The conventional Wall Street C-suite wisdom is that Joe Biden and Kamala Harris will be moving to the White House next year, and that President Trump is trailing so badly in the polls that he simply won’t be able to overcome the pandemic and the recession it has created.
Funny — that’s not what another important part of Wall Street called the stock market is telling us.
It should come as no surprise that Wall Street CEOs are predicting — some clamoring, even — for a Trump defeat. This crowd never warmed up to Trump’s brand of populism and trade nationalism, particularly against China, which it sees as a business partner no matter how many times it gets ripped off.
More recently, amid the social unrest, Wall Streeters have been busy out-woke-ing each other with town halls and anodyne, politically correct commentary while implicitly (sometimes explicitly) slamming Trump’s leadership. As if the country is desperate for a bunch of very rich white dudes to suddenly preach about equality.
Executives see progressive change in Washington coming in November and they want to appease the Jacobins before the proverbial beheadings start.
But for all their years studying stocks, these execs appear to have no clue what stocks tell us about presidential elections. Contrary to their belief (and most polls), the markets are telling us the election is far from over — and that Trump may still win it.
And if he loses, Trump could keep it close enough that the GOP could hold the Senate and blunt the progressive economic agenda Biden-Harris will impose on the country.
Investment research firm Strategas explained the uncanny ability of the benchmark S&P 500 index to predict presidential elections in a recent note to clients that I was able to get my hands on. The S&P is a better predictor “than the polls and the pundits,” according to the note. “If the S&P 500 is higher in the three months before the election [which began Aug. 3], the incumbent party has won, and if stocks are lower in the three-month period, the opposition party has won.”
The note, which cites sequential as opposed to year-over-year gains and losses, added: “This has been true in every presidential election since 1984 and 87 percent of the time since 1928.”
I know it’s early, but since Aug. 3 the S&P is up 2.4 percent and has nearly erased all of its pandemic-induced losses.
OK, I know what you’re saying: The COVID pandemic changes everything and we haven’t experienced anything like this since the Spanish flu of 1918 to 1920.
And while Trump didn’t create the virus, his handling of it, particularly in terms of messaging (remember how it was supposed to disappear in the summer?), was uneven at best. That will cost him plenty of votes. As for the markets, they’re up because of the Fed (zero-percent interest rates), so where else do you put your money?
Maybe they’re also up because Biden, not Bernie Sanders, is the Dem nominee, and he chose a former prosecutor, Kamala Harris, as his running mate over Elizabeth Warren, who has vowed to break up all the banks and the big tech companies.
Still, while Biden isn’t an avowed socialist, his policies are becoming pretty left wing. He’s promised an avalanche of new taxes on individuals and business, lots of regulations and spending plans on a “Green New Deal.” He’s also promised socialists like AOC and Sanders a seat at the policy table.
All of which means if Biden is really set to win (and the Dems set to take the Senate), markets should be pricing this in by now. They’re not.
The stock market in the short term is not the best gauge into the future of the US economy, and the pandemic recession may or may not have bottomed out.
But the stock market does reflect sentiment among smart investors who have skin in the game, and at least for now, those investors are saying there’s a good chance that a doomsday scenario of a Dem sweep in the fall won’t happen.
TikTok: We’re fair and balanced
No one will ever mistake TikTok for a vast, right-wing conspiracy. But it would be wise for the wildly popular short-form video app to let people know — particularly that really important guy in the White House — that it is also friendly to conservative voices.
Sources tell Fox Business’s Lydia Moynihan that the company has recently completed what has been described as an “internal sweep” of its users and found a significant number of conservative voices posting short videos.
Indeed, a simple check of the platform shows plenty of people posting satire that mocks woke culture.
Why does this matter? President Trump has now given the company 90 days to find a US buyer or face a US ban because he believes TikTok’s Beijing-based parent, ByteDance, shares sensitive user data with the Chinese government for surveillance purposes.
Some people inside TikTok also believe Trump is miffed by satirists on the platform who have reached cult-hero status during the pandemic by mocking the president (see comedian Sarah Cooper, whose lip-syncing Trump impersonations on the app have gone viral, landing her spots on late-night TV).
With time running out on completing a deal (talks are ongoing for a Microsoft purchase), TikTok is trying to spread the word it’s not out to get Trump.