Naturally, presidents like to take credit for positive economic developments over which they may have minimal influence.
Biden took credit for the Dow recently hitting 40K. He was wrong.
Trump has taken credit for a buoyant stock market that correlates to his lead in the polls. He is right.
It can be tricky to isolate reasons for market movements. Many factors move stocks, and there’s always a potential “black swan” event lurking. When asked for stock market guidance, John D. Rockefeller is reputed to have replied, “I believe the market will fluctuate.”
Those fluctuations are accentuated now that the bots have infiltrated a jittery market. Computers often unleash antsy trading algorithms based on misconstrued headlines such as “inflation is rising/cooling,” or “The Fed leaves open the door for rate cuts this year.”
It takes self-aware humans to analyze important details under the surface. Context that includes the correlation between Trump’s poll numbers and the general market updraft. Indeed, there is quantitative evidence provided by Morgan Stanley (presented below) that “the stock market [is] positioning for a GOP win” in the upcoming elections.
Some sectors, like clean energy, may not do as well. Neither will industries that rely on invasive industrial policy and central planning. However, overall, markets will relish a business-friendly tone with less regulation.
Morgan Stanley’s quantitative research corroborates Trump’s market-friendly claim. In their February US Policy Pulse report, under the “Investment Conclusion” section, Morgan Stanley chose their words carefully: “we see the stock market perhaps positioning for a GOP win.” [Emphasis added] That sounds like typical Wall Street hedging.
Here’s what they wrote in the same section of their March report: “we see the stock market positioning for a GOP win.” Not definitive, for sure, but it adds more conviction by removing the word “perhaps.”
ABiden taking credit for Dow 40K is also preposterous because investors are petrified of his tax-and-spend budget. Despite Biden’s socialistic politics of envy, the markets have been resilient partly due to the revolutionary productivity gains that AI-focused companies are leveraging.
If anything, emerging from the Covid doldrums should have wrought a bigger bounce, were it not for bearish Biden and his FTC- and DoJ-lead war on successful businesses. They take glee in thwarting mergers that make rational business sense, for example. Markets have risen not because of, but in spite of his supplication to the intoxicated greenies in the “keep it in the ground” movement.
Markets are a forward-looking mechanism, and they seem to be anticipating GOP resurgence. After all, Biden letting Trump’s tax cuts expire would not be propitious for the economy overall, nor anyone’s 401K. Even Morgan’s Democrat-oriented basket of assets would likely flounder if bearish Biden is able to raise capital gains taxes and impose a “wealth tax” that bizarrely — socialistically — goes after unrealized gains. That adds new meaning to the term “confiscatory taxes.”
Biden’s economy is as anemic as the empty shell of the man himself. In fact, GDP just declined for three straight quarters. If anything other than technical market dynamics drove the Dow to 40K, it is the flexibility and ingenuity of American businesses, and reflects optimism about the GOP’s election prospects. But if Biden gets his way (he won’t), the Dow will do well to hold onto 35K, give or take (though it’s problematic to try to time it).
I doubt he’d take responsibility for that as quickly as he trolls Trump about Dow 40K. But as long as Democrat election shenanigans are thwarted, that’s probably moot. Trends among voters in swing states, trends in the stock market, and trends in Morgan Stanley’s political party equal-weight baskets, are bullish for Making America Great Again.
Now drill, baby, drill. Merge, baby, merge. Grow, baby, grow. Export, baby, export, including opening open up the liquefied natural gas spigots, which has national security implications.
Let’s grow this economy more, which will be a precursor to gradually lowering the debt. Instead of being adversarial to successful businesses, let’s encourage them to make more profits as a rising tide lifts all boats, as Trump proved. The charging GOP bull will quash the Dem bear. I’ll buy that.
Image: Andreas Horstmann for Arturo Di Modica
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