Did you hear the promo that Trump is better for stocks?
Investors say so, you know. “Trump is better for stocks.”
First of all, that was painful to watch last night. Not because I like Biden or the political machinery behind him. I don’t. But because a failing old man failed right there on TV during the most important 90 minutes of the year. That said, and insensitive as it is, I still laugh audibly every time I replay Trump’s facial expression and response “…and I don’t think he knows what he said either” in my head.
Anyway, the media are on the job advising you that Trump is better for stocks according to “investors”.
Without delving into the partisan politics of it, Trump just got elected last night barring some sort of miracle candidate’s entrance for the democrat party. But is Trump better for stocks?
Well, as noted all year in NFTRH, the Biden administration (i.e. the machinery behind him with Janet Yellen a key gear in that machinery) has been pulling out all the stops in keeping this mess up to appearances using a massive and growing bag of debt ($32 Trillion+) to fund ongoing economic appearances. This picture cannot be argued with; our national Gross Domestic Product is increasingly levered to that mountain of debt. Monetary soundness be damned, get elected!
Out of this bag of debt favored areas like Semiconductors (I agree with this) benefit from the CHIPS Act, GSEs are planning to take advantage of a rigging of the bond market in order to allow more Americans to use their homes as piggy banks by refinancing at artificially lower interest rates (I abhor this), Green Energy here, Roads & Bridges there, and most obviously, an unprecedented (in my experience) streak of massive government hiring for nearly every Payrolls report over the last many months. If memory services, April was the only month of muted government hiring. Here’s the picture from May.
So, Trump is better for stocks? Is that true or is it just the MSM doing what the MSM does, taking the path of least resistance intellectually, peddling bromides and conventional bias reinforcement (republicans are better for business, Trump is a businessman, etc.)? I’ll take ‘B’ Alex, bromides.
Stocks have benefited from the liquidity injected by the Fed as it panic inflated coming out of the 2020 pandemic meltdown. Stocks (especially in favored sectors) have benefited from the full on fiscal (political) policy of a party desperate to retain power. My question is, barring a miracle candidate pulling a White Knight routine, what do you think is going to happen when the democrat loss is in the bag? Will Trump be better for stocks then?
Think about it. If the body democrat dies, either officially in November or unofficially any time sooner (where last night’s debate may have started the clock ticking), and it stops pushing and withdraws the policy that has been keeping this pig, I mean stock market, afloat, what do you think is going to happen? Trump could be greeted with a massive ‘pffffftttt….’ sound as the air comes out of the balloon. He could be left with a deflated mess in his lap.
That is and has been my story and I’m sticking to it. That the economic pumping out of that bag of debt may create a dangerous ‘bubble high’* situation if the democrats secure four more years of power and relax fiscally, or especially if they don’t and Trump ascends for a second (interrupted) term.
* My view is that the bubble is policy, both monetary and fiscal, spanning the last 24 years. Not stock prices.
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