President Trump is anything but traditional. He frequently says things that his predecessors would never have dared to utter publicly. But, for the most part, his supporters applaud the candor and straight talk.
That said, one Presidential tradition that Trump may not want to break is celebrating stock market gains because what goes up, at least on Wall Street, usually comes crashing down in spectacular fashion at some point soon thereafter. Alas, that didn't stop Trump from celebrating #Dow20K over twitter:
— President Trump (@POTUS) January 25, 2017
Trump assistant, Anthony Scaramucci, also celebrated, saying "Dow 20,000 = big league. Thank you @POTUS."
— Anthony Scaramucci (@Scaramucci) January 25, 2017
Of course, the only problem with taking credit for the gains on Wall Street is that you set yourself up to also get blamed for the losses. Thats why, according to The Hill, past presidents have shied away from linking their presidency to stock market gains.
Under former President Obama, the Dow more than doubled in value, but his administration rarely cited gains in the market when promoting its record on the economy.
The main reason for that, longtime Wall Street observers say, is because what goes up will almost always go back down.
“There’s always a temptation for the president to celebrate what Wall Street is applauding,” said David Wessel, director of the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution. “Wise advisers usually restrain them from doing it.”
Wessel noted that during the tech boom of the late 1990’s, Treasury Secretary Robert Rubin counseled President Clinton against any back patting for surging stocks.
“He told the president, don’t take credit for the market going up, because you’re setting yourself up to take the blame when the market goes down,” he said.
There is no doubt that the "Trump Bump" is real with the Dow surging since election day.
That said, there is also no doubt that with each passing day, U.S. stock markets are looking increasingly bubblicious. And, unfortunately for Trump, if it all comes crashing down over the next 4 years he will be saddled with the blame even though this catastrophe has been in the making for quite some time courtesy of Yellen & Co.
Taking a look at the Shiller 10-year trailing P/E, aside from the tech boom in 2000 when company valuations soared despite generating no revenue, the S&P hasn't been this overvalued since the great depression in 1930.
So, while it's fun to "win", we suspect this fight will only have losers.