In the weeks before November’s election, the stock market rose and fell with Hillary Clinton’s prospects. As Donald Trump narrowed Clinton’s polling advantage in the race’s final two weeks, stocks started falling; when FBI director James Comey declared the new batch of Clinton emails innocuous, just before Election Day, the market rallied.
And then Trump won. The president-elect spent the ensuing days comporting himself as the kind of incompetent kleptocrat that investors had ostensibly feared — the president-elect took meetings with business partners, used his platform to condemn protestors and adversarial members of the press, invited the manager of his “blind trust” to a sit-down with a foreign leader, betrayed a profound ignorance of the duties of his new office, and appointed widely reviled racists to top White House positions, apparently on the basis of their personal loyalty.
Meanwhile, the markets rallied with such exuberance, the Dow Jones Industrial Average hit a new high of 19,000, on the two-week anniversary of Trump’s triumph.
The most puzzling aspect of this phenomenon is not why investors have greeted Trump’s victory with such enthusiasm, but rather, why they were so averse to the mogul before November 8.
After all, the president-elect has provided the market with plenty of reasons for bullishness: His agenda includes huge tax cuts for the rich, some kind of infrastructure stimulus, financial and environmental deregulation, the repeal of the Affordable Care Act, and, unlike Clinton, no specific plans for preventing price-gouging in the pharmaceutical sector.
The stock prices of steel producers, financial firms, energy companies, and drug makers have all soared in recent days, accordingly.
But Trump’s agenda was public knowledge long before Election Day. Sure, our “populist” president-elect has made less effort to disguise his coziness with the financial sector since securing the presidency. But Trump long ago named a Goldman Sachs veteran as his campaign’s finance chair.
When the market rallied the morning after Trump’s victory, some rationalized the response by noting the conciliatory tone the president-elect struck in his victory speech. But Trump has been anything but conciliatory in the days since, and stocks have continued to rally, nonetheless.
It simply isn’t the case that investors rationally adjusted their expectations of a Trump presidency, on the basis of information that only became available after November 8.
The only satisfying explanation for the markets’ sudden change in perspective is that before Election Day, investors indulged in the delusion that what was bad for the United States was also bad for business.
Then, after Trump’s victory, Wall Street’s superego went silent, while its id saw with crystal clarity how many opportunities for short-term profit a president who believes in regressive tax cuts and financial deregulation — but not in climate change — was sure to present, regardless of whatever else his victory might portend.