President Donald Trump, gearing up for the official start of his 2020 campaign, warned that the U.S. would face an epic stock market crash if he’s not re-elected. “If anyone but me takes over,” Trump told his 61 million Twitter followers on Saturday, “there will be a Market Crash the likes of which has not been seen before!”
The Dow posted 71 record high closes in 2017, starting within a week of Trump’s inauguration, and another 15 in 2018, helped by the passage of a Republican tax bill.
As Trump kicks off his re-election campaign, the chances of a recession the starting in the U.S. within the next year have risen to 30% from 25% a month ago, according to a June 7-12 survey of economists conducted by Bloomberg News. Recent figures have shown slowing job gains, and Trump’s tariff threats are weighing on business sentiment. The rising U.S. budget deficit and national debt have also raised alarm bells.
So does Trump have a point? Trump’s first two years in office the DOW is up +25.21% which ranks:
- 6th best percentage gain for a Republican president (out of 17)
- 11th best percentage gain for any president (out of 31)
- The best first two years in office (regardless of term) for a Republican president since Reagan from 1985 – 1987
- The best first two years in office (regardless of term) for a president since Obama from 2013 – 2015
Whether Trump wins or not, a Market crash is the inevitable. We have experienced the longest bull market in history, but things are starting to slow down. After years of central banks around the world hiking rates, now they are putting rates on hold or even lowering rates. I think the most famous of them all was the Powell pivot back in December, which is now leading to inverted yields.
The spread between three-month and 10-year securities has inverted before each of the last seven recessions, elevating such an event as a key signal of a future economic downturn. But it’s not automatic, and some argue central bank policies like quantitative easing have made the curve less of a direct predictor.
The chart suggests a break of the monthly demand at 21700 and 20700 will confirm the downtrend.
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