Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Trump said the stock market would crash if Biden won. The Dow just had its best month since 1987.

Trump said the stock market would crash if Biden won. The Dow just had its best month since 1987.

President Donald Trump repeatedly warned Americans that if they failed to reelect him, the stock market would implode. In reality, the opposite happened.

Between August and October alone, Trump sent six tweets saying markets would "crash" if Joe Biden were elected, using a word presidents typically avoid.

"The Dow Jones Industrial just closed above 29,000! You are so lucky to have me as your President," Trump wrote on September 2. "With Joe Hiden' it would crash."

Yet no post-election meltdown emerged. If anything, markets melted up as nightmare election scenarios were avoided and investors celebrated coronavirus vaccine breakthroughs from Pfizer and Moderna.

The S&P 500 notched its best election week rally since 1932. And despite a sharp pullback Monday, the Dow soared nearly 12% in November, its best month since January 1987. The S&P 500 and Nasdaq enjoyed their best month since April.

"In terms of Biden being bad for the market, we can already see the opposite is true," said Daryl Jones, director of research at Hedgeye Risk Management.

Wall Street has moved on from Trump


There's no doubt that Trump's tax cuts and deregulation helped boost markets. His trade war with China and love of tariffs, however, were clear negatives for stocks.

Biden is signaling he won't adopt extreme policies that would rattle markets. His economic team, unveiled Monday, is headlined by Janet Yellen, the crisis-tested former Federal Reserve chair with whom investors are very comfortable.

"Biden is showing us that from a business and economic standpoint, he's likely to be moderate," Jones said.

The strong November performance on Wall Street partially reflects relief that the election removed a huge cloud of uncertainty, even if the votes took time to count. Before the election, there were serious concerns about a constitutional crisis and the transfer of power. But investors have largely shrugged off
Trump's avalanche of election-related lawsuits as a sideshow doomed to fail.

"The fear was there would be a seriously contested election," said Kristina Hooper, chief global market strategist at Invesco. "Certainly, it's being contested but there's a recognition there's a very, very slim chance that President Trump will actually succeed in his bid to overturn the election results."

Gridlock beats blue wave


Even better from Wall Street's perspective, the election failed to produce the blue wave Democrats hoped for.

Democrats would need to win both Georgia runoff races in order to get control of the Senate, with Vice President-elect Kamala Harris breaking a 50/50 tie.

Republicans are the heavy favorites to retain control of the Senate, according to PredictIt, an online prediction market.

Divided government in 2021 means Biden won't be able to raise corporate and personal taxes, a huge relief to investors. It will also limit the ability of Democrats to pass sweeping climate legislation.

Markets are focused on 'game changer' vaccines


The celebration on Wall Street comes even as the suffering mounts on Main Street.

The pandemic returned this fall with a vengeance, with coronavirus infections and hospitalizations at record highs. Health restrictions are back, and federal relief is expiring.

All of this is hammering mom-and-pop shops, movie theaters, hotels, airlines and restaurants. Jobless claims have climbed in back-to-back weeks and the government jobs report due out on Friday is expected to show hiring slowed in November.

But investors are looking past the worsening pandemic and focusing instead on enormous progress on vaccines.

"The vaccine news is a real game changer," said Hooper. "The stock market has this great ability to look through immediate headwinds to a future that appears brighter."

Moderna (MRNA) said Monday that its vaccine is 100% effective against severe Covid-19. That's a huge positive given that just a few months ago there were concerns whether an effective vaccine could ever be developed.

Now, there is greater confidence of a stronger economic recovery in 2021 that will include hard-hit sectors like travel.

Bank of America economists predict global GDP will surge by 5.4% in 2021, the best year since 1973. US GDP is expected to increase by 4.5%, the strongest since 1999.

"A year of vaccine not virus, a year of reopening not lockdown, a year of recovery not recession," Michael Hartnett, chief investment strategist at Bank of America, wrote in a note Monday.

The gap between rich and poor is getting wider


The market boom sends a positive signal that can encourage nervous consumers and corporations to spend instead of hunker down. That, in turn, can boost the real economy.

Yet the V-shaped recovery on Wall Street is another example of how the pandemic is worsening inequality. That's because millions of Americans don't get a boost from the market boom.

Only about half (52%) of American families have some level of investment in the market, mostly through 401(k)s and other retirement accounts, according to the Pew Research Center. Just 14% of households are directly invested in the market.

And the surging stock market is likely exacerbating the divide between rich and poor because affluent families have far more skin in the game.

As of the first quarter of 2020, the wealthiest 10% of American households owned 87% of all stocks and mutual funds, according to the Federal Reserve. The middle class, by contrast, owned just 6.6% of stocks, according to NYU professor Edward Wolff.

No matter who owns stocks, markets can't go up forever.

