Stock market predicts Trump will defeat Biden

Stock market history suggests President Trump will prove the polls wrong and secure four more years in the White House.

The benchmark S&P 500, which has predicted the winner of 87% of all presidential elections and every one since 1984, added 1.2% from July 31 through Monday.

Typically, a gain in the three months leading up to the election has signaled a victory for the incumbent party while a loss signaled a transfer of power.

Ticker Security Last Change Change %
SP500 S&P 500 3371.5 +61.26 +1.85%

“With the market staying up here and rallying, it’s telling me that [Trump] is going to occupy 1600 again for another four years,” said Anthony Saliba, CEO of the Chicago-based Matrix Execution Group, an executing broker-dealer that specializes in options and equities. The White House’s address is 1600 Pennsylvania Avenue.

THIS BIDEN ‘TELL’ SHOWS RACE CLOSER THAN POLLS SUGGEST: BILLIONAIRE JEFFREY GUNDLACH

While the S&P 500 is pointing to a Trump win, other indicators based on markets and the economy suggest former Vice President Joe Biden will be the candidate who takes the oath of office on Inauguration Day.

The U.S. dollar, which has correctly picked seven of the last eight election winners and every one since 2000, gained 0.6% in the three months through Monday. On Election Day, the index was trading as little as 2 cents above its July 31 close.

Also playing in Biden’s favor is the fact that earlier this year, the coronavirus plunged the U.S. economy into its deepest recession of the post-World War II era. Presidents who have overseen a recession in the two years ahead of an election have lost five of seven campaigns, including the most recent case – former President Bill Clinton’s victory over George H.W. Bush.

But even with the coronavirus-induced plunge, 56% of Americans say they are better off now than they were four years ago, according to a Gallup poll released earlier this month.

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The reading topped those of former Presidents Barack Obama (45%), George W. Bush (47%), George H.W. Bush (38%) and Ronald Reagan (44%). Of that group, only George H.W. Bush did not win reelection.

The Economy Is A Mess. So Why Isn’t The Stock Market?

We’ve said it before: The stock market is not the economy.

Usually, this simply means that fluctuations in the markets may have little to no real bearing on the underlying realities we think of as making up the economy. Or that there are many important structural factors that make the markets’ outlook different from how ordinary citizens view the country’s overall economic health.

But now, those usual bromides risk wildly understating the disconnect. In the time of COVID-19, the stock market couldn’t be more divorced from the United States’ broader economic situation. Although the S&P 500 tumbled sharply in March, as the coronavirus shut down large swaths of the economy, it had made back almost all of its losses by the first week of June — before dipping again and then quickly rebounding yet again.

Even beyond the markets, there has been some data to suggest that the worst fears about the economy in late March and April were too pessimistic. (Take May’s jobs report, for instance, which showed a surprising decline in unemployment even after accounting for a classification problem with laid-off workers.) But the overall state of unemployment is still quite bad by historical standards, which mirrors numerous important economic indicators that are almost uniformly down — to a significant degree — from last summer:

Obviously, not every core indicator has dropped off a cliff in the face of this recession. Inflation, as measured by the sticky-price consumer price index (excluding ever-volatile food and energy expenditures), has dipped some since February — from 2.8 percent year-over-year to 2.1 percent — but remains in a relatively normal range. New building permits (a sign of construction investment and activity) have rebounded from an initial dip and are almost back at last year’s level. And measures of credit risk, such as the TED spread, have stabilized, indicating a low implied risk of commercial-bank defaults.

But employment ratesoil pricesconsumer confidence and many other measures paint a clear recessionary picture. Even corporate earnings — which in theory help dictate the prices of shares on the market — suffered their worst quarter since 2008. (This is what has driven forward-looking price-earnings ratio forecasts for the S&P skyward.)

And yet stock indices continue to rebound much faster than the rest of the economy.

Why? As is usually the case in economics, it’s complicated — and everyone has a pet theory. A few include the idea that investors are betting on a quick “V-shaped” recovery (rather than the longer, slower “swoosh” shape many economists have predicted) and banking on corporate profits eventually rebounding in the medium and long run. (And why not? The Federal Reserve’s actions have made it clear this is a priority.)

Some prominent tech companies at the top of the market (such as Microsoft, Apple and Alphabet) actually have reason to think the pandemic could shift business in their favor, with so much emphasis placed on digital shopping, communication and entertainment. And the rise of algorithm-based trading has insulated markets somewhat from the shocks that could be created by big news events, such as political developments or the protests against racial injustice currently sweeping across the country, since dispassionate algorithms don’t get worried or scared by the news the way humans do.

