese and caribou.

Nicole Whittington-Evans, Alaska program director at the advocacy group Defenders of Wildlife, said her organization would fight any move to expand fossil fuel development in the remote region.

David Krause, Alaska assistant director for the Wilderness Society, questioned why the administration would upend the existing plan when it includes more than 10 million acres yet to be leased. “Clearly the only reason to scrap the existing, science-based management is to pander to oil companies who will drill anywhere, regardless of the social and ecological impacts,” he said.

Designated a naval reserve in 1923, the area has been the subject of energy exploration for years. But in 1976, the Navy transferred control of the area to Interior under a law that required any oil exploration conducted in areas with “significant subsistence, recreational, fish and wildlife, or historical or scenic value” be conducted in a way that provides “maximum protection.”

Commercial companies became interested in the area in the 1990s, and have been producing oil in the reserve for two decades. But operations there are subject to strict rules, and each new project has spurred significant controversy.

“It is arguably the most special place for birds in the Arctic,” said David Yarnold, president of the National Audubon Society, in an interview. “If you were to try to find a place to do more damage in the Arctic, you couldn’t.”

But Kara Moriarty, president of the Alaska Oil and Gas Association, said in a phone interview earlier this year that her members were committed to minimizing their operations’ environmental impact.

“Nobody cares about the backyard more than than we do,” she said, adding that Alaska remains a critical component to fulfilling President Donald Trump’s vision of expanding fossil fuel production at home. “The only way you can do that is through Alaska. There’s a recognition that this administration is very focused on energy security and this is their words, energy dominance.”

The federal government’s fluctuating estimates of the reserve’s energy potential has influenced what sort of limits previous administrations have imposed there. In 2010 the USGS downgraded its estimate of the area’s undiscovered oil from 10 billion to 896 million barrels. The Obama administration developed a master plan for the reserve that allowed leasing in half the reserve, and put the other half off limits.

But just a few years later, federal experts were forced to reassess their projections. After 150 exploration wells produced only modest finds, Armstrong Oil and Gas discovered the Pikka oil pool in 2015 on nearby state lands. The field, now known as Pikka/Horseshoe, alone could hold more than 1 billion barrels. Two years later, the third-biggest U.S. oil company ConocoPhillips tapped Willow, an oil reservoir on federal land that could hold more than 300 million barrels.

The latest oil boom holds out economic promise for the state of Alaska, which is heavily reliant on income from the petroleum industry. Drilling in the reserve is particularly lucrative for Alaska due to a special deal crafted by the late senator Ted Stevens (R-Alaska), which gives the state half of the reserve’s federal royalties.

And it has split the Alaska Native community on the North Slope, which funds much of its local government operations with taxes on oil and gas companies. A year ago North Borough Mayor Harry K. Brower Jr., joined Alaska’s Director of Resources at the time, Andy Mack, in asking Trump officials to expand leasing in the reserve.

“While always mindful of the need to protect the environment and critical subsistence opportunities, our residents also recognize that our ability to continue to provide even the most basic services to our communities depends largely upon a revenue stream generated by taxes on land-based oil and gas facilities,” he wrote.

However some village leaders in Nuiqsut, a town of just under 500 people at the edge of the federal reserve, have begun to push for limit drilling in the region.

Declines slightly outnumbered gains among members of the S&P 500 index. The dollar held steady and Treasuries dipped as China’s chief trade negotiator reportedly said he was “cautiously optimistic” about reaching a phase-one accord. Pessimists focused on speculation Donald Trump may sign legislation backing Hong Kong protesters, setting up further conflict between the nations. TD Ameritrade soared on reports that Charles Schwab Corp. is in talks to buy the brokerage.

Hong Kong’s deteriorating situation may prove crucial to the trade talks, and on Thursday a commentary from China’s state-run news agency accused the U.S. of applying a double standard. China has threatened to retaliate for the passage of the American bill and said supporting the protesters was a “gross” interference in Hong Kong affairs. With stocks still within 1% of a record high, traders will be watching for signs of progress ahead of a Dec. 15 deadline for further tariffs.

“Investors now are starting to worry again that we may not see that phase one in 2019,” said Chris Gaffney, president of world markets at TIAA. “It’s going to be tough to have the next leg up without a trade deal.”

Elsewhere, oil futures rose. European bonds tracked Treasuries lower and emerging-market stocks slid.

Here are some key events coming up this week:

–Economic indicators due for release include U.S. and European PMI data for November on Friday.

These are the main moves in markets:

Stocks

–The S&P 500 index fell 0.1% as of 2:39 p.m. New York time.

–The Stoxx Europe 600 index dipped 0.4%.

–The MSCI Asia Pacific index declined 0.7%.

–The MSCI Emerging Market index fell 0.8%.

Currencies

–The Bloomberg Dollar Spot index was little changed.

–The euro slipped 0.1% to $1.1059.

–The British pound slid 0.2% to $1.2899.

–The Japanese yen was little changed at 108.64 per dollar.

Bonds

–The yield on 10-year Treasuries increased three basis points to 1.78%.

–Germany’s 10-year yield increased two basis points to -0.33%.

–Britain’s 10-year yield jumped two basis points to 0.75%.

Commodities

–West Texas Intermediate crude gained 2.4% to $58.46 a barrel.

–Gold decreased 0.5% to $1,463.81 an ounce.

Pimchanok Vonkorpon, director-general of the ministry’s Trade Policy and Strategy Office, was downgrading a prior prediction of zero growth in 2019.

But the situation is expected to improve next year, she said.

Contraction this year might not reach 2 per cent if the baht does not further strengthen in value against foreign currencies and there is no further steep plunge in global oil prices.

She said exports to shrink this month, then expand next month.

The department announced on Thursday (November 21) that the overall Thai export sector shrank in October by 4.57 per cent, leaving total trade value at US$20.8 billion.

Pimchanok said a 25-per-cent-plus decrease in the price of oil and lower demand for commodities including rice and rubber were chiefly to blame.

The effects of international trade wars are improving, as can be seen in a rise in Thailand’s electronics exports, she said.

But there are other harmful contributing factors, such as the baht’s appreciation and Brexit worries, that can affect Thai exports in the long term.

Total exports for the first 10 months of 2019 were valued at $207 billion, a 2.4-per-cent decrease from the same period last year.

Pimchanok expects exports next year to expand by at least 2 per cent since exporters have already adjusted to the trade-war situation and are seeking out new markets.