At some point, the vaccine optimism will all be priced in. The epic rebound on Wall Street — the S&P 500 is up a stunning 61% since the March 23 low — has driven up market valuations to levels unseen since the dotcom bubble.

Bank of America's Hartnett argued it would be "silly to think big stock market gains from here" won't cause negative responses, including higher inflation, higher taxes and higher bond yields. That's why he's advising clients to "sell into strength on vaccine in coming months."

"We expect peak prices in early '21," Hartnett wrote.

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Spain and Morocco Trade Blame After 72,000 Migrants Enter Ceuta
AI Is Remaking the US Economy, From GDP Growth to iPhone Prices
Europe’s Heat and Drought Are Now Disrupting Power, Shipping and Tourism
Europe’s Drying Rivers Trigger Power Cuts, Factory Shutdowns and Wildfire Emergencies
Record-Low Danube Forces Nuclear Cuts and Emergency Power Curbs
Danube Drought Forces Hungary’s Paks Nuclear Plant Into Full Shutdown
Ceuta Death Toll Rises as Spain and Europe Clash Over Border Response
Valued at $109 Million: F-35B Fighter Jet Crashes in Southern California
Record-Low Danube Exposes Probable Mammoth Remains in Bulgaria
US Says It Has Carried Out Heavy Strikes on Iran After Attempted Attacks on Its Forces
The AI User Nightmare: Private Claude Conversations Leaked to the Internet
Over 24 Hours in the Air: Qantas Airbus Completes Record-Breaking Test Flight
Massive Wildfires Ravage Southern Europe: Fatalities in Greece and Evacuations Across France, Spain, and Turkey
Nvidia Reportedly Takes Vast Texas Data-Centre Lease to Underwrite AI Expansion
FIFA’s Private-Investment Plan for World Cup Rights Draws European Revolt
Apple Briefly Crosses Five Trillion Dollar Valuation as Investors Retreat From AI Bets
Fresh Heatwave Threatens to Rekindle France’s Historic Wildfire Crisis
Following OpenAI's Cyberattack: 'Most Companies Still Do Not Understand What Is Coming'
OpenAI Sued After ChatGPT Allegedly Discouraged Emergency Care Before Near-Fatal Embolism
Miliband Sets Climate and International Law at Centre of UK Diplomacy
Czech Central Bank Governor Rejects Early Euro Entry and Rate-Cut Pressure
Trump Readies New Tariffs as Temporary Global Levy Nears Expiry
Vivienne Westwood Casts Cicciolina, 74, in Its New Autumn Campaign
Dejavu: Germany’s Military Expansion Reshapes Europe’s Strategic Balance With France
Morgan Stanley Builds a Wall Street Lead in AI Infrastructure Finance
High Prices Push Coffee Drinkers Toward Whole Beans and Home Brewing
Trump Draws Boos and Podium Scrutiny at Spain’s World Cup Triumph
Brilliant move: Péter Magyar Moves to Nominate Chess Grandmaster Judit Polgár as Hungary’s President
Spain Defeats Argentina in Extra Time to Win Second World Cup
Current AI Seeks to Build an Open Global AI Infrastructure Outside Big Tech Control
Germany’s Economic Malaise Reopens the Sunday Shopping Debate
Proposed U.S.-Saudi Nuclear Pact Could Permit Limited Uranium Enrichment Under International Safeguards
Netherlands Declares Water Shortage Emergency After Drought Pushes Rivers to Historic Lows
Why Kentucky Fried Chicken Became KFC—and Why the False Explanations Persist
Ukrainian Drones Strike Wildberries Warehouses Deep Inside Russia
Reported CIA Mission Helped Clear the UAE’s Path to Advanced US AI Chips
Artificial Intelligence Capital Fuels Markets While Governments and Regulators Face Mounting Strategic Tests
China’s Moonshot’s Kimi K3 Narrows the Gap With Anthropic Through Scale, Openness and Lower Cost
The Ledger Will Not Trust on Faith
Trump Administration Pressures Banks to Restrict Financial Access for Undocumented Immigrants
Passenger Bound for Germany Refused to Sit Beside a Woman on a Plane — Then Slapped a Flight Attendant
Ukraine’s Leadership Rift Spills Into the Streets as Protesters Target Army Chief
Ukrainian Drone Barrage Kills Eight and Strikes Russian Logistics Network
The Ten World Cup Finals That Defined Football History
Smartphones Are Getting More Expensive, Sales Are Collapsing, and Even Apple Admits: "Prices Will Rise"
The Monaco Bombing Has Become a Test of Ukraine’s Intelligence Accountability
Leadership Change and Strategic Rivalry Redraw the Political Map
The AI Race Enters Its Infrastructure Era
Britain Nationalises British Steel to Protect Scunthorpe Production and Strategic Supply
French National Assembly Overrides Senate to Pass Historic Assisted-Dying Legislation
×