But Tara Sinclair, an economics professor at George Washington University and a senior fellow at the Indeed Hiring Lab, told me she thinks the markets are also providing a better place for wealthy people to stash their money than alternatives like bonds or banks.

“People, particularly the rich, have cut back their spending, so they need to park their funds somewhere like the stock market (especially since interest rates are rock bottom),” she said in an email. “Inequality can mean that even with millions out of work, there might still be a glut of funds from the high-earning and/or high-wealth individuals.”

As Paul Krugman of The New York Times pointed out relatively early in the crisis, the yield on Treasury bonds is so low (see the chart above) that stocks are an attractive option — even in the midst of a recession caused by a once-in-a-generation pandemic.

“Recent stock market performance could be more about something like a savings glut rather than optimism on the future value of companies,” Sinclair told me. “It may be more about the S&P 500 being better than anywhere else to put funds rather than about actual optimism.”

That doesn’t necessarily mean there’s no optimism driving investors’ actions, though. “Maybe (hopefully?) people are investing for the longer term and are viewing the current economic situation as substantially temporary,” Sinclair wrote.

And it’s worth noting that, despite everything, the markets are not totally separate from the virus that continues to afflict every corner of the world.

When news of the coronavirus first hit, the VIX — a measure of market volatility perhaps better known as the “fear index” — spiked to 82.7, its highest level ever. (The previous high was 80.9, which it hit in November 2008, when the Great Recession sparked a massive selloff.) News of a COVID-19 resurgence earlier this month caused the VIX to surge to 40.8, another abnormally high number — outside of recessions, the VIX usually floats between 10 and 20. Despite the rising indices, uncertainty rules the stock market right now.

What that means down the line is anybody’s guess. But for now, Wall Street has shown a shocking amount of resilience even as almost every other economic indicator has tanked. If nothing else, let this be the final confirmation that, once and for all, the stock market is not the economy.

Real Vision Daily Briefing – JUNE 9, 2020

Senior editor Ash Bennington joins managing editor Ed Harrison to discuss market sentiment in light of NBER’s recent announcement that the U.S. slid into recession in February. Bennington and Harrison explore whether market participants are betting that liquidity will mitigate the credit cycle’s severity and whether this could be a miscalculation that catches investors off guard, leading to a “double-dip” recession. They also draw comparisons between today’s markets to that of the dot-com era, highlight the shift toward momentum trading, and share their thoughts on how durable damage to demand can bring an unnaturally elevated market crashing down later in the year. In the intro, Peter Cooper explains the surge in new online brokerage accounts and explores particular instances of excess speculation by retail investors.

Jim Rogers: The Reset has begun: you have no idea what’s coming

trigger coming well we’re gonna we’re
24:50
having we have had a very substantial
24:53
rally governments everywhere have pulled
24:56
out all the stops printing spending
25:00
buying doing everything they can to get
25:03
markets up so yes we are having a rally
25:06
it will probably continue for a while
25:09
remember Michele there’s an election in
November you know that’s only six seven
months away from now so especially in
the u.s. they’re gonna do everything
they can to get reelected is that good
for my kids no is it good for you no
you’re good for me
no but that’s what’s going to happen but
I would suggest to you that the bear
market is not over yet we may even have
one more blow off rally if they do
something really dramatic if the suppose
I found a cure for the viru
s or
something like that we’ll have a blow
off rally blow off top and then the bear
market will resume because this bear
market is not over yet

