Two weeks before Election Day 2020, Donald Trump and Joe Biden met for their final debate, and as regular readers might recall, the incumbent president made a bold prediction. "If he's elected, the stock market will crash," the Republican claimed, pointing at his Democratic rival.
Americans elected Biden soon after. The stock market, at least for now, has not crashed. In fact, the Wall Street Journal reported in April that Wall Street was off to its best start to a presidential term since the Great Depression. Fortunately for investors, the growth has continued. The Journal added yesterday:
The [Standard and Poor's] 500 and Nasdaq Composite extended their record-setting streaks on Thursday, while investors digested the Federal Reserve's latest update on stimulus spending and interest rates.... It was the sixth consecutive record close for both indexes.
Circling back to our earlier coverage, at a certain level, none of this should come as too big of a surprise. As the nation crawls out of its pandemic-generated hole, it stands to reason that Wall Street would respond positively.
What's more, any such analysis should come with all kinds of caveats, starting with the most important: The major stock market indexes are not the economy and do not always reflect economic health.
The major indexes' record highs nevertheless stand out, in large part because this is likely the one part of Biden's record that frustrates Trump the most.
It's not just that the Republican promised Americans "the stock market will crash" in the event of a Biden presidency — one of several unfortunate Trump predictions from the fall — it's also Trump's persistent belief that Wall Street offers a real-time barometer of the incumbent president's performance.
Though the former president's Twitter account has been permanently suspended, Trump spent much of his term in the White House bragging about assorted bull markets. This was a matter of intense preoccupation for the Republican, with every new high seen as proof of his genius.
He even incorporated Wall Street into entirely unrelated stories. In late 2019, for example, Trump argued in a tweet that if he were impeached, "it would lead to the biggest FALL in Market History. It's called a Depression, not a Recession!" He was impeached soon after. Investors didn't much care.
Trump spent years operating from the assumption that Wall Street was a direct reflection of the American presidency — and upturns were proof of Oval Office excellence. That never made any sense, but as the major indexes reach new heights under Biden, I'll look forward to the explanation as to why the stock markets are no longer politically relevant.