WASHINGTON, December 14, 2016 – In the stock market, while things have been going along more or less swimmingly since Donald Trump was proclaimed the winner of 2016’s U.S. Presidential sweepstakes on November 9, and while the ensuing investor enthusiasm over his election has boosted the Dow dramatically in its record-breaking run to the top this December, the financial media continues to predict the kind of Doomsday Apocalypse we generally expect from End-of-the-World religious fanatics.
CNBC, for all its usefulness in presenting stock market and business news, has continued to beclown itself since roughly September, pushing upwards of ten anti-Trump headlines per day that relentlessly spin the gloom and doom we’re in for come Inauguration Day 2017.
Here’s one example of a typical fun anti-Trump headline:
Op-Ed: Trump’s Cabinet picks like an ‘invasion force’ coming to destroy Washington as we know it
Seriously? A Russian “invasion force” maybe? No, it’s just those scary top businessmen, Congressmen and “global warming climate change deniers” Trump is appointing to his cabinet, the ones with real business experience who can root out hundreds of Obama Era regulations that are stifling American growth and not doing much to attack America’s real and persistent unemployment rate (U-6), which currently stand just slightly under 10 percent—as opposed to those much lower, official “fake news” figures.
However, the hands-down silliest “fake news” anti-Trump story we’ve seen today comes from CNBC once again, via a far too-clever Wednesday story whose splash headline reads
Dow would rise to 50,000 if Trump matches market performance under Obama
Looks like a pro-Trump story, right? Nope, wrong. Check out the key paragraphs of this actually pro-Obama puff piece:
“Investor enthusiasm around [Donald Trump’s] presidency has helped push the Dow Jones industrial average to the cusp of 20,000.
“Now all President-elect Donald Trump needs to do while in office to get the Dow to 50,000 is match the stock market’s performance under his predecessor.
“During the eight years of President Obama, the Dow jumped 150 percent, or 12.3 percent annually, through Tuesday, according to Bespoke Investment Group. That’s the third-best stock market performance since WWII for any president behind only President Clinton’s and FDR’s triples.”
This bit of verbiage conceals a clever sleight of hand that effectively damns any future economic triumphs with faint advance praise by setting a phony standard for stock market performance under a President Trump. Obama took office in the midst of an economic cataclysm, which arguably bottomed—stock- and bond-wise—in March 2009, roughly two months after the new president was inaugurated.
That March market bottom was substantially lower than the level that markets achieved in 2006-2007 before the finance and subprime disasters began to unfold. For that reason, a substantial chunk of Obama’s alleged 150 percent market improvement over two terms simply constituted getting even with where the market had been before the fall. In other words, the market didn’t really gain at all. It got back to even before actually going up in the true sense of that term.
Claiming the entire 150 percent jump as a “gain” sets a false standard against which this article has deceptively chosen to measure Trump’s future performance. It’s yet another bit of petty dishonesty that conceals the economic truth in favor of magic realism.
Worse, it also conceals the fact that Obama never actually did a thing to help the economy. He left that boring problem to the Fed to handle. Unfortunately, the Fed’s only available sledgehammer tool was to lower interest rates to the point where the banking, corporate and “1%” communities were flooded with free money they used to juice up the stock market, creating wealth for themselves and the appearance of wealth for everyone else, including those working class rubes in Flyover Country.
In the process, the average American’s income and job prospects sank to depths we haven’t seen since the Great Depression. Both measures have pretty much remained there ever since, unless you accept the government’s meaningless employment statistics which ignore the long-term unemployed and the chronically under-employed.
Meanwhile, Obama went on his merry way, deploying his “community organizer” skills by setting the races against one another, dispensing money and other free stuff to Democrat constituencies while concocting—with a tyrannical Democrat-majority Congress—the Obamacare disaster a majority of Americans continue to hate. Meanwhile, the Obama-Pelosi-Reid triumvirate kept piling up a Matterhorn of Federal debt so high that realistically, it will never be paid off.
For these reasons, whatever gains the market has sustained over the past 8 years were solely due to Fed money-printing activities and were only enjoyed solely by those wealthy enough to have an investment portfolio—and the free cash to put into it. Anything positive that has happened to the market averages over this period of time was solely due to the Fed’s money printing activities. Obama had nothing to do with any kind of economic progress at all, since he essentially ignored the economy for 8 years as he ruthlessly took America down a peg politically and economically, which was his plan all along.