okay it’s gonna be the worst in my
lifetime Michelle and Michelle oh I’m
older than you so it’s gonna be the
worst in your lifetime too
right now do you think it’s gonna be
comparable to 1929 do you think it’s
gonna be much worse well he could be you
know 1929 was caused because politicians
kept making mistakes one mistake after
another all over the world
so you know
the rest of that story at the moment I
wouldn’t say this will be absurdly worse
than 2008 I doubt if it’ll be worse than
29 but it could be I mean we have a lot
of completely totally incompetent people
around the world in government’s
we
always have but especially now the
Japanese it’s to me it’s in unfathomable
what the Japanese are doing and
Washington it’s unfathomable to me
what’s going on so they could really
bumble this very very badly mr. Trump
and his guys love trade wars they like
war so real war I mean so conceivably
this could get much worse and we could
bungle it
and have a 1929-30 of 30s be
more like it
there it is kind of thing at the moment
I don’t expect it but watch these guys
they’re good at making mistakes these
guys are crazy Korea I mean you look at
some of the things that are German you
now Michelle even their German cities
now that have huge financial products
John when I was a kid there was nothing
27:37
more righteous and virtuous than German
27:41
spending even German cities now have
27:44
problems so this is not just us this is
27:47
a lot of places go into that for us
27:51
please
27:52
what you see globally you know that
27:57
Illinois is bankrupt
27:59
you know the Connecticut’s bank run I’m
28:01
starting with the u.s. you know that
28:03
many cities and states and companies in
28:07
the US have got huge debts America’s the
28:10
largest debtor nation in the world the
28:13
Japanese might even be per capita more
28:17
indebted than we are because they just
28:20
the population is declining the
28:22
population has been declining for ten
28:24
years the debt has been skyrocketing for
28:26
thirty years and they’re just down there
28:29
printing and spending as fast as they
28:31
can
28:32
demands got very very serious problems
28:35
of facing it then you turn to the other
28:38
parts of Asia yes some of them are doing
28:41
better less bad I should say Korea the
28:45
38th parallel is going to open soon when
28:48
that happens
28:49
Korea the Korean Peninsula will be the
28:53
single most exciting place in the world
28:55
for a decade or two China’s doing its
28:59
making mistakes but you know Michelle in
29:01
China they still have interest rates
29:04
interest rates are 2 3 percent which is
29:07
somewhat low but it’s fairly normal the
29:10
Chinese are spending money but they’re
29:12
not spending everything in sight I mean
29:15
I have to say that the Chinese have done
29:17
a less bad job than just about anybody
29:20
in the world I’m startled I’m impressed
29:22
at how well they’re handling this so far
29:26
Russia’s a disaster
29:28
everybody hates Russia but I’ve as I
29:31
said I’m investing in Russia now and
29:34
have been for a while
29:34
it’s hated so much Europe I don’t know
29:40
if the euro will survive all of this I
29:43
own very very few euros going forward I
29:46
don’t want I don’t own much in Europe we
29:51
discussed the u.s. a bit maybe Venezuela
29:54
is a great place to invest we share you
29:58
and I are citizens of the land of the
30:00
free we’re not a we’re not free to
30:03
invest in Venezuela we’re not free to
30:06
invest in Korea we’re not North Korea
30:08
we’re not free to invest in Iran or some
30:11
places around the world that are great
30:13
investments but because we’re citizens
30:15
of the land of the free we cannot invest
30:18
they’re very depressed extremely
30:26
depressed has been for a while so
30:28
agriculture continues to be a great
30:30
place to look you know how to drive a
30:32
tractor Michelle not at the moment
30:37
not many tractors in San Diego are they
30:40
do grow up in San Diego no Indiana
30:45
yeah Indiana tractors in India I know my
30:50
grandpa
30:52
attractor I never learned yet in the
30:58
next 20 years that’s what I want to talk
31:01
to you about too we touched on this in
31:03
our last interview the fact that the
31:06
things that are going to be most
31:07
valuable in bear markets are the thing
31:11
the tangible items you know tractors
31:16
agriculture things like that food so you
31:21
know what I want to mention something to
31:23
you and I want to get your thoughts on
31:24
this there was a news article that came
31:27
out that Vermont had said that they were
31:30
stopping selling seeds I mean like fruit
31:34
seeds food seeds because it wasn’t
31:36
considered to be a necessary item at
31:39
this time don’t you find that odd I keep
31:45
telling you politicians keep making
31:48
mistakes no I think most rational people
31:50
would say what telling see he is
31:54
certainly essential vital to the world
31:58
economy in 2020 I told you these guys
32:01
really mess things up Michelle we could
32:05
have a horrible horrible head time ahead
32:07
of us and this is one of the perfect
32:09
examples of the kind of things that
32:11
these people do you know Michelle the
32:14
studies show that the people who are
32:16
good at being politicians in America
32:19
anyway are the people who were good at
32:22
playground in elementary school in
32:25
primary school they were great at
32:28
playground put as far as knowing
