- The Presidential race remains tight though Trump’s position has improved over the past 24 hours.
- The financial markets shot upwards as he spoke to the nation on Friday re: coronavirus.
- Biden and the Democrats made a tactical blunder by trying advantage of the situation for political gain.
At least until the coronavirus pandemic begins to abate in the United States the best way to get a handle on the Presidential race is to keep an eye on the financial markets. In the short term, their performance will largely be a reflection of how Trump and his administration is handling this unprecedented situation. In our previous update, we talked about how the race had tightened following Trump’s horrific speech to the nation on Wednesday night. Even before it was over you could tell it was going over like the proverbial ‘lead balloon’. The key was to look at the futures market–the DJIA futures went from being up +400 at the start of the speech to the bottom falling out during the speech. By the time it was over, they were down over -1000 points and set the stage for the largest one day drop in the history of the Dow Jones Industrial Average.
Trump was largely absent from view on Thursday and in retrospect that might have been his best plan. He probably didn’t plan it this way but his absence gave his political opponents some ‘rope which which to hang themselves’. And that they did–Trump definitely looked weak on Wednesday night but as I made perfectly clear the Democrats had to be very careful how they responded. They couldn’t look like they were out to undermine the President and trying to politicize a legitimate national emergency.
THE DEMOCRATS BLUNDER THEIR OPPORTUNITY
Guess what they did? Joe Biden started the Dems bumbling response giving the impression that he loved the sound of his own voice than doing what was best for the nation. Biden had to offer his own ‘plan’ for dealing with the coronavirus pandemic. Obviously, Bernie Sanders wasn’t smart enough to leave well enough alone and there’s no doubt he loves the sound of his own voice more than doing right by his country, party or probably anything else. He also gave *his* ‘plan’ for dealing with the situation which looked even more cynically opportunistic than Biden since it was just the same warmed over health care proposals he was touting during the campaign.
Things got even more bizarre when Elizabeth Warren–who at last check had withdrawn from the race for the Democratic nomination–showed up on CNBC’s Mad Money to tout her own ‘plan’ to Jim Cramer. Cramer can be hard to take sometimes but he’s no doubt a smart guy and has been in rare form during the coronavirus pandemic. Seriously–he’s been articulate, passionate and insightful and has not been afraid to moderate his opinion in real time as the situation has changed. He’s been excellent. Not sure if it was his call to let Warren dumb down his show or the network’s but he looked like he couldn’t believe what he was seeing and hearing as she gave what was essentially a campaign stump speech:
Ironically, one of the Democrats’ primary talking points throughout the day was Trump’s failure to ‘take the coronavirus situation seriously’. They then turned around and did the same thing by making a full court press to politicize the situation. Whether or not you like Trump is irrelevant–the look they gave that scoring a few political ‘gotchas’ was of greater importance to them than actually trying to *lead* during a legit emergency was a bad one. They had the opportunity to demonstrate maturity and leadership that could have actually attracted some undecided voters to their side. Instead, they pandered to the ‘true believers’ and their seething hatred of Trump. That strategy is what doomed Hillary Clinton in 2016 and it sure doesn’t look like the current crop of candidates and the national party has learned from her disastrous campaign.
TRUMP BOUNCES BACK BRINGING THE FINANCIAL MARKETS WITH HIM
Friday might have been the most important day of the Trump Presidency. The financial markets began the day with some anemic gains but they couldn’t hold them and by early afternoon were right around the ‘Mendoza Line’ bouncing from red to green. He definitely took a ‘high risk/high reward’ approach by scheduling a press conference in the market’s final hour. The easy way out would have been to just wait an hour after the market close–the response to his comments would have been reflected in the futures market but that’s something that few non finance geeks pay attention to.
I’ve never been a Trump fan and have been as critical as anyone of his Wednesday address to the nation. That being said, he absolutely ‘nailed it’. He sounded very Presidential and was definitely articulating the gravity of the situation. I noted in my article about his Wednesday address that it might be remembered as the point where he lost the 2020 election. By contrast, his Friday appearance in the Rose Garden could now be remembered as the point where he *won* the 2020 election. The profound contrast from his bumbling Wednesday address could immediately be seen in the financial markets which surged as he spoke. Here’s how CNBC called it:
Stocks soared Friday as Wall Street rebounded from the sharp losses suffered in the previous session — the worst since the “Black Monday” market crash in 1987.
The Dow Jones Industrial Average closed 1,985 points higher, or 9.4%, at 23,185.62. Friday marked the Dow’s biggest-ever point gain. The S&P 500 climbed 9.2% to 2,711.02 while the Nasdaq Composite surged 9.3% to 7,874.23. The averages posted their biggest one-day gain since October 2008.
Was this Trump’s doing? There have been plenty of financial types calling this a once in a lifetime buying opportunity. Then again, there have been plenty warning that the market could go lower. To be sure, history has shown that massive drops in the financial markets are often followed by massive upswings. It would be easy to write off as just an inevitable function of market dynamics. Except that the NYSE and other US markets were in their final hour and that hadn’t happened. Like Wednesday’s rapid downturn in the futures market the last hour rally began as Trump spoke. Like the guy or not, if you’re being intellectually honest you have to admit that this was all on him.
The result was that Trump’s odds have improved slightly at the major European books. At the prediction market Predictit on Friday evening he had regained the lead over Biden priced at 48 cents with the Democratic challenger down to 45. There’s been some buyback on Biden now but the immediate but that’s likely due to the ideological ‘true believers’ taking their candidate at what they perceive as a value price. This is why I find the European sportsbooks a better metric than Predictit–they simply don’t have the same degree of ideological influence.
In our next update, we’ll talk about some of the structural challenges that now face the Democrats in the current coronavirus driven climate.