To give Obama credit, as CNBC does, for a stock market rise whose substantial first act merely brought stock market averages back to even simply adds insult to injury. It also sets an impossibly high bar for Donald Trump, one he’s statistically unlikely to overcome even if his presidency proves to be a brilliant success.
With regard to CNBC’s source for this essentially useless bit of information, we’ve investigated the previous history of Bespoke Investment Group and its evolving websites. Whatever the quality of their recommendations over time, the Bespoke Investment Group, like many investment advisory firms has long had a pro-Democrat, pro-Obama bias. That’s evidenced by this “non-partisan” fluff they published online on the first anniversary of Barack Obama’s presidency:
“While his detractors will argue otherwise, based on his first year in office, Barack Obama has been a good friend to the stock market. Since 1897, the 33% return in the DJIA during his first year in office has been better than every other President except FDR, who saw a first year rally of 96%. While conventional wisdom generally says the market likes Republicans better than Democrats, history suggests otherwise – at least during a President’s first year. Since 1897, the median return of the DJIA during the first year of a Democratic President’s term has been 22.6%. Under Republican Presidents, however, the median return of the DJIA has been a much more modest 0.4%.”
This article is the direct antecedent to the one we’re skewering in CNBC today, as it essentially gives Obama credit for a market “return” that, at this point, hadn’t even returned stocks and bonds to the breakeven point—the highs it had achieved late in the Bush II administration.
Second, it perpetuates the notion that the first years of Republican administrations are failures. In fact, the lower numbers that seem to crop up in the initial years of such administrations are directly traceable to the wreckage previous Democrat administrations leave behind. We have only to look back at Reagan’s first year, during which the market labored painfully through a recession that resulted from Jimmy Carter’s failed, hyperinflationary policies. The remainder of Reagan’s two terms as president were a rollicking success, however, as his genuinely stimulative policies and tax cuts took effect.
Ditto the first term of Bush II. After loads of negative press due to his contested presidential win in 2000, Bush assumed office in the midst of the “dot.bomb” crash that occurred in the final year of Bill Clinton’s Monica Lewinsky-stained second term. Worse, at the moment a recovery was becoming possible, America woke up to the violent tragedy of 9/11, finishing off whatever positive economic action might have begun to unfold during Bush’s first term. But Bush and his administration recovered, setting the market on a positive trajectory.
In a broader sense, the Bespoke Investment Group’s 2010 happy talk above actually credits Barack Obama for something he never did. Both he and the Democrat-dominated Congress during the initial years of his first term had spent that time giving away free money first to the trade and teachers’ unions that had supported them (which is where that original ~$800 billion “stimulus” package actually went) and then to the largely Democrat-supporting fat cats on Wall Street via the Fed’s free-money printing presses.
Bash them or not, it was only the Federal Reserve that’s kept this economy afloat at all over the last 8 years, pumping money to wealthy people to invest in stocks and bonds while ensuring the market averages continued to climb, creating a sense of prosperity while inflating the price of hard assets. But since only the wealthy actually had stocks, bonds and hard assets to start with, only they have benefited from this largess over the past 8 years.
Yet that’s all the Fed could basically do, and if they hadn’t done it, we’d be worse off by now than Americans were when FDR was inaugurated for his first term in March 1933. In cautious Washingtonspeak, former Fed Chair Ben Bernanke begged Congress again and again to add some muscle to the Fed’s efforts in order to create a real recovery for all Americans. But that was too risky and unnecessary for Harry Reid, Nancy Pelosi and Barack Obama, who simply sat back and let the Fed take the blame for America’s ballooning deficit.
Over his 8 years in office, Barack Obama has done precisely nothing for the U.S. economy. In fact, he, his phone and pen, and his vile, dictatorial, overreaching EPA, have done their best to raise costs and stall energy independence in this country, putting average American families farther and farther behind while ensuring the wealth of his friends and supporters.
To write a dishonest article that appears to endorse Trump while at the same time setting an impossible standard for his “success” the current president has done his best to forestall with his thicket of anti-business regulations, is yet another nail in journalism’s coffin. Once again, honest reporting seems to be fast receding into an already distant past, if indeed anyone still alive has ever seen any evidence that it existed.
No Trading Diary today as the market’s uneven reaction to the Fed’s Wednesday interest rate hike announcement makes entry points deceptive at best. Perhaps tomorrow we’ll catch our breath and see if the current rally is getting ready to resume after today’s modestly negative day off.
*Cartoon by Branco. Reproduced by arrangement and with permission from LegalInsurrection.