32:31
anything or learning anything but you
32:34
heard seeds are not essential Michelle
32:37
it was this the most absurd thing I’ve
32:40
ever heard of especially right now when
32:42
they’re talking about possibility of
32:43
food shortages here and there you know
32:45
it was a small article but I just it
32:48
caught my eye and I just wanted to get
32:50
your impression don’t give up with you
32:53
know they’re gonna be more of certain
32:54
things coming in the next year will be
32:57
many more although not just in America
32:59
you know all over the world
33:01
it’d be very strange that you should be
33:04
worried
33:06
expound on that just a little bit for us
33:09
please
33:10
well you know in the in the let’s go
33:13
back to 29 and since you brought it up
33:15
before in 29 American Congress was
33:18
considering raising tariffs and starting
33:22
a trade war 2000 of the best of the most
33:27
extraordinary economists in America took
33:30
about ads and said do not do this it
33:33
will be very bad for the American
33:35
economy and for the world economy
33:37
Congress did it anyway they had all the
33:40
experts saying to them starting a trade
33:43
war in 1929 is going to be bad for the
33:47
world they did it well you know the rest
33:49
of that story the market almost
33:51
immediately collapse the senators were
33:53
clear they were going to pass this law
33:55
and then economy started collapsing
33:58
banks and your banks in America started
34:01
going bankrupt in one of the largest
34:04
countries in Europe at the time the
34:06
government made two failing banks merge
34:10
so they failed I got a big failure when
34:13
they thought they were gonna save the
34:15
world about putting these guys together
34:17
turning in a real you know one then it
34:20
became one of the largest makes in
34:21
Europe failing needless to say that was
34:24
the 1930s mistake after mistake so don’t
34:29
think we are any smarter than other
34:30
politicians in history we’re gonna make
34:33
plenty of mistakes too I don’t who knows
34:35
Trump loves trade wars he thinks race
34:38
wars are good he thinks he can win a
34:39
trade war history shows he’s totally
34:41
wrong but who cares he’s the president
34:44
if he thinks it and once it it might
34:47
well happen and in 20 years 40 years we
34:51
look back and say oh that was a mistake
34:54
but in Miami what are your thoughts on
34:57
the president well mr. Trump did win the
35:02
election I suspect he will win the next
35:04
election as well who cares what I think
35:08
he’s probably going to win the election
35:10
he’s smart enough to do that he’s
35:12
adapted enough to you know that’s what
35:14
politicians are paid to do when
35:16
elections he won big
35:19
you’ll probably win the next big ones it
35:21
was very difficult in American history
35:23
to unseat a sitting president you know
35:28
if you’re the president you need votes
35:30
over here in this state you can spend
35:32
money over here in this thing
35:34
his opponent cannot do that and that’s
35:37
why it’s hard to defeat a sitting
35:40
president I if I were a betting man and
35:42
I’m not a betting man but if I were I
35:44
would bet mr. Trump will win you would
35:47
do you think that mr. Biden would make a
35:50
better president than mr. trunk I have
35:56
learned that I should not invest on what
35:59
I want of what I think I have to invest
36:02
on facts and what is happening in the
36:05
world I cannot in make an investment
36:07
because I think mr. Biden would be
36:10
better I have to make investments based
36:13
on what will happen and I’ve just got to
36:16
tell you that mr. Trump will win now mr.
36:20
Trump can bundle it and mr. Biden might
36:22
win then I would have to make
36:25
investments based on that fact doesn’t
36:29
matter whether I like him or dislike it
36:30
doesn’t matter whether I like Trump or
36:31
dislike it I have to based my
36:34
investments and my life what is
36:37
happening in the world I cannot let
36:39
emotions get too involved in it
36:42
with otherwise come I make enough
36:44
mistakes did not tell you about my first
36:46
wife I was foolish young hormones
36:56
emotions are not rational judgment so
37:01
what you’re saying is it’s very
37:02
interesting as an investor’s perspective
37:05
you see as as I’m not a professional
37:08
investor I don’t really look at things
37:11
that way but I can see that as a
37:12
lifelong global investor you look at
37:15
things from what you believe politically
37:18
will be happening and therefore you can
37:20
foresee certain ways that things may go
37:25
very interesting I
37:31
to try taking all the information spin
37:35
it around
37:36
come out with a decision on the other
37:39
side and then act if I had my emotions
37:43
get involved if I drink too many beers
37:45
and make decisions you know it’s not
37:48
gonna make enough mistakes is certainly
37:51
not going to work so into play to say
37:54
people say to me sometimes how can you
37:57
invest in that country it’s a horrible
37:58
country I say listen I don’t care if
38:02
it’s a horrible country investors are
38:04
supposed to make money and if you invest
38:06
it might make it a better country you
38:08
know you could be much better country if
38:11
you go there and invest in help change
38:13
things so please try to keep your
38:16
emotions out of it that’s so interesting
38:20
because people do say that they say how
38:23
