The polls are shouting for attention every day, but it’s the silent indicators over many presidential cycles that will prove most predictive of November 8th’s result.
Public numbers are harder to skew, especially when it comes to market performance. And it turns out the stock market has been an accurate indicator of our next president.
Most of the information needed is already available. The last quarter before the election gives a strong indication towards the winner. If the market is down, Republicans win. Up, the Democrats.
Where is the market since July? Down. And that’s bad news for Hillary. Bloomberg’s headline reads:
This Chart Predicts Trump Will Win, Unless the S&P Rallies in October
Curiously, the article doesn’t want to hammer that point home, so it doesn’t mention Trump or Hillary again, but instead explains how this process works—and how October could change everything.
The performance of Standard & Poor’s 500-stock index from July 31 to Oct. 31 has a curious way of predicting the winner of the presidential election.
As with every prediction, take it with a giant grain of salt. But the pattern is solid, as shown in this chart by Sam Stovall, equity strategist for S&P Global Market Intelligence. Should the S&P 500 record a positive return from July 31 to October 31, it signals the reelection of the party in power, while a decline suggests replacement. The S&P ended September slightly below its July close, so the election results are at the mercy of the market’s October performance.
The good news all voters need to know? If Trump wins, the market will go higher:
For those who need a “virtual Valium” for stock market jitters, Stovall pointed out that in November and December of election years the stock market is typically up, regardless of the winning party. If the incumbent’s party is reelected, the market goes up 1.7 percent, on average, and rises in price 70 percent of the time. If the incumbent party loses, the market rises 2.3 percent and increases in price 75 percent of the time.
That makes sense, right? Markets are thrilled to know that free-market policies and less job-killing regulation will be forced down their throats. So barring a surprise October rally in the market, Trump is on the way to victory…and the markets will rebound.