Who Benefits Most From Rising Stock Prices? Spoiler Alert: It’s Not You

By Heisenberg

On Tuesday, in “‘How’s Your 401(k)?!’ Trump Accidentally Taunts Low Income Americans With New Slogan,” we noted that Donald Trump doesn’t seem to appreciate the fact that a whole lot of the folks who comprise his base are not in fact benefiting from his beloved stock market rally.

Lacking any legislative achievements to which he can point to refute the notion that he has not in fact delivered on any of his lofty campaign promises, the President has increasingly cited rising stock prices as “evidence” of his “success.”

Don’t let it be lost on you that back in April, he said something similar about the dollar. “I think our dollar is getting too strong, and partially that’s my fault because people have confidence in me,” he told WSJ, in an interview published on April 12. Here’s what the dollar has done since then:

Dolalr

We’re not going to regale you with the entire rationale for that, but suffice to say that headed into 2017, the top two “no brainer” trades were “long USD” and “short USTs” – those turned out to be disastrous calls.

In short, everyone faded the Trump agenda aggressively and the idea that the stock rally is attributable to Trump is debunked by this chart, which shows you the extent to which two Trump trades came off after the initial election bump and only began to show signs of life once there was progress on tax reform starting in September:

ValueGrowth

But even if you want to give Trump credit for this year’s stock market rally, his obsession with equity prices either reflects his ignorance with regard to the plight of his base, the fact that he actually doesn’t care about that plight, or more likely, a bit of both.

As we showed you on Tuesday, the overwhelming majority of low income Americans would not know how to respond to Trump’s rhetorical “how’s your 401k?” question because they do not participate in workplace retirement programs:

401k

Again, either he doesn’t know that, or he’s actually speaking to a different audience than that which he purports to represent.

Well with all of the above in mind, consider this from a recent Credit Suisse note:

Only higher net worth households tend to own appreciating financial assets. Figure 10 shows the share of families at different net worth quantiles which own equities (either directly or through mutual funds).

Above the 90th percentile of net worth, around 70% of families had some equity exposure, but for households between the 50th and 75th percentile, the share of equity ownership was below 20% in 2016. Ownership went down for all groups after the crisis, but again the decline is most noticeable for less-wealthy households.

StockHouseholds

Long story short (no equity market pun intended), the everyday Americans who were duped into voting for a billionaire pushing faux populism do not benefit from the stock market rally he spends a decent portion of his time tweeting and talking about.

We’ve been over this time and time again, but it literally cannot be emphasized enough.

Finally – and this is another thing we can’t emphasize enough – the notion that Donald Trump has ushered in some kind of equity market miracle the likes of which no one has ever seen is a lie. As in pure, unadulterated fiction.

Here, in closing, are two charts that debunk Trump’s twitter stock market bravado.

Dow performance in Obama’s first 11 months:

Obama

Dow performance in Trump’s first 11 months:

Trump

Again:

He.

Is.

Lying.

To.

You.

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