could so and so invest in such-and-such
38:25
or there’s terrible things going on over
38:28
there or you know don’t they understand
38:31
the humanity of it but the perspective
38:33
is if years your perspective is that if
38:38
you invest in it you add money to the
38:40
situation in and you have a little bit
38:44
of influence that you may be able to
38:46
make things better rather than just
38:48
turning your back upon a situation
38:50
because it wasn’t right we shall right
38:53
now Venezuela is a catastrophe in every
38:56
way the United States says Americans
39:00
cannot invest there now I assure you the
39:03
people in Venezuela would love for
39:06
people to come there invest and he’ll
39:09
make things better and if Americans went
39:12
there and invested it he’ll make things
39:14
better the Venezuelans would say while
39:16
the Americans are great they helped us
39:18
you know but right now we cannot go
39:22
there and invest and help them and
39:25
change things you know if you ask me
39:28
we’ll be better off have we sent the New
39:31
York Yankees there for an exhibition
39:33
trip at baseball team if it’s a
39:35
Venezuelans love baseball that would
39:37
have much more influence in health than
39:39
boycotting and having sanctions and
39:42
saying nobody can go there and nobody
39:44
invest what you know I don’t live in
39:47
Washington that’s why I’m not a
39:49
politician it’s just so enlightening
39:53
it’s so enlightening because
39:54
automatically you do think well that
39:57
country’s doing terrible things
39:58
so-and-so look at this corporation
40:01
investing all current sorts of money
40:02
into it but in fact you’ve just
40:05
enlightened me into a completely
40:07
opposite point of view well and first of
40:10
all I know the US government has been is
40:13
way those are the people etcetera
40:16
etcetera have also learned Michelle in
40:19
my life don’t miss into propaganda
40:21
because it’s nearly all what governments
40:25
always have a view and they always spout
40:28
propaganda I have learned in my life
40:32
not to listen to propaganda to try to
40:35
ignore it because you go there yourself
40:37
and see what’s really happening and you
40:40
might come away with an entirely
40:42
different view I have learned the show
40:44
if you get your advice from governments
40:47
on investing well you’re gonna go broke
40:50
it’s mainly propaganda that comes out
40:53
and it’s artificial it’s is this on not
40:56
just American problem I mean everybody
40:58
everybody shine for everybody Japan
41:01
they’re all good at Russia oh my gosh
41:04
some of the stuff that comes out of
41:06
government mouth is astonishing so
41:09
please try to learn I teach my children
41:12
I you know I used to read newspapers
41:15
from five different countries every day
41:17
they all thought they were right they
41:19
all said they were right but then you
41:21
get many different views and you might
41:24
figure out what’s really happening my
41:26
kids you know they don’t read newspapers
41:27
they get on the internet they know about
41:32
international networks you know there’s
41:35
one from England there’s one from
41:37
Germany there’s one so the Middle East
41:39
is more from Japan is one from China
41:41
Russia us watch all these different
41:45
points of view they all say they’re
41:47
right how do you sure you CNN says it’s
41:51
right every day Fox says it’s right
41:54
every day but some of the Russians so
41:57
did everybody
41:58
you put them all together you might you
42:02
might get right you’re more likely to
42:03
get right if you listen to lots of
42:05
points of view rather than just one so
42:09
I’ve tried to learn about propaganda try
42:12
to learn that it is nearly always wrong
42:14
whoever the source it was a great saying
42:18
it’s famous in World War one in America
42:21
a famous American senator said it but it
42:24
turns out it comes from a Greek
42:26
philosopher and that is that the first
42:30
casualty of war is truth look in other
42:35
words when war starts I wouldn’t
42:37
propaganda starts truth completely
42:39
disappears so you must learn that you’re
42:42
still too young you learn that go back
42:44
and ask your parents in India it will
42:47
tell you your grandparents in Indiana
42:49
they know they know that people can
42:52
mislead young people and you know I mean
42:57
it just seems like it’s just all
43:00
propaganda anymore it was gonna use
43:03
another word now I want to turn real
43:21
briefly to China
43:22
real quick Jim it’s sort of a
43:25
complicated topic because there are many
43:27
people that are actually blaming China
43:30
for the entire worldwide scenario that’s
43:35
taking place right now we actually have
43:36
US politicians that are calling for
43:39
lawsuits against the country of China
43:42
over this situation now do you think
43:44
that china is in a stronger position
43:47
right now or weaker after the
43:50
coronavirus well everybody in China has
43:54
lost a lot of money this is cause China
43:57
a great deal they’ve had some deaths in
44:00
some lockdowns they are come seem to be
44:03
coming out of but if you could believe
44:06
what you see on the internet and on the
44:08
TV they seem to have done a much better
44:10
job of handling
44:11
that we have with us anyway so yes
44:15
relatively they’re coming out stronger
44:18
they were all weak everybody is hurt by
44:21
this but China’s neighbors have done a
