still less than one year into Trump's presidency -- who gets credit for the stock market uptick?

Politics & Elections
21

Obama inherited the worst labor market and loss of capital in modern times, so he was hardly to blame for people dropping out of the economy. You could argue that his policies prevented some of them from returning sooner than they perhaps could have – I’ll meet you half-way on that one. On the other hand, it’s not entirely clear that dropping out of the labor force was necessarily a negative. If a 63 year-old retires because he has confidence that he’ll have access to medical insurance and cash out on a pension, that’s not really a bad thing. Nor is it bad if an expectant mother has enough confidence in her family income to become a stay-at-home mom. These two individuals are better off than a 63 year-old who has now put off retirement or decides he needs to work full-time rather than part-time because he can’t afford it. Now if you’re philosophically committed to the idea that people should work regardless of circumstances and that the public sector has no role to play, that’s not really an objection I can overcome as that’s a matter of personal principles. All I ask is that you understand that other people can have another set of socioeconomic principles as well.

I don’t necessarily have a knee-jerk reaction to reforming the corporate tax rate, but in listening to some investment analysts (not necessarily Obama fan-boys either), it seems to me they’re less in favor of lower taxes and more of the opinion that Trump is in a better position to tackle regulation, which they regard as excessive (particularly the banking and financial services side of things). Where I feel Trump is really going off the rails is in focusing on economic nationalism. There’s no problem with renegotiating a WTO or NAFTA and getting some modest concessions, but a full-on trade war is a very risky idea. And it does nothing to address the much more serious problem of economic displacement caused by technology.

22

Another factor is that Presidential elections always cause an increase in the stock market, no matter who wins. Some people believe that one guy will be better, and some believe that the other one will. When the outcome is revealed, the ones that believe in the winner will put more into the market, while those who believe in the loser will put less in. The net effect is more in, because the winner is the one who won.

One should also remember, too, that the stock market is not the entirety of the economy, and can be improved by good news or bad news. People will invest in the stock market if they expect businesses to expand significantly, for instance, and that’s good. But people will also invest in the stock market if they expect major inflation, and that’s bad.

23

The increase in the value of stocks on the stock market is not reflective of the health of the economy. The stock market can go up with a healthy economy, but it can also go up with an unhealthy economy, and the vs is true too.

Right now, the price paid for shares of stock in some companies is going up. Those who paid for those shares at a lower rate are making out well, but it has little other effect on the economy.

It is, however, a symptom of tons of capital looking for a place to be invested. I am not sure the best way to find the exact amount of capital in private hands looking for investment, but there are over 2 trillion dollars sitting in banks as excess reserves, which if lent at a 10% fractional reserve, represents over 20 trillion dollars looking to be invested into the economy. IANA investment analyst, so I will only estimate that the money in private hands looking for a place to be invetsted is of a similar magnitude.

Wikipedia says that the net worth of the united states it about 123 trillion dollars, so we are talking about around a quarter to a third of the value of the US is sitting around, looking for a place to be invested into the economy.

It is small wonder that this money finds its way into the stock market, driving up the price of individual shares of companies that look stable enough to take it. The current stock market bubble is, IMHO not a healthy sign, does nothing to promote the economy of job creation or improvement, and is poised to cause a great deal of disruption when it pops.

The solution to this is, of course, demand side economics. Get some of this money into the hands of people who want to spend it on consumer items, and that money is flowing in the economy again, strengthening it, and providing jobs and/or raises to people who need to create the goods and services that are being demanded by consumers with more money to spend. If you give the money to the wealthy, then it has no where to go. If you give the money to the consumer class, then it ends up in the hands of the wealthy eventually anyway, it just does more good in the economy on the way.

24

A lot of obvious shit isn’t actually true.

And having checked out your cites, if you would be so good as to quote the specific parts that support your claim, I’d be deeply appreciative.

Sam Stone was making a claim about the pernicious effect of increased regulation on the larger economy. He also made a claim about the quantity of regulations. We’re not talking about staffing of regulatory agencies.

Well, you might be talking about that, and that’s fine. It’s just not a response to anything I’m saying.

25

In the graph I linked to, the largest continuous climb was under Clinton. Last I checked, Bill Clinton was not a Republican.

26

It’s important to look behind a single-number assessment of market performance. Energy shares have fallen; materials, telecom, utilities and consumer goods are all flat; healthcare shares are up, but by less than the index. Services are up, but the only non-financial sector with a big rise has been technology shares, led by Apple.

It is been the Financial sector that has driven this latest Bull Market. Money has rushed into bank stocks assuming that there would be another round of deregulation. The already-bloated sector of Wall Street greed (our brightest college students don’t want to be doctors or lawyers or scientists anymore; they want to be financial traders) is due to have its egregious behavior and excess profits fed once more.

Goldman Sachs shares soared last November, and are still up almost 30%. JPMorgan is up 35%. Bank of America shares are up … 50%.

