Posted in: Market News
Published:
February 12, 2020 12:00 PM

The Dow Is Soaring Because Trump’s a Lock to Win the 2020 Election

Investors are increasingly pricing in the likelihood of Trump's re-election after he won last night's New Hampshire primary with a record-breaking share of votes.
  • The Dow Jones Industrial Average surged around 250 points on Wednesday.
  • Trump tightened his grip on re-election with a record-breaking victory in the New Hampshire primary last night.
  • Historically, a strong economy and consumer confidence points to Trump’s victory in 2020.

The Dow Jones Industrial Average (DJIA) is getting a huge boost on Wednesday as Trump looks destined for re-election.

Headlines out of New Hampshire are all focused on the Democrats this morning. But Trump quietly won the Republican primary with a record-breaking share of votes.

With approximately 70% of precincts reporting, President Trump has surpassed the New Hampshire Primary vote total of every incumbent President running for re-election over the last four decades – Brad Parscale, Trump 2020 campaign manager.

Source: Twitter

That’s not all. The American people’s confidence in the economy is at multi-decade highs. Historically, that means the incumbent president almost always wins re-election.

We’re nine months out, but Trump might already have 2020 locked.

Dow surges 250 points

The Dow surged when the opening bell rang on Wednesday, brushing off a placid day of trading on Tuesday.

By 10:01 am ET, the Dow had soared by 259.28 points or 0.89% to 29,535.62, setting a new all-time high in the process.

The Dow Jones Industrial Average (DJIA) popped to a new record high on Wednesday. | Source: Yahoo Finance

The S&P 500 and Nasdaq climbed 0.55% and 0.52%, respectively.

Trump quietly sweeps victory in New Hampshire

Trump may have divided the Republican party back in 2016. But now it’s more united than ever. The president just swept victory in the New Hampshire primary 

Wouldn’t a big story be that I got more New Hampshire Primary Votes than any incumbent president, in either party, in the history of that Great State? Not an insignificant fact! – Trump.

A recent Gallup poll also put Trump’s approval rating among Republicans at 94%. The Democrats are going into battle with a fiercely united Republican party.

It’s the economy, stupid…

The old election adage, “it’s the economy, stupid” usually rings true. Presidents historically win re-election when the economy is strong. And right now, the numbers are good for Trump.

When the Misery Index falls during a president’s first term, it almost always predicts their re-election. | Source: Market Watch

The chart above depicts the “Misery Index” – a gauge that measures the average American’s confidence in the economy. Not only is the index at multi-decade lows, but it has been trending down since Trump took office.

Historically, this almost always leads to re-election for the incumbent president. A recent Gallup poll also revealed that Americans rate Trump’s handling of the economy higher than any president for the last 20 years.

Stock market pricing in a Trump victory?

It’s no secret that Wall Street fancies another four years with Trump in the White House. Traders have boldly claimed the Dow would collapse up to 40% under Bernie Sanders or Elizabeth Warren.

Trump’s commitment to tax cuts and Wall Street deregulation has been a boon for the stock market. State Street’s deputy global chief investment officer, Lori Heinel, says investors are definitely pricing in Trump’s re-election.

I think investors are sort of sanguine about the idea that [President Donald] Trump will mostly likely win, and if you look at most of the analysis, they predict overwhelmingly that Trump will defeat any of the likely Democratic candidates.

What could trigger a Dow Jones reversal?

Only a major change in momentum for the Democrats would give investors pause. But Bernie Sanders emerging as the front-runner in Iowa and New Hampshire is one warning sign.

Trump himself admitted that he’s a little nervous about Bernie securing the nomination.

Frankly, I’d rather run against Bloomberg than Bernie Sanders… Because Sanders has real followers, whether you like him or not, whether you agree with him or not. I happen to think it’s terrible what he says. But he has followers. Bloomberg’s just buying his way in.

National polls compiled by Real Clear Politics show that Bernie is among the best-placed to beat Donald Trump in 2020. But investors aren’t worried yet.

This article was edited by Samburaj Das.

Last modified: February 12, 2020 3:04 PM

Ben Brown @_ben_brown

Ben is a journalist with a decade of experience covering financial markets. Based in London, UK, his writing has appeared in The Huffington Post and he was Chief Editor at Block Explorer, the world's longest-running source of Blockchain data. Reach him at benjamin-brown.uk or on Twitter at _Ben_Brown. Email ben @ benjamin-brown.uk.