44:23
much better job and by the way call it a
44:26
china virus viruses you know in 2009
44:30
nobody called the h1n1 virus we started
44:34
in America and nobody called the
44:36
American bombers closed airport’s closed
44:39
countries say encountering this you
44:42
cannot do that you know and I don’t know
44:45
you may not know but in 1918 the world
44:47
had this gigantic flu epidemic all over
44:51
the world kill millions of millions with
44:53
an L
44:54
it started at an army base US army base
44:58
in Kansas I wouldn’t call that the
45:02
American flu even though it started in
45:05
American military but you know what they
45:07
called it the Spanish flu was very very
45:11
good this is the Spanish flu stop it
45:17
American military base in Kansas but
45:20
American PR propaganda very very good
45:23
job the world still calls it the Spanish
45:26
flu so all this is absurd it’s the flu
45:30
forever it started you know and so far
45:33
John’s done a better job that we have of
45:35
handling it if you can believe what
45:37
seems to be on the internet and in the
45:39
press Jim it is always such an honor to
45:45
have you on this show I could continue
45:46
talking you know I want it before I let
45:52
you go I want to ask you something among
45:57
global investors it’s no secret that you
46:00
continue to carry the reputation of
46:02
being one of the top in the world and
46:04
it’s interesting to note that you have
46:07
said that some of the most profitable
46:09
times in your life took place in exactly
46:14
this kind of a bear market situation so
46:19
talk to us about your mindset your
46:22
philosophies and your perspectives about
46:25
when and how fortunes are most easily
46:29
made well we were just talking about
46:32
Asia and it’s remarkable you know agent
46:34
civilization has been around a lot
46:36
longer than we have those of us who
46:38
speak English there they all have a word
46:40
in China it’s way G in Japan it’s Kiki I
46:45
forget what it is in Korea but what the
46:48
word means what kiki japanese where kiki
46:52
means is disaster and opportunity are
46:55
the same thing and if you and if they
46:58
been around a lot longer than we have
47:00
but if you think about it it’s true
47:02
whenever there’s a disaster it’s
47:05
horrible for many people but there’s
47:07
also opportunity I mean if your house
47:10
burns down
47:11
Michele it’s terrible but it’s an
47:14
opportunity for somebody to rebuild your
47:17
how to sort of by the Prophet whatever
47:19
it is and the Asians know this at least
47:24
they have words for if we have a word in
47:27
English I don’t know it but that’s the
47:30
way I hope I have learned to try to look
47:33
it like when I see it this front pages
47:36
on a newspaper of some kind of disaster
47:38
I also try to you know sometimes give
47:42
money or try to help but I also try to
47:44
figure out okay someone is going to
47:47
benefit from this let’s figure out who’s
47:50
going to benefit where we can invest and
47:53
by the way when you invest in places
47:56
like that they’re very happy
47:57
Haiti money and they know it you might
48:00
be doing it so you’re an investor and
48:01
want to make money but the people who
48:04
receive your investments in a disaster
48:06
area they’re very very happy that
48:10
somebody has come in to invest because
48:12
it’s a help to them as well
48:14
but if you can remember Kiki Kiki which
48:18
is the Japanese word and I’m sure that
48:20
I’m pronouncing it harmless but it means
48:22
disaster and opportunity are the same
48:25
thing try to learn that go back into
48:28
peak your grandparents in Indiana they
48:30
did a good job remind him of Kiki Kiki
48:35
that’s a wonder that’s actually a
48:37
brilliant thing for everyone to remember
48:40
that a disaster and an opportunity are
48:43
the same thing I assure you you turn on
48:46
the TV next time there’s some kind of
48:48
horrible disaster somewhere whatever it
48:50
is trying to think you’re gonna feel
48:53
sorry for everybody yes and you might
48:55
want to help and you should but you also
48:57
then you should try to start saying well
49:00
wait a minute okay who’s going to
49:02
benefit from this where is the
49:06
opportunity I told you if your house
49:08
burns down it’s horrible but it’s good
49:12
for somebody somebody loves the fact
49:15
that your house burned down you don’t
49:17
but it’s good for somebody the guy who’s
49:19
gonna rebuild your house or whatever
49:21
okay
49:22
it was delight to see you again Michelle
49:25
very very pleased I everything is okay
49:29
and I guess everything is okay in San
49:31
Diego everything is fine here in
49:33
Singapore as far as I know so hope to
49:36
see you again sometime oh absolutely
49:39
sometime soon thank you so much for
49:41
coming on this show today I’m wealth
49:44
international okay what did you say
49:50
I said watch wealth international oh you
49:57
mean portfolio of global what did I say
50:00
yes a portfolio well in that all the
50:02
same international we hope that your
50:12
portfolio has wealth yes it doesn’t if
50:16
you watch portfolio well – you will get
50:20
in your portfolio thank you so much for
50:24
coming on the show today mr. Jim Rogers
50:27
author financial commentator and
50:30
legendary international investor the
50:36
industry experts panel I’m Michele
50:38
holiday at portfolio wealth global
50:47
thanks Jeff
50:55
[Music]
50:58
you
51:12
you

