In the contemporary history of the United States, there has never been a president like Trump. Obsessive-compulsive disorder is always staring at the stock market and regard it as the vane of his success. In recent years, he has sent out dozens of hundreds of tweets that constantly mention the Dow Jones index. Every time the index hits a new high, he will celebrate and take the opportunity to attack the Democratic Party.
Obviously, he is highly serious.
The prosperity of the economy has a decisive influence on the outcome of the election. This has long been a commonplace, but letting go of the economy and talking about the impact of the performance of the stock market on the election prospects, this research topic has only gradually gained in recent years. Expert circles are more concerned. Some keen observers pointed out that in 2016, on the eve of Hillary's final defeat, the stock market did have a few days of return to negative. For those who have been in the political arena for decades, this is a real ominous sign.
Now, there are new academic studies that have found that among those who have a shareholder status, market performance does have a measurable impact on their voting choices, and it can be a huge influence. This study compares people with divergent dividends at various levels and points out that if US stocks rise in 2008 rather than actual declines, John McCain may have won the key states of Florida and Ohio.
Researchers from Rice University and the University of Pittsburgh did not categorically say that stock returns would determine the outcome of the election �C after all, in 2000, the Democrats were expelled from the White House in one of the most significant big bull markets in history. However, at least everyone has enough reason to start believing that the performance of the stock market does have some influence, and in some cases it is entirely possible to control the key to the election.
"Probably, if you have a lot of money invested in the stock market and the stock market has been rising, then of course you will tend to support the ruling party's candidates, because this is good for you personally." Rice University Finance Professor Alan Crane explains, "For politicians, this is a specific channel to cater to voters."
Although the market performance will affect the election prospects, this impression is very intuitive and the logic is also plausible, but it is very difficult for researchers to really quantify this influence, which is partly because of the candidates. The performance in turn is also constantly affecting the market, and the interaction between the two is difficult to cut clearly. There is also a variable, that is, the economy is also likely to exert influence on both at the same time, which further complicates the situation.
The study attempts to determine the impact of stock market performance on voters based on the depth of their involvement in the stock market. In order to achieve this goal, the experts made a ten-point score for the national voters based on the estimated stock market investment level. They found that if the stock market rose in the past four years, the group with the highest shareholding ratio had the highest support rate for the ruling party, and then with the continuous decline in the shareholding ratio, the support rate also showed a clear Stable decline trend.
"Actually, from the standpoint of academic research, this is already a generally accepted law, that is, a good economy is always beneficial to the ruling party. The problem is that it is very difficult to explain it through various actual data. "Klein and the two professors at the University of Pittsburgh, Andrew Koch and Leming Lin, conducted the study. "Our research is trying to implement this. Let everyone see that the stock market performance is indeed There is such a causal relationship between the election results, and we can identify it."
They found that the most influential voter's voting tendency was not the performance of the stock market in a particular year, but the performance of a four-year full term. As we all know, since Trump's term so far, the stock market has risen a lot, but according to the latest findings of experts, the key issue now becomes apparent. When it comes to the general ledger, that is, at the end of next year, what is the overall market? which performed?
Needless to say, it is not easy to completely erase the entire progress of Trump's stock market so far. From now on, the market must fall by nearly 30% to complete this task. However, it is undeniable that the unabated economic data is disappointing and seems to be sending an ominous message. This cycle is very old - this expansion cycle has lasted for more than ten years, setting a new history in the United States. The record on. Also, including the Treasury yield curve, many indicators seem to be sending information that the S&P 500 index has or is about to peak.
Michael Ball, executive director of Weatherstone Capital Management in Denver, said in an interview with Bloomberg: "When we look at the stock market, we will find that when you talk about which specific candidate may bring prospects, it is no longer emotional. They really said it was done, based on their own impact on the economic reality."
At present, various interpretations can be seen everywhere. The only certainty is that during the Trump appointment, the stock market has risen by nearly 40% and is still at a level close to the highest point in history. Although there are still 13 months from now to voting, everything can happen in theory, but at present, various benchmark indicators are clearly on the side of the president.
Whether such a reality can continue to be maintained remains to be seen. In addition to the overall performance of the major stock indexes, there are some signals worthy of attention. The yield curve shows that the economy may be caught in more trouble than it seems. However, the performance of stocks in certain industries that are considered to be closely related to the incumbent president seems to be transmitting similar signals. In short, from these perspectives, the performance of the market seems to be less favorable to Trump.
To a certain extent, because of the president's own foreign policy, the fear of recession is on the rise. As bond yields fall to record low levels, stock investors are also looking for low-volatility options. This situation is in stark contrast to the first year of Trump's tenure. At that time, after he won, he quickly introduced measures to relax supervision and tax cuts, which stimulated the "beast spirit" of the market. At one time, the S&P 500 index realized the continuous fifteen-month continuous income of dividend income.
However, in one corner of the market, questions about his prospects for re-election are quietly accumulating. This is the health care sector, and it is also a political battlefield, because some Democratic presidential candidates highly favor the government-led "national health insurance" system. Now, with the rapid rise in support for Democratic candidate Elizabeth Warren, an index of stocks compiled by the largest US-administered medical company has entered the consolidation range for the second time in 2019.
Jeffrey's analyst David Windley said that although this area has put tremendous pressure on the sector, the decline in this size seems to be too exaggerated. In his recent interview, he interpreted this: "Maybe, the market is saying that they know that President Trump is unlikely to be re-elected."
Although there is no suitable analogy cycle in the past from the economic cycle point of view, at least the crucial recession signal, that is, the two-year bond yields exceed the major reversal of the 10-year period, this is likely to mean The stock market has peaked, and the economic weakness will also come on the eve of next year's election.
According to historical data collected by the Bank of America, since 1956, such bond market warnings, on average, are ahead of the S&P 500 for the top seven months, ahead of the recession's arrival time of fifteen months. The first major reversal of the yield curve occurred in August, the first time in more than a decade. If the historical law is fulfilled again, this means that starting in March next year, the stock market will encounter major troubles, and starting in November, the economy will fall into recession.
"The most important question at the moment is, are we looking for signals or looking for excuses? I think the current market belongs to the latter." Bianco Research president and founder Jim Bianco bluntly said, "The situation is either It is definitely not good for Trump, or it will definitely benefit him. These are enough to influence the judgment of the voters."
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