BYRON WIEN: Stock markets can predict US elections - and this one pointing to a Clinton victory
If you want to get a feel of how the US presidential election will play out, Blackstone's vice chairman Byron Wien has a suggestion: look at stocks. Blackstone
The incumbent party usually wins if the stock market is doing well, Wien said in a webcast Thursday. Conversely, if the stock market is doing poorly, the challenger usually wins.
"There's a correlation between the outcome of the election and the market," Wien said, citing the polling before recent results on Florida and Ohio. "Hillary had at least 70% probability of winning with the market doing relatively well."
Wien, it should be noted, has donated to the Clinton campaign - as well as those of other Democratic candidates in the past. So that 70% figure might be taken with a grain of salt.
But he's not the only one to observe the correlation between markets and election outcomes.
Blackstone
When the country prospers during the election year, it is likely to favor the incumbent candidate as voters feel good about current and future prospects. When the economy is in a bad shape, voters are likely to seek change and punish the incumbent or their political party.
Wien's prediction method echoes that of Daniel Clifton at Strategas Research Partners, who saw the S&P 500 has correctly "predicted" the winner in 19 of the past 22 presidential elections.
Of course this doesn't mean strong markets direct the outcome of the election. Instead it may be that past market gains have reflected the overall economic trend, which in turn influenced voters' decisions. There's many reasons to wonder if that's true this time around - with stock gains driven by many factors - like low interest rates - that actually indicate economic weakness.
Still, Wien's bullishness on Clinton's chances is only increasing.
In his 10 surprises for the year, Wien had assigned a better than 50% chance of Hillary Clinton winning and Democrats taking back the US Senate.
Blackstone
"There's only a five point spread between Trump and Clinton, and in my view that's narrowing and enough to assure Clinton's victory," Wien said, citing presidential polling trends from July 2015 to July this year.
Not surprisingly, he thinks Obama's favorability and Hispanic voters play important roles in the upcoming election.
"If Hillary somehow wins the landslide, there're six seats in play. They could lose the senate in the landslide Democratic victory, but right now the election looks much closer than that," Wien said.
- TVS iQube gets a new variant priced under ₹1 lakh, ST variant gets a bigger battery
- As English players begin their premature IPL exodus, Gavaskar calls for action against England Cricket Board
- Top 10 destinations for river rafting in India in 2024
- Should you enrol your child in an online university like IGNOU?
- Mobile recharge packs to get more expensive as telcos gear up for another round of tariff hikes: Report
- Nothing Phone (2a) blue edition launched
- JNK India IPO allotment date
- JioCinema New Plans
- Realme Narzo 70 Launched
- Apple Let Loose event
- Elon Musk Apology
- RIL cash flows
- Charlie Munger
- Feedbank IPO allotment
- Tata IPO allotment
- Most generous retirement plans
- Broadcom lays off
- Cibil Score vs Cibil Report
- Birla and Bajaj in top Richest
- Nestle Sept 2023 report
- India Equity Market