Posted on 11/04/2019 8:32:14 AM PST by SeekAndFind
Before the Fed lowered its target interest rate range on Wednesday, Donald Trump was already on Twitter, touching on two of his favorite topics: how the Fed doesn't lower interest rates enough and that the stock market's performance is thanks to him and his Republican pals.
The connection between a president and equity markets isn't straightforward. Many factors—the general health of the economy, investors sentiment, interest rates, financial stimulus, and global business conditions, for example—affect how stocks perform. But presidents also aren't unimportant.
"Policies may or may not be helpful for economic growth," says Kenneth Orr, CEO of investment research firm and value investment fund manager KORR Acquisitions Group. "Policies are led by the President and his Administration, but Congress must pass laws and budgets to affect those policies."
And so, as Fortune did in early June, we decided to take a look at how the markets performed during the Administrations of Barack Obama and Trump. We downloaded historical information on the Dow, S&P 500, Nasdaq, and Russell 2000 indexes from Yahoo Finance. Then we compared the same periods for both presidents: from inauguration on January 20 to Oct. 31 in their third year of office.
Because the market had already run up a long way before Trump was elected, the absolute numbers would be misleading. Instead, Fortune compared the performance under each president to his initial inauguration day to get an accurate comparison of growth under each.
Below are graphs and analysis for each of the sectors. For those who want the quick answer, market growth was considerably stronger under Obama, but there is an important caveat. The financial crash that occurred immediately before Obama took office left markets reeling, so there was a lot of room for them to move. Also, the massive financial stimulus enabled by Congress
(Excerpt) Read more at fortune.com ...
Read the article. They are comparing the SAME period of time for both presidents. They are NOT comparing eight years of Obama to three years of Trump.
They claim they are comparing Inauguration to Oct. 31 of the third year of the first term. But that would be 1,014 days and the charts only go to 700 days which is not even two full years in office (2 x 365 = 730 days).
Because there was a nice drop at the end of last year, they could use to fudge the numbers
year 1 was 20%+, year two was -5% due to a late year drop, year three is around 20% so far... They are playing games.
RE: since I actually suck at mind reading.
Here’s my advise to you ( you can take it or ignore it as you please ) -— ASK someone for his opinion first before jumping into conclusions.
I agree with what you wrote—but wanted to point out that the days difference is because the market is not open on weekends and holidays.
The stock market is not the economy.
Trump’s election was the first time in history that the market didn’t drop the next day after the election.
If Trump doesn’t get credit for November 9th -Jan 20 2016 then it’s bogus. The markets look ahead
Here’s my advise to you ( you can take it or ignore it as you please ) -— why don’t you just state a quick summary of your take on the article your posted. 8>)
Oops, they are reporting TRADING days, not CALENDAR days. So 700 is correct.
My apologies on that.
Thanks. I just figured that out when I was creating the charts in Excel. They are using trading days, not calendar days. Duh!
Agree. And you could even make a case to begin looking at the day he won the nomination.
Trump’s accomplishment consists of maintaining the high stock valuations from the Obama era fiscal stimulus and converting that financial recovery into long term, sustainable real economic growth. The result is the country’s longest economic expansion, with prosperity and opportunity that is widespread and reaches deep into the ranks of marginal and hard to employ groups. This is also diminishing many social pathologies and conferring ancillary benefits on them and the country at large.
Its important to note 2 key things.
#1-When Obama took over, the market was already tanked.
It had NOWHERE to go but up.
Where as for Trump, he inherited a market that had revalued itself.
#2- Obama had all but 1 or 2 quarters of Fed 0% interest rates. And the 1 or 2 quarters were only 0.25%.
The feds purposely raised the interest rate to slow the economy under Trump.
The reality is that the underlying trends are usually driven by when they are ELECTED.
Between Election Day of 2008 and November 1st of 2011, the S&P 500 Index was up around 21%.
Between Election Day of 2016 and November 1st of 2019 (last Friday), the S&P 500 Index was up about 43%.
Including the growth in the U.S. stock market between Election Day 2016 and Inauguration Day 2017 as part of Obama's legacy is a joke. Obama's most enduring legacy was that he was succeeded by Donald Trump (of all people).
Fortune the business magazine for Globalists...
I wonder why you are interested in MY PARTICULAR take when there are scores of very good responses from other FReepers...
But since you insist:
1) S&P was in the pitts when Obama took office in 2008. It had nowhere to go but up. Of course he could get a better percentage increase.
It’s like saying that a third world country like the Philippines has a GDP growth of 6% while the USA had a GDP growth of 3%. The question to ask to be fair is this — what are you starting with?
Obama’s market was OVERSOLD.
2) People forget the ROLE OF THE FED in the stock market. The Fed LOWERED rates under Obama several times and kept them flat for years under Obama. This was a great economic tailwind for him.
OTOH, The Fed RAISED interest rates several times after Trump came into office ( despite the fact that the markets were still going up ). Trump had to scream bloody murder before the Fed stopped this summer.
What you’re seeing now is the result of a very accomodating Federal reserve.
3) The stock market is NOT the economy. It does reflect it somewhat, but the economy is MORE than the stock market. Look at jobs, labor force participation rate and wages. Look at company PROFITS to see how the two economies are performing when talking Trump vs Obama.
I have owned the Vanguard S&P 500 Index Fund for over twenty years. Using real numbers and investing all returns, my portfolio increased 21.05% per annum during the Obama time period and 13.73% per annum under Trump. However, investment markets have an emotional aspect that often reflects future expectations. Therefore, when I run the numbers for Obama and Trump from Election Day (as opposed to Inauguration Day), Trump beat Obama 15.96% vs. 12.93%. Indeed, between Election Day 2008 and Inauguration Day 2009, the markets plummeted so that when Obama took over there was nowhere to go but up. In contrast, between Election Day 2016 and Inauguration Day 2017, the markets exploded up.
What a stack of steaming horseshit.
A good chunk of barky’s gain was digging out of the hole that was the recession.
I get 42% for the whole barky administration and 51% for the Trump Administration.
Let’s play fun with numbers and see what we can make of them.
The whole exercise has less to do with either president, and more to do with conditions and factors neither one is or was in control of.
Obama had the advantage of entering office when the markets had little to do but go up, naturally, having shed a ton of over valued conditions in the economic downturn of 2008.
Trump and other world leaders are saddled with the results of recoveries built on too much central bank stimulus, which for the last three years has used up its effectiveness and the markets, globally, drunk on that opium, are now slowing.
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