Dow 22,000? Trump’s Stock Market Tweet

This article covers President Trump's stock market tweet from this morning and offers a counterargument to the Washington Post claims that the stock market's performance is unrelated to Trump and Washington.

In a Washington Post article published this afternoon, Alex Schiffer argued stock market returns are not attributable to President Trump. His article makes the following bold claim:

While stocks jumped after Trump won and the Republicans claimed control of both houses of Congress, analysts said the market’s recent run probably has less to do with politics than it does the healthy performance of the nation’s public companies. If anything, Congress’s failure to repeal and replace the Affordable Care Act or the nation’s tensions with North Korea should have dampened investors’ enthusiasm, some said.Alex Schiffer, Washington Post Contributor

Schiffer's article appears to come in response to President Trump's tweet early this morning. In his tweet, the President pointed out the strong performance in the stock market since his election.

Validity of Trump's Stock Market Tweet

Later in the article, Schiffer cites an S&P index analyst to support his insinuation the stock market's rise was coincidental with Trump's election.

The market hasn’t been paying attention to Washington,” said Howard Silverblatt, a senior index analyst at S&P Dow Jones Indices. “It’s paying attention to fundamentals,” such as revenue, profits and other corporate metrics.Washington Post

However, the same S&P index analyst (Silverblatt) clearly recognizes the correlation between market returns and the presidential election. In a tweet back in June, he notes the S&P 500's (IndexCBOE:SPX) remarkable 7-month performance since Trump's election.


Consumer Confidence Index

Trump's Stock Market Tweet
Obtained from Advisor Perspectives.

Of course, Alex Schiffer omitted the primary reason why fundamentals are doing so well from his Washington Post article. When the American consumer is optimistic about the future, the U.S. economy and its companies perform well. According to the Consumer Confidence Survey and Advisor Perspectives, consumer sentiment is at its highest point in well over a decade. Consumer sentiment is not an abstraction, it is shaped by what people see and hear on a day-to-day basis.

Any technician analyzing this chart would identify late 2016 as the time the index broke through its resistance level.

The stock market may not pay attention to Washington, but average Americans do. What average Americans see, hear, and ultimately, believe, is reflected in the consumer confidence index. And, the consumer confidence index is a proxy for the velocity of money in the economy. When the CCI is strong, companies experience growth in their fundamentals. The stock market prices in earnings growth. Therefore, the Dow approaching 22,000 and the strong performance in the rest of the market is still attributable to Washington.

The aforementioned is why our Bullish List and our Bearish List were comprised with Trump stocks since early November.

With this in mind, Trump's stock market tweet appears completely legitimate. Moreover, the Washington Post continues to relentlessly weave bias into its articles.

Eric Bruin

Eric Bruin

Founder. Kelley School of Business ’17. Write about stocks and business news. Contact for business inquiries or to write articles for The Stock Trader Blog.

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