How the stock market signals whether Trump will stay or go Special

Posted Jan 5, 2019 by Tim Sandle
Those who want President Trump to stay in office should hope the stock market rises, and those who want him ousted should hope it crashes, according to Alan Hall, a senior analyst at the Socionomics Institute.
A vocal contingent of Democratic lawmakers  including Rashida Tlaib  is intent on punishing -- and p...
A vocal contingent of Democratic lawmakers, including Rashida Tlaib, is intent on punishing -- and perhaps impeaching -- US President Donald Trump, who they believe has abused his authority
Alex Edelman, AFP
As to why the fortunes of the president are tied to the movement of financial markets, Alan Hall offers analysis to Digital Journal readers. He notes: “History shows that the stock market is a useful indicator of people’s attitudes toward the president.”
This is because socionomic theory proposes that society’s overall mood regulates both stock prices and the public’s perceptions of its leaders. The approach is a synthesis of social science research and together with economic analysis.
In essence this means that: “Positive social mood makes society feel optimistic, bid up stock prices and credit leaders for their good feelings. Negative social mood makes society feel pessimistic, sell stocks and blame leaders for their bad feelings”, according to Hall.
This is signalled by history, as Hall points out: “These tendencies are evident in presidential re-election outcomes. Presidents Hoover and Carter, for example, lost bids for re-election during trends toward negative social mood as reflected by declining stock prices. In fact, the stock market is a better re-election indicator than inflation, unemployment and GDP growth combined.”
The historical process has been described in a paper published in Sage Open “Social Mood, Stock Market Performance and U.S. Presidential Elections: A Socionomic Perspective on Voting Results.”
Drawing on this evidence Hall notes President Richard Nixon’s near-impeachment and resignation from office which “serves as a textbook case of how social mood influences the fortunes of public figures.”
He adds: “That trend toward positive mood helped Nixon win re-election in a landslide. But as mood trended toward the negative, the public’s view of its leader darkened, its appetite for scandal increased, the investigation accelerated, and Nixon’s fortunes changed. With almost certain impeachment looming, Nixon became the first president to resign from office on August 9, 1974.”
As to what this history tells us about the probability that President Trump will serve a full term in office? Hall assesses: “Since the October 3 stock market peak, disapproval of the president has grown steadily louder and more strident. At the same time, the Mueller investigation has implicated more and more of the president’s inner circle in illegal activities. The Democrats won control of the House in the 2018 midterms. A November 26 Gallup poll revealed Trump’s disapproval rating had hit an all-time high.”
Furthermore: “On December 24, Time reported, “National Christmas Tree to Stay Dark During Holiday Due to Government Shutdown,” and several news organizations ran stories with versions of The Atlantic’s headline, “President Trump’s Nightmare Before Christmas,” as the stock market plunged.”
He concludes his commentary for Digital Journal with: “We don’t know what the Mueller investigation will ultimately reveal, but for Trump, the facts may not matter as much as the social mood. Fasten your seatbelt and keep your eyes on stock market indexes, our best reflection of the trend of social mood.”