Tired bull market ‘will plague’ Trump, economist portends

The cards are already stacked against U.S. president-elect Donald Trump, David Rosenberg says, but not for the reasons you might think.

The billionaire, who takes office next month, is cursed by being propelled to power “well into the seventh year of an economic and market cycle,” the Gluskin Sheff economist said in a note to clients on Friday.

“This is what will plague The Donald,” Rosenberg said.

He argues that past U.S. presidents Dwight Eisenhower, Gerald Ford, Ronald Reagan, Bill Clinton and current president Barack Obama were “fortunate to have been elected at or near the start of the business cycle, or better yet, during recession.”

For example, Obama was elected more than halfway through the last downturn and saw a 12 per cent annualized gain in blue-chip stocks, Rosenberg said.

Eisenhower saw a 10 per cent annual rate advance in the Dow while in the White House, he notes.

Reagan, meanwhile, was lucky enough to have started with an economy that was bottoming out, and as a result saw the stock market rise more than 11 per cent per year, on average, during his tenure.

Richard Nixon, in contrast, took the top job eight years into a tired expansion with a recession two years away, Rosenberg adds. Nixon had a progressive and active agenda, and yet the stock market fell three per cent each year under his tenure, he notes.

George W. Bush saw a recession set in shortly after he entered the White House, and the market dropped 3.5 per cent annually.

Trump is becoming the leader of the free world as this bull market moves toward its eighth birthday and Rosenberg reckons it is running out of steam.

“The Fed is tightening, not easing,” the economist said. “And there are many barometers out there flashing late-cycle signals, such as the economic rotation into commercial construction and the escalating strains in various segments of the credit market, especially subprime auto loans where delinquency and loss rates are on a visible uptrend.”