Don’t Worry About Trump; Worry About Earnings

Written by John Coumarianos | Aug, 29, 2018

If you’re concerned about President Trump’s influence on the stock market you’re concerned about the wrong thing. That’s not because political leaders – and their problems — don’t influence stock prices temporarily, but because if you own stocks you should own them for their long term earnings prospects (which is why retirees should have reduced stock exposure). Stocks are ownership units of business. And although the political climate influences the business climate, a stock’s price reflects anticipation of earnings far into the future, beyond any politician’s time in office. Procter and Gamble will be selling Tide laundry detergent and Crest toothpaste long after President Trump is out of office. And that doesn’t mean you should own Procter at its current price. It just means, barring any concerns with capitalism or the stability of the country in general, Procter’s current price relative to its earnings is what matters.

もしあなたが株式市場へのトランプ大統領の影響を懸念しているなら、懸念材料が間違っている。問題は政治リーダーではなくーー一時的に株式市場に影響するわけではなく、あなたの持ち株の長期的な収益見通しだ(だからこそ引退者立ちは株式露出を減らさねばならない)。株式はビジネスの一部分を所有することだ。そして政治環境が株式市場に影響はするが、株価は収益見込みを反映する、政権をだれが取っているかよりもだ。Procter and Gambleが売り込まれるのはトランプが大統領を止めてずいぶんと経ってからだろう。だからといって現在の株価でProcterを買うべきだと言っているわけではない。単に資本主義での懸念事項もしくは国の一般的安定性からして、Procterの収益に対する株価が問題なのだ。

President Trump has been in office for a year and a half, and stocks have shrugged off much of the turbulence that has accompanied his administration. There have been specific policies that seem friendly toward stocks such as the tax cut. But there have also been policies that have been unfriendly to them such as tariffs. No matter, the S&P 500 Index surged nearly 22% in 2017, and is up another 9% this year as of this writing. From taking his time to fill key posts, to feuding openly with his attorney general and the press, to an investigation into his campaign’s contacts with Russia and payments to women with whom he’s had extramarital liaisons, to often betraying a lack of understanding of constitutionalism, to an erratic foreign policy that simultaneously displays abrasiveness but also a diminished role for the United States in global affairs and questionable friendliness toward obvious U.S. enemies, markets have continued rising through it all.


The last week may represent a turning point, but it’s too soon to tell. Trump’s longtime attorney Michael Cohen pleaded guilty to violating campaign finance laws in buying the silence of a pornographic film actress and former Playboy model. In the process Cohen, who taped meetings with Trump when Trump was his client, implicated the president in conspiring with him to commit the crimes.

先週が転換点だったかもしれない、しかしそれを言うにはまだ早すぎる。トランプの長年の弁護士だったMichael Cohenが選挙期間中の違法な資金利用を認めた、ポルノ女優の口封じのために資金を利用したと。まだトランプがクライアントだったときのトランプとの会話を録音しており、トランプ自身が共謀していたことを打ち明けた。

Moreover, Trump’s former campaign chairman, Paul Manafort, pleaded guilty to 8 counts that included tax fraud and bank fraud. Although Manafort’s trial didn’t touch directly on the accusations that the Trump campaign colluded with Russia to exploit damaging information Russia had on Hilary Clinton, the income that Manafort didn’t report came from advising a pro-Russian political party in the Ukraine. Finally, the chief financial officer of the Trