From Market Watch on November 1:
With the United States’ presidential election on Nov. 8, and a series of elections and other political decisions fast approaching in Europe, now is a good time to ask whether the global economy is in good enough shape to withstand another major negative shock.
The answer, unfortunately, is that growth and employment around the world look fragile. A big adverse surprise — like the election of Donald Trump in the U.S. — would likely cause the stock market to crash and plunge the world into recession.Now, this was a column by Simon Johnson is a professor at MIT’s Sloan School of Management, but a responsible business publication should not spook the market like this. Indeed the column ended:
Investors in the stock market currently regard a Trump presidency as a relatively low-probability development. But while the precise consequences of bad policies are always hard to predict, if investors are wrong and Trump wins, we should expect a big markdown in expected future earnings for a wide range of stocks — and a likely crash in the broader market.From Investor's Business Daily on November 1:
FBI Director James Comey may or may not have bungled the investigation of Hillary Clinton's email, depending on one's point of view, but his October surprise on Friday did bolster the argument that stocks are in for a bout of selling if Donald Trump is elected.
Just how much major stock indexes would fall is unclear, with various estimates ranging from about 5% to 12%. But those estimates came before the S&P sank 0.7% on Tuesday to a near-four-month low amid Trump's continued rise in the polls. The size of a Clinton relief rally is likely to be much smaller because markets have priced in the likelihood — though a diminishing one — of a Clinton victory.That was a news account. It was stated as a fact.
From CNBC on November 3:
Wall Street's long-running view that Hillary Clinton would easily become the next president has been replaced by a new fear that Donald Trump could win, and it probably won't be a pretty picture for stocks if he does.
Bond yields have moved lower and so have stocks, as the markets have begun to react to the possibility of a Trump victory in the last several days. On Thursday, the S&P 500 was up slightly, after falling 13 points Wednesday, to close at the key support level of 2,097.
The work of two economics professors may provide a glimpse of how the stock market might react if Donald Trump were elected. They studied the predictions market, including PredictIt.org and the reaction in the financial markets to events around the election. One of the economists says their findings point to a sharp immediate sell-off if Trump wins and a slight rally if Clinton wins. The amount of the rally or sell-o"If we were to go in 70/30 [for Clinton], and we think the market is 10 percent higher under Clinton than Trump, if Clinton wins it should be up about 3 percent and if Trump wins, it should go down 7 percent," said Eric Zitzewitz, economics professor at Dartmouth College. He and Justin Wolfers of the University of Michigan studied the market effect of the first debate in a Brookings paper. Clinton's odds in the prediction markets had been closer to 80 percent, and at that level, a Trump victory would have triggered an 8 to 10 percent sell-off, he said.ff depends on the predicted outcome.That was a little more reasonable, a news story about what others speculate, and there was this firther down in the story:
Bruce Bittles, chief investment strategist at Baird, has a different view and he believes a Trump victory could result in a V-shaped move in the market, as Wall Street reflects later on positive tax changes and the looser regulatory environment Trump supports.
"What I think happens is we get a repeat of what happened after Brexit. The market initially goes down and then goes up," he said. He said with a Clinton win, the market would rally but not as much as it historically has when an incumbent party wins. "It depends now on how a Democratic win is already built into the market. If that's the case, then I would say a Republican win would mean a sharper down, but then a sharper up to follow," Bittles said.I point this out because it is not just the political press that got the election wrong because it was with her, but the business press as well.
Have a little fun. Read "Trump the Press," in which I skewer media experts who wrongly predicted Trump would lose the Republican nomination. "Trump the Press" is available as a paperback, and on Kindle.
For an autographed copy, email me at DonSurber@GMail.com