Is Trump Right About A Market Crash???
President Donald Trump, gearing up for the official start of his 2020 campaign, warned that the U.S. would face an epic stock market crash if he’s not re-elected. “If anyone but me takes over,” Trump told his 61 million Twitter followers on Saturday, “there will be a Market Crash the likes of which has not been seen before!”
The Dow posted 71 record high closes in 2017, starting within a week of Trump’s inauguration, and another 15 in 2018, helped by the passage of a Republican tax bill.
As Trump kicks off his re-election campaign, the chances of a recession the starting in the U.S. within the next year have risen to 30% from 25% a month ago, according to a June 7-12 survey of economists conducted by Bloomberg News. Recent figures have shown slowing job gains, and Trump’s tariff threats are weighing on business sentiment. The rising U.S. budget deficit and national debt have also raised alarm bells.
So does Trump have a point? Trump’s first two years in office the DOW is up +25.21% which ranks:
- 6th best percentage gain for a Republican president (out of 17)
- 11th best percentage gain for any president (out of 31)
- The best first two years in office (regardless of term) for a Republican president since Reagan from 1985 - 1987
- The best first two years in office (regardless of term) for a president since Obama from 2013 - 2015
Whether Trump wins or not, a Market crash is the inevitable. We have experienced the longest bull market in history, but things are starting to slow down. After years of central banks around the world hiking rates, now they are putting rates on hold or even lowering rates. I think the most famous of them all was the Powell pivot back in December, which is now leading to inverted yields.
The spread between three-month and 10-year securities has inverted before each of the last seven recessions, elevating such an event as a key signal of a future economic downturn. But it’s not automatic, and some argue central bank policies like quantitative easing have made the curve less of a direct predictor.
The chart suggests a break of the monthly demand at 21700 and 20700 will confirm the downtrend.
A shrewd political tactic (credit to Trump). I think that crash is overdue and is coming no matter who wins the US presidency. If he isn't re-elected, it will be easy for him to point the finger. If he is re-elected, well then it doesn't matter to him because he already has what he wanted.
Trump makes bold economic moves. They may pay off, but they are risky. Ultimately the economy will crash, but it won't be his doing: it will be the result of a decades long string of errors all cumulating and coming home to roost. Sooner or later the piper has to be paid.
Exactly BB. The piper always gets paid, aka, ALL debts are paid. Either by the entity taking the loan or by the lender...but they’re all paid.
Look up the US national debt clock as you’re thinking about that fact. We’ve spent like drunken sailors over the last 18 years. Bush racked up a ton of debt after 9/11. Then Obama came in and spent more money than all presidents in history COMBINED...and no one knows what exactly he spent it on. Worse yet, they don’t seem to care. This will end badly.
I'm very familiar with that clock, it's the kind of thing that keeps me awake at night. :(
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Well said Rolland. Couldn’t agree more.