Despite Trump’s claims, U.S. market ‘dragging rest of world lower’

JONATHAN RATNER

As he does most mornings, Donald Trump took to Twitter on Wednesday, this time to take credit for the rally in U.S. equities since the election.

U.S. President Trump said the U.S. stock market has increased by US$5.2 trillion in value since voting day on November 8, marking a 25 per cent gain. But as usual, his claims warrant a little fact checking.

“It would be really nice if the Fake News Media would report the virtually unprecedented stock market growth since the election,” Trump tweeted.

Derek Holt, head of capital markets economics at Scotiabank, provided some context, noting that while U.S. stock market capitalization is up approximately 19 per cent, global equity market capitalization has risen 33 per cent.

As for Trump’s US$5.2 trillion figure, it’s a bit high, with Holt noting that aggregate U.S. stock market capitalization is up US$4.4 trillion since the election. The world’s equity market cap is up US$21.8 trillion.

Removing the U.S. from the equation, the rest of the world’s market cap has climbed 41.6 per cent in the post-election period, or roughly US$17.2 trillion.

In other words, “the U.S. market is dragging the rest of the world index lower,” Holt told clients. Factoring in movements in the U.S. dollar since the election, the economist noted that U.S. stocks have underperformed the rest of the world by a substantial margin. That trend may gain more momentum if the Trump administration is unable to push through tax reforms that already appear to be priced into the market.