Biden Has Brought Happy Days for Investors - WSJ
Last edited Wed Jan 24, 2024, 06:05 PM - Edit history (1)
In 2020 President Donald Trump predicted that the stock market would collapse if Joe Biden was elected president. Mr. Trump was way off the mark. The S&P 500 rose 27.4% during Mr. Biden’s first three years in office. This healthy market performance came despite the Covid pandemic and wars in Israel and Ukraine—not to mention China’s menacing military activity around Taiwan.
(snip)
Several signs suggest stocks will rise 10% or better between now and the next inauguration in January 2025. Corporate earnings and public confidence are two of the most important market movers. Right now, there are positive signals for both. Corporate earnings are expected to rise 12.2% this year, according to FactSet, while the latest survey from the University of Michigan showed consumer confidence in the U.S. economy has jumped 29% since November, the biggest two-month surge since 1991.
(snip)
Interest rates, too, are a reason for optimism about stocks and the economy. For 15 years, the Federal Reserve had to keep interest rates artificially low to help America recover from the 2007-08 recession. Before rates rose back to normal levels, the Covid pandemic came, knocking the world into a short, deep recession. That depressed the yield on 10-year Treasurys to a frightening low of 0.52% in 2020.
Since then, the Fed has carefully inched interest rates up to more normal levels. The yield on 10-year Treasurys briefly hit 5% late last year. By last week, it had settled back to a reasonable 4.15%. Expect rates to decline a bit further. While many bemoan the rate rise, it may be the Fed’s most significant accomplishment over the past decade. It has reduced inflation and steadied the economy. The hardest part of increasing interest rates is to do it and without triggering a recession. Kudos to Fed Chairman Jerome Powell, who has enjoyed unwavering support from Mr. Biden, for accomplishing this.
More..
https://archive.is/ko52C
By Mr. Finn, a consultant to media companies, was editor and president of Barron’s, 1998-2017.
= new reply since forum marked as read
Should have included it..
