Donald Trump loves himself some elevated equity benchmarks.
Indeed, bragging about record highs on the Dow has become a favorite pastime of a President whose other leisure activities include berating lawmakers, painting the free press as the enemy of the people, and saying “thank you!” to Twitter bots that he didn’t realize were fake accounts.
In fact, Trump is so excited about the stock market that a measure of his tweet enthusiasm has “gone parabolic”:
Of course Trump won’t talk much about the dollar – you know, that other “benchmark” that, in an April 12 interview with WSJ, he claimed was a measure “of people’s confidence” in his presidency.
And the reason he won’t talk about that is because going into August, it was down every single month since that interview:
Oh, and he won’t talk about small caps either. Because small business optimism was supposed to be a key measure of this administration’s success with regard to reppin’ for average Joe.
And while small business optimism is still sitting at near decade highs, it’s down notably since the initial “Trump bump,” and as for the Russell, well, it’s starting to crack relative to the President’s new favorite confidence measure.
That brings us to a pretty good piece out on Tuesday from Bloomberg’s Robert Burgess who notes the following:
Most astute market watchers know that the S&P 500 Index has underperformed the global market for equities this year. That suggests U.S. stocks are perhaps being pulled higher by the rest of the world, not a reflection of confidence in the Donald Trump administration.
But there’s another way to look at all this, and the results aren’t likely to please Trump.
A sector-neutral basket compiled by Goldman Sachs of the 50 S&P 500 stocks with the highest 10-year median effective tax rates has lagged behind, with the underperformance only getting bigger in recent weeks. That’s hardly the result one would expect to see if investors truly believed that the Trump administration would be able to deliver on its promises of big tax cuts.
To be sure, Goldman has been talking about this for months.
But it’s worth keeping tabs on, because it demonstrates that Trump’s obsession with the Dow is just another example of smoke and mirrors designed solely to make his base believe that this administration isn’t the complete train wreck that it most certainly is.
Ironically, if Trump wants to tell his base who to thank for high-flying benchmarks, he could point to Janet Yellen – the woman who just last September the President said “should be ashamed of herself.”