We keep talking about how amazing the stock markets have been since Trump won the election, but it’s usually just to emphasize a point or draw a correlation. Now that we have a full 30 days of data, it’s time to review Trump’s initial economic performance. We’ll get into the numbers to see that things aren’t just good; they’re the best they’ve been in the better part of a century.
The First 30 Days
This particular break down will only look at the first 30 days since Trump officially took office. The Dow is up 4 percent, which is the biggest inaugural month gain since FDR started his last term in 1945. For those curious, that’s a 72 year high.
It also bears mentioning that the Dow hit a record close over 2,000 for the first time in this span, and if you consider how much larger the scale of markets is today than it was in 1945, the raw gains necessary to hit 4 percent are more than 10 times higher than they were for FDR.
The Dow isn’t the only index that has seen a meteoric climb. The S&P 500 was a different animal in FDR’s day, so a direct comparison doesn’t really make since. Still, Trump’s run in this index is also historical and impressive, albeit to a smaller degree.
In the first 30 days of office, he oversaw a 3.5 percent rise in the S&P 500, which is the biggest since 1997. Once again, looking at raw increase comparisons, Trump’s increase is triple that of Bill Clinton’s in 97. The combined Bull Run has defied expectations to the chagrin of many economists.
The primary reason for the Trump Bump so far has been investor confidence. Business owners are convinced that Trump will be able to keep his promises of tax breaks and regulatory reductions that will free assets for investment. So far, he has attacked several major issues with executive orders, including Obamacare, the Fiduciary Rule, Dodd-Frank and environmental regulations that hurt production.
This is only the beginning, and early estimates suggest that by the end of the year, across all of the industries that Trump targets, more than $100 billion will hit the economy as a direct result of deregulation. The potential for tax breaks on top of that raises prospects even higher.
Speaking of tax breaks, perhaps the biggest reason for the immediate market run after Trump’s election comes down to one specific tax: capital gains. This was a major point of contention during the campaigns, and Hillary Clinton’s plan to dramatically increase these taxes had markets stuttering.
As soon as it was evident that those threats were gone, investors were excited to get back into the market and make money, and the result has been the history-writing, record-setting bump that has us so excited.
In another conversation we discussed at greater depths what can be derived from this historic change, but there are a few points worth mentioning here. First, consumer and investor confidence, and the economy itself are reliable indicators for the state of the country and the effectiveness of Trump’s leadership.
The mainstream media is not ready to give up attacking the president and painting him as every kind of monster they can imagine. Despite their efforts, the people within the country are carrying out their business better than ever before.
News outlets once had the power to shake markets with their reporting, but that power has shrunk considerably over the last year, and their refusal to correct their errors continues to diminish their presence in modern day America.
The other important lesson is that now is the best time in ages to invest in your future. All of the major indexes are opportunities to make money, and small business investment is finally returning to form. Whether you want to start your own business, look into expansion or just ride the markets to prosperity, the options are there.
Obviously, the risk of investment is not and never will be zero, but for the first time in more than a decade, you can move your money with reasonable confidence. Unless we see a major change in Trump’s Administration or Congress’s willingness to work with him, the only real mistake would be to stay on the sidelines.
~ Liberty Planet