The blog-goblins thought Hillary was Goldman Sachs’ girl. To the contrary, Wall Street seems quite pleased to have Pence-Kushner-Bannon in charge.

27

The old saw says buy on the rumor, sell on the news. Thus far the Trump presidency is all rumor. Its in a bit of a bubble expecting a very business friendly environment where environmental worker and customer protection are a thing of the past and tax cuts ensure that the rich can get richer. All of this has been promised by Trump but it is not clear that even with all three branches the Pubs can deliver. If it turns out they can’t, well then we may be in for a significant correction.,

28

The President cant really make the market go up, all he can really do is screw up and stop a upturn. Trump has not done so, so as far as Obama was “responsible” so is Trump. But it’s early yet.

29

While Sam is correct that Wall St. hopes the party will continue, with Trump pursuing “public be damned” policies, the perspective reflected in the above excerpt is rather blindered.

During the Obama Administration, the major averages of the U.S. stock market more than Tripled. That’s Tripled with a T. The Nasdaq Composite Index more than Quadrupled. That’s Quadrupled with a Q. In and of themselves, these astounding facts don’t make the Obama epoch unique. There were a few other strong booms: during the Clinton years, during the Roaring Twenties, and during the mid-1930’s recovery from the Crash. However the prior booms were accompanied by share prices rising in Europe and around the world. During the Obama Boom, other world markets remained in the doldrums — a special American exceptionalism had indeed returned. Employment has risen sharply. The share of the U.S. economy accruing as corporate profits is now at a nearly unprecedented level. Billionaires have seen their worths climb dramatically.

In the context of reality, “Obama['s] regulations … held back growth in [share prices]” and “depressed confidence” is a peculiarly partisan synopsis.

30

If the market was uncertain what would happen in a post-Trump victory world, it would make sense that the rises were muted in the year before the election by this fact. After Trump won, it was clear he was no revolutionary political figure. Nothing crazy happened. Nothing happened of any consequence really. The markets looked around saw that the Greenspan/Bernanke/Yellen Put was still in effect, tax cuts were on the table, and remembered that a one-party government means loads of spending. So not only did the bubble not burst, but it got juiced up off that right-wing Keynesian scent wafting across Washington.

31

I also don’t buy the “regulation is choking business” argument when the facts used to make that claim are directly attributed to the number of regulations. That’s a bullshit attempt to prove the claim.

Why?

Because the realities of business/industry/technologies continue to change. 20 years ago, there were no regulations on fracking. Why? Because fracking did not exist as a technique being used in large scale 20 years ago. There were no regulations on internet commerce, none on electric vehicles, none on solar and wind as a major part of our power grid, etc.

Do these industries need regulation? Of course they do. You and I can disagree on how much, but I think we can all agree that there is some regulation called for.

So, there ya go. We just added dozens of new regulations. Bam, you are now part of the problem.

32

The actual numbers have a different opinion (particularly when contrasted with the current beginnings of the Trump Slump), but then we all know that reality has a liberal bias.

33

In general the President doesn’t have a direct effect on the markets but Trump’s recently-launched trade war does seem to have caused a few significant shocks. It’s too early to say what the long-term effect will be but it doesn’t appear to be positive thus far.

As far as the (zombie) point on regulation and growth goes, it’s worth noting that that unfettered growth is not generally a good thing and that regulations help ensure that controls and oversight keep pace with business growth to mitigate the risk of bubbles and outright poor behaviour in the markets which then tend to “correct” rather spectacularly. I can certainly recall the financial sector in 2005 complaining that regulation was too onerous and was stifling growth…and three years later the same sector demanding to know why the regulators hadn’t done something to prevent the wildly risky practices that caused the financial crisis. And here we are again, with the same refrain of “regulations are stifling growth!”. Plus ca change…

(I can also remember in September 2016 one Donald J. Trump claiming that the rising stock market was a dangerous bubble which showed how poor Obama’s economic policies were…until it became his rising stock market, at which point it became evidence that he had the best economic policies ever, believe me.)

34

That, and his petulant attacks on Amazon because its CEO owns a newspaper that says mean things about him.

35

Those things tend to be short-term blips. A months-long tariff war which will result in increased raw material costs across the manufacturing sector and decreased export demand, on the other hand, will have a depressant effect across several sectors and a long tail once the war finishes.

36

I’m still relatively bearish on the market. I’ve heard it say time and again that the one thing the markets and the business world hates is uncertainty, and uncertainty is something that the mercurial Trump thrives on.

37

Many of the downturns of the stock market are due to Trump doing stupid stuff. Declaring trade wars, attacking businesses that own newspapers, etc

38

“These massive tax cuts will be rocket fuel for the American economy.” - Donald Trump

39

You know what rocket fuel does, if you’re not really, really careful with it?

40

Evaporate?