There is a hard and fast rule in the investment business that says: If the price of a publicly traded asset does not react as expected to piece of news, then it is largely safe to assume that piece of news is “priced in”. In other words, if the price of stock, for example, declines only marginally on the announcement of a highly negative piece of new information, then more than likely the price of the stock already incorporates that negative piece of information. It is this principle/framework that aided my conclusion in the days and weeks leading up to the 2016 election that Trump had a far better chance of winning than the “smart money” betting markets indicated. In a similar vein, applying this framework to President Trump’s current 42% approval rating is instructive.
In the first 100 days the Trump Presidency has produced the following: Two “illegal” travel ban EOs; a hideously botched healthcare “reform” bill; Russian investigation hysteria, including the official revelation that the Trump Campaign is being investigated for collusion with the Russians; global “disruption” of US foreign relations; an all-out war with the Mainstream Media; Michael Flynn; Sean Spicer; KellyAnne Conway; and last but not even remotely least, Trump’s outlandish tweeting. And if we extend the time frame to say 105 days, this past weekend’s series of seemingly incoherent interviews by Trump can be added to the list.
Never Trumpers may feel vindicated in their belief that this was the worst opening 100 days in the US presidential history by the fact that President Trump’s 100th day approval rating was the lowest in history. But that vindication is misplaced, as Trump started his presidency at the lowest approval rating since President Truman (President Eisenhower started below 40%, versus 46% for Trump). Trump’s approval rating is his “stock price”, and after the worst opening 100 days in US presidential history it declined by just 4 percentage points to 42%.
In other words, Trump is so wildly unpopular that his approval rating has barely budged and 96% of Trump voters would vote for him again…versus 85% of Hillary Clinton voters. Think about it – after 6 months to rethink the influence Comey and Putin had on their decision, in addition to seeing the worst opening 100 days in US presidential history, just 85% of Hillary Clinton voters would vote for her again. Astonishing.
Now this is not even remotely to say that some of Trump’s behavior is excusable; nor that he can coast for the duration of his presidency. Far from it. The simple point is this: If Trump is able to execute on even 50% of his economic growth-friendly domestic policy agenda, rebuild America’s standing on the foreign stage, and maintain a controlled-yet-aggressive battle against the Establishment, there is significant upside to his “stock price”.
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As an addendum to the above analysis, I would like to highlight the following segment from the 5/2/17 airing of Morning Joe. With mostly straight faces, the panel spends nearly 20 minutes hyperventilating about the state of Trump’s mental health following a weekend barrage of interviews by the President. With 30 hours a day/8 days a week of outrageously biased coverage of the Trump Administration by the Mainstream Media, there is a mountain of examples of elitist media bubble arrogance; but in my opinion, this Morning Joe segment takes the cake…
To conclude, I would encourage anyone willing to actually look beneath the surface to take a spin thru the Bloomberg Interview transcript, for starters.