Most people on Wall Street “would probably say that the chances are pretty good that he’ll get reelected,” David Rubenstein, co-founder of the private-equity firm The Carlyle Group, which has $201 billion in assets under management, told FOX Business’ Neil Cavuto. Trump is "obsessed with making certain the economy stays strong,” he said.
The U.S. economy flexed its muscle Friday when the Labor Department's monthly jobs report showed unemployment at a 50-year low of 3.5 percent. Consumer sentiment hit its highest level in a year, as the upper class reaped near-record gains in household wealth.
“After a number like we got today, that non-farm payroll number of 266,000 and the fact that the Democrats, I think, are going to fail in their impeachment gambit, Trump's the favorite,” Greg Valliere, chief U.S. policy strategist at Ontario, Canada-based AGF Investments, which has nearly $39.5 billion, told FOX Business. He noted that the markets look at the Las Vegas oddsmakers and the London bookies, which both point to a Trump victory.
“Everywhere you look right now, it's Goldilocks, an economy that's in really good shape and no inflation to speak of and very, very low interest rates,” Valliere added while conceding the market is not “unabashedly in love with Trump” because of his trade conflict with China and unpredictability.
While the market may have some doubts about Trump, there's no disputing the results. The benchmark S&P 500 has rallied 47 percent since Trump trounced Democratic rival Hillary Clinton in the electoral college in November 2016. The index has gained more than 25 percent this year alone, despite the U.S. House of Representatives forging ahead with impeachment proceedings.
"The bottom line for the markets is that the impeachment story has been background noise and not much more," Valliere said.
While big-money investors may be placing their bets on a Trump win, the Wells Fargo Investment Institute says it’s too early for the stock market to accurately predict who will occupy the Oval Office in 2021.
Since 1900, the first half of an election year has “tended to be flat for U.S. equity prices,” according to the firm’s 2020 election preview. Movements afterward, however, start to provide indications about political prospects.
“In years when the incumbent party wins the presidential election, the equity market rally has been stronger than for the average of all U.S. election years," the institute said. "Stock prices tended to stumble into the year’s second half when the incumbent party lost the presidential election.”
Even worse for Trump than a slide in markets would be a recession. The last four presidents (George H.W. Bush, Jimmy Carter, Gerald Ford and Herbert Hoover) to oversee an economic downturn within two years of their reelection bids all failed to reclaim the White House.
“One of the things that I think all presidents recognize is that presidents who are running for reelection in recessions do not tend to get reelected," Rubenstein said.