‘Godfather’ of technical analysis says stock-market downturn is going to get worse: ‘I am looking at a 10% drop maybe a little bit more’

It is going to get worse before it gets better for the stock market, says prominent technical analyst Ralph Acampora.

‘I think it’s going to be a little deeper. I am looking at 10% maybe a little bit more even.’

Ralph Acampora

A pioneer in the field of price chart-based trading, Acampora told MarketWatch during a Friday interview that he thinks that the coronavirus fears are a catalyst for a market that had gotten too pricey and was due for a substantial pullback.

“The market itself was stretched, which is true, so we were begging for some kind of correction and this is the catalyst,” he said. He is expecting that the stock market will face at least a 10% drop from its recent peak, which would meet the criteria for a bona fide correction held by most market technicians.

Fresh worries grew over an Asian influenza that reportedly originated in Wuhan City, China, has infected 9,500 people, and claimed at least 213 lives, according to reports out of China. The illness, which has drawn comparisons with SARS, severe acute respiratory syndrome that hit Beijing in 2002-03, is being classified as a novel strain of coronavirus, or 2019 nCoV.

Read: Coronavirus update: First U.S. case of person-to-person transmission confirmed, 195 U.S. citizens in isolation and WHO declares a public health emergency

On Thursday, the World Health Organization declared the viral outbreak a public-health emergency of international concern but didn’t call for a restriction of trade. And the U.S. saw its first person-to-person transmission of the virus, escalating concerns about its spread.

The infectious illness comes at a terrible time for China, which is celebrating Lunar New Year, a holiday that is associated with heavy consumerism and travel. As a result of limits on travel that Chinese officials have imposed on cities in China, restricting the movement of some 50 million people, economists have lowered expectations for economic growth in the world’s second-largest economy, even if the outbreak doesn’t pose a significant health risk in the U.S.

Check out: Why investors should buy stock-market dips as WHO declares coronavirus a public health emergency — and dump equities as they rebound

The rapid spread of the Asian influenza caused China to extend its holiday to Feb. 2, but investors are worried that markets will tumble once markets in Beijing reopen, as they have already in Hong Kong and Taiwan. Hong Kong stocks HSI, -0.52%  dropped over 2% in their first day of trading since the outbreak and Taiwan stock-markets Y9999, +0.64% reopened Thursday after the Lunar New Year holiday to a nearly 6% drop.

“The worrying thing is how much worse the numbers could look when the markets reopen next week, given just how rapidly they’re rising,” wrote Craig Erlam, senior market analyst at Oanda, in a Friday research note.

“Huge efforts are being made to contain the virus and yet the numbers are already massive,” he wrote.

Those concerns were weighing heavily on stock-market gauges early Friday. The Dow Jones Industrial Average DJIA, -1.81% was off 520 points, or 1.8%, at 28,340, breaching its short-term technical support level, its 50-day moving average, at 28,443,30, according to FactSet data, and the index touched a Friday nadir at 28,339.85.

The S&P 500 index SPX, -1.61% was down 53 points, or 1.6%, at 3,231 and the Nasdaq Composite Index COMP, -1.29%  shed 122 points, or 1.3%, at 9,176.

All that said, Acampora is constructive on stocks in the medium term. He forecasts the Dow, for example, to hit 30,000, but he says that the markets are likely to be choppy with the 2020 election starting to take shape on the Democratic side.

“I’m not negative [on the stock market], if you’ve got cash and are looking to get in this [market, this is an opportunity,” Acampora said.

Don’t Bet on Trump Rescuing the Stock Market

If the president cares so much about the stock market, why is he pursuing trade policies that are anathema to Wall Street?

Should investors rely on Donald Trump underpinning the stock market by backing away from trade threats as stocks fall? In short: not as much as they seem to.

