All the Presidents’ Stocks: Beware Jedi Mind Tricks
With Team Trump offering the election year forecasts for a stock market crash under the "other guy," we inject some incredibly obvious facts.
Facts and history are one with the force…lies and anger lead to the dark side.
With Team Trump putting out a warning that stocks and your 401Ks will get crushed if you vote for Harris, we sort of remember hearing that before – in 2020. Waves of all-time highs in the equity markets were seen in 2021 and across the Biden term into recent weeks (see Footnotes & Flashbacks: Asset Returns 10-27-24), so that fact was not included in his recent comments nor was his prior forecast from 2020.
The comments on the stock market were unusual despite the fact that Trump would often use record high stock markets as his measure of success. He had to avoid the topic for much of the past 4 years under Biden as stocks crushed the Trump records despite a tightening cycle and wild inflation ride. Inflation is now down below long-term medians (see PCE Inflation Sept 2024: Personal Income and Outlays 10-31-24, CPI Sept 2024: Warm Blooded, Not Hot 10-10-24).
We had looked at the above history of stock performances under Trump and under Biden back in August, and the world of “up and to the right” is still alive and well both at the end of the Trump term and again in the Biden term (see All the Presidents’ Stocks 8-21-24).
Given the Fed-engineered bailout of the Trump markets and “his” economy in the latter part of 2019 and during COVID in 2020, Trump should be kissing Powell’s butt in Macy’s window rather than attacking him over the years. ZIRP was a recipe for a lot – both good and bad.
We thought this chart was worth an update for the 4 remaining undecided voters on the planet as they head into the weekend. We used prices posted just after 10 a.m. this morning (higher now as we go to print). It is a simple index price chart for the S&P 500 across the Trump term and then a running price chart across the Biden term to date. We follow with the NASDAQ in the next chart. We stacked them for an easier visual on the trend. After all, there was plenty of room between the two lines to see the relative performance! As seen in the chart, those lines never crossed.
Obviously, there is a lot more to the story than which carbon-based unit sits in the Oval Office, but that is something you will not hear from anyone in an election year when the markets are doing well.
The big question is whether those voters who have decided will get off the couch and find their way to the polls in the all-important turnout question for both parties. The last election in 2020 had the highest turnout rates in the US since women got the right to vote even if it still well below the turnout seen in many developed economies and emerging markets (feel free to google that topic…it is depressing).
In terms of the turnout and numbers game, you had to shake your head when you would hear Team Trump members such as Navarro saying it was statistically impossible for Biden to win (his thesis advisor was a great economics Professor at Harvard and is likely doing a corkscrew in his grave). Jim Jordan said the same thing, but at least he had the excuse of no math classes in his wrestling curriculum. Jordan struggles with long division and multiplication as evident in his conceptual grasp of “crime rates.”
The S&P 500 chart above speaks for itself.
As far as we are concerned, the biggest threat to the markets are massive tariffs, trade wars, and mass deportations leading to a labor shock, social unrest, and de facto military occupation of major northern and west coast cities selected by design to make political points and to exercise control over the military for domestic purposes.
Such a backdrop would bring down retail and undermine travel and tourism while leisure and hospitality economics would be devastated. Any rational analyst (who is not reverse engineering scenarios to a preset conclusion or simply ducking the topic for business purposes) can think through the steps and reactions and how it unfolds. Picture the logistics and manpower demands. Then think of the reaction risk. The same holds true with tariffs and major trade partners (see Tariffs: The EU Meets the New World…Again…Maybe 10-29-24, Trump at Economic Club of Chicago: Thoughts on Autos 10-17-24).
That is what a “market crash risk” looks like. It is the “March of Folly” but with a war declared by the US on the US.
The NASDAQ time series plotted above does the same drill as what we just did with the S&P 500. The performances of the S&P 500 and NASDAQ are not just all about Mag 7 tech as has been covered recently from a range of sources. That includes the fact that a significant majority of the top performing S&P stocks in 2024 are not Mag 7, who are underrepresented. We routinely update the equal weight benchmark ETFs (e.g. RSP, QQEW) and industry groups also each week (see Footnotes & Flashbacks: Asset Returns 10-27-24).
Some days when watching the markets and economic releases, you get this sense you are looking down staring at the line in the middle of one of those “lane and half” roads like you see in many places. Meanwhile, there are two wide load trucks traveling at high speed in opposite directions. The market, investors and most importantly the voters have to now decide how to avoid being the roadkill.