Over and over we’ve suggested that Donald Trump should probably stop bragging about the stock market on Twitter if for no other reason than to save himself from having to come up with a scapegoat when equities finally do correct.
But he’s not listening. In fact, he shattered his own 3-day record for market tweets earlier this month:
Of course it is by no means clear whether the inexorable rise in equities has anything whatsoever to do with Donald Trump. Reflation trades (i.e. “Trump trades”) were faded aggressively all year right up until December when they finally got some life thanks to progress on the tax bill. The dollar has had an abysmal 2017 and if the yield curve could talk, it would be screaming “recession” at the top of its curve lungs. The market is a function of decent earnings, the synchronous upturn in global growth, and most importantly, subdued inflation that allows central banks to take a gradualistic approach to easing (i.e. keep policy accommodative for an extended period).
But that’s not going to stop Donald Trump from tweeting about the market and making absurd claims that he has no way to back up like this one from a couple of weeks ago:
He’s even gone so far as to suggest, on national television, that the higher the stock market goes, the lower the national debt (see video at the bottom of this post).
Everyone knows why he does this. Lacking any major achievements, he’s constantly grasping at straws in an effort to ensure his base that he’s not a failure. That’s why, for instance, he includes “strong military” in the list of things he’s gotten done even though, as I politely reminded him, “strong military” is not an “achievement”…
Mr. Prez, "strong military" isn't an "accomplishment." it's just a noun with an adjective in front of it. like "big truck" or "baby bird"
— Walter White (@heisenbergrpt) October 22, 2017
Well recently, Trump has taken the market rhetoric up another notch. As Bloomberg notes, the President has “tested out a new campaign slogan this month at a fundraiser, a campaign rally and in a White House meeting, predicting that the rising U.S. stock market will help him win re-election.” Here is that slogan:
How’s your 401(k) doing?
Now, recall the following from a Heisenberg piece published over at DealBreaker earlier this month:
It seems highly unlikely that Trump’s base is benefiting from the inexorable rally in equities. And even if they are benefiting, financial assets are disproportionately concentrated in the hands of the rich.
Here’s how Salient’s Ben Hunt put it in his latest note:
- The goodies of a trebled stock market aren’t evenly distributed. Who owns stocks? If we’re talking about households, leaving aside pension funds and endowments and other institutional investors, it’s the rich, mostly. And that household share of the Central Bankers’ Bubble doesn’t increase linearly with wealth, but exponentially, meaning that the really rich own a lot more stocks than the merely rich, so the really rich have gotten a lot richer than the merely rich.
Right. And if Jeff Bezos is getting “exponentially” richer than Steve Mnuchin during this rally, well then you can extrapolate what that means for the likes of Gwynne Abrams, an unemployed nanny in Henderson, Nev., who told the Washington Post how she recently scraped together $78 in nanny money to donate to Trump’s “cause.”
At least Steve gets the satisfaction of knowing that even if Bezos is now 333 times richer than him thanks to the Amazon rally, the money Jeff spends is literally signed “Mnuchin”. I don’t think you’re going to see “Gwynne Abrams, Certified Nanny” scrawled on your dollar bills any time soon.
And indeed that’s the punchline here. Less than half of Americans have a 401k. As for Trump’s base, consider this from the GAO:
Overall, approximately 14 percent of workers in the lowest income quartile participated in a program compared to 57 percent and 76 percent of those in the third and fourth income quartiles, respectively. Similarly, according to the W-2 adjusted data, 22 percent of workers in the lowest income quartile participated in a program compared to 67 percent and 84 percent of those in the third and fourth income quartiles.
The people Trump claims to be fighting for simply don’t benefit from his beloved stock market rally, so whether he (or his followers) realizes it or not, he’s just rubbing inequality in the faces of America’s middle and low income families.
Further, Bloomberg reminds you that “the president has also rolled back efforts to expand retirement savings options to more middle-class and low-income workers.”
So, when Trump asks the people that voted for him and the unemployed nannies who are scraping together money to send him “how’s your 401k?” the answer is probably: “we don’t know because we don’t have one, Mr. President.”
Meanwhile, he started selling “MAGA” Christmas hats on his official website for a whopping $45 each last month.
As you can see, they’re sold out.