At Dow 26,000, White House is bull speed ahead
Misguided souls — including the occupant of the White House — are crediting President Donald Trump with giving a huge lift to the stock market, where the Dow Jones Industrial Average breached the 26,000 mark last week.
There’s no doubting that the S&P 500 has risen about 31 percent since Mr. Trump lost the popular vote on Nov. 8, 2016.
Just as there is no doubting that Mr. Trump earned the lowest approval rating of any president in his first year in office, according to Gallup. The pollster was obliged to survey more than presidential supporters who ask: “How’s your 401(k) plan doing?”
From former President Barack Obama’s Nov. 4, 2008 election through mid-January 2010, the S&P 500 rose about 13 percent. Not bad given the legacy Mr. Obama inherited after eight years of Republican rule: the worst recession since the Great Depression. During Mr. Obama’s two terms, the S&P 500 generated annualized returns of more than 16 percent from the day he was inaugurated to the day that record crowds failed to materialize for Mr. Trump’s inauguration.
The real estate developer’s election raised hopes that the regulatory cords binding the nation’s job creators would be loosened, that new business opportunities would open up offshore and in national parks, and that their crippling tax burden would be reduced.
The momentum of the economy and Wall Street when Mr. Trump took office notwithstanding, progress on those fronts has further fueled what many are calling history’s most hated bull market.
There is one industry that is not crediting the Tweeter in Chief with bumping stocks.
Since Mr. Trump won the White House in November 2016, gun stocks have woefully underperformed the market. The dismal returns most likely reflect the comfort of not having to worry about gun control measures being enacted during the Trump administration.
Shares of Sturm Ruger & Co. [ ticker: RGR], the firearms manufacturer of the year for 11 years running, are down 18 percent since Mr. Trump’s election. The Southport, Conn.-based company’s sales fell 20 percent in the first nine months of 2017 while profits slid 37 percent.
The story is the same at American Outdoor Products [ AOBC], whose offerings include Smith & Wesson firearms. Last month, the Springfield, Mass., company
reported a 37 percent slide in sales for the first half of its current fiscal year. Profits totaled a mere $1.1 million vs. $67.7 million in the yearago period. The company’s shares are off about 58 percent since the November 2016 election.
Vista Outdoor [ VSTO] of Farmington, Utah, the industry’s third big player, has seen its stock drop about 61 percent. Sales dropped 12 percent in the first half of its current fiscal year, when the company swung to a $98.1 million loss vs a $102.3 million profit in the year-ago period. Vista sells guns, ammunition, archery accessories and other outdoor equipment.
Fortunately, the gun industry’s struggles have not stopped Wall Street’s seemingly inexorable rise. But lest Mr. Trump’s unblinking minions get as exuberant as the stock market, they should remember this: well-documented studies indicate the economy and the stock market generally perform better under presidents who are Democrats.
Most recently, Princeton University economists Alan Blinder and Mark Watson found “a systematic and large gap” between the economy’s performance under Democratic and Republican regimes. Looking at presidents since Harry Truman, the economy grew an average of 4.4 percent under Democratic White Houses vs. 2.5 percent under Republican presidents, their 2014 study concluded.
Nor should Democrats get carried away with those facts.
The economists said good luck in the form of fewer oil price spikes and more favorable international conditions and “a touch of good policy” explained only a little more than half of the performance gap.
“The rest remains, for now, a mystery,” they wrote.
Fact-based economists generally believe presidents deserve little credit for influencing the economy. Mr. Trump’s most steadfast supporters abhor facts, so they will continue taking credit for the aging bull market.
Until it inevitably turns on them.
Can we count on them to accept the blame when it does?