Many market watchers believe the pattern of the administration announcing progress on trade talks after falls in the S&P 500 amounts to a “ Trump put,” similar to a derivative that pays out when prices drop to a certain level.

The Trump put was on full display last week, when Mr. Trump delayed some tariffs due to be imposed on China next month, pushing up the S&P by 1.5%. The move followed a tumble in stock prices that had briefly taken the S&P down more than 6%—although the fall was triggered by his own action in imposing those tariffs in the first place.

There’s no doubting that Mr. Trump’s tweets have the power to move markets both up and down. It’s also obvious that Mr. Trump regards a strong stock market as a measure of success, something he has repeatedly referred to when it’s doing well. That’s led many to think that Mr. Trump will do what’s necessary to keep the market strong ahead of the 2020 election to win votes.

“Every investor I talk to, virtually without exception, gives me the identical argument that Trump cares about the stock market and will get a [trade] deal that will boost the economy and him in the elections,” said Tina Fordham, chief global political analyst at Citigroup.

She thinks investors are overconfident about the Trump put, though. “It’s better for him from an electoral perspective to force concessions and be seen to be tough, and to have that happen much closer to the elections in 2020,” Ms. Fordham said.

Another risk to the power of the “put” is that Mr. Trump keeps trying to support the market, but fails. Andrew Milligan, Edinburgh-based head of global strategy for Aberdeen Standard Investments, thinks the market is one of a number of “Make America Great key indicators” for the president, along with jobs and Fox News’s reports of corporate earnings. But even if Mr. Trump’s rhetoric offers support, the other countries involved in his trade fights might not play along, and stocks still suffer.

“There’s the possibility of policy error here by both sides,” Mr. Milligan said.

A Trump ‘Put’ in ActionDonald Trump often seems to ease off ontrade threats when the market is down.S&P 500Source: FactSetAs of Aug. 20, 12:33 p.m. ET
Some tariffs on China delayedAug. 7Aug. 12Aug. 15Aug. 20282528502875290029252950

Last week might be an example of the Trump put having little lasting power—it took just one day for stocks to reverse all the gains from the tariff delay.

The logic of the Trump put is questionable, too. If Mr. Trump cares so much about the stock market, why is he pursuing trade policies that are anathema to Wall Street in the first place? The obvious answer is that he has multiple goals, some of which differ from those of global investors; he’s also unpredictable, which increases uncertainty about government policy.

Making things still more complex, Mr. Trump’s actions overlap with the Federal Reserve and the more-powerful “Powell put,” the idea that Fed Chair Jerome Powell will ease monetary policy to rescue a falling stock market. This is both controversial—the Fed should be driven by the economy, not the wealth of stockholders!—and obvious: If the market’s falling because investors fear a slowdown, the Fed probably fears a slowdown too, and should act. Falling stock prices can also crimp consumer confidence and household wealth, and so slow the economy.

Donald J. Trump

@realDonaldTrump

Our Economy is very strong, despite the horrendous lack of vision by Jay Powell and the Fed, but the Democrats are trying to “will” the Economy to be bad for purposes of the 2020 Election.  Very Selfish! Our dollar is so strong that it is sadly hurting other parts of the world…

Donald J. Trump

@realDonaldTrump

…..The Fed Rate, over a fairly short period of time, should be reduced by at least 100 basis points, with perhaps some quantitative easing as well. If that happened, our Economy would be even better, and the World Economy would be greatly and quickly enhanced-good for everyone!

21.6K people are talking about this

At the moment, the Powell put works when the Trump put doesn’t. The Fed is concerned that Mr. Trump’s trade fights are a risk to the economy, and has already cut rates once. Futures traders are pricing as certain a cut next month, with a further one or two cuts likely by the end of the year. The more Mr. Trump talks tough on trade, hurting the market, the more the Fed is likely to cut rates. Equally, if Mr. Trump can persuade the Fed to slash rates—as he recommended in a tweet on Monday—it is less risky for him to ramp up the action on trade.

This creates some perverse signals. Lower rates can help stocks by boosting the valuation of future profits, even if profits are likely to be lower in an economy held back by rising tariffs. Disentangling exactly how much stocks would be down by if the Fed wasn’t expected to respond is impossible, but prices would surely be lower.

Put this together and the Trump put is less reliable than many think, especially when combined with Fed moves. Even if the Trump put exists, the president could be freed to become more aggressive on trade if the Fed helps out with lower rates. At least as likely is that the Trump put fails, either because the president thinks electoral success rests more with bashing trade partners than supporting stocks, or because trade partners fail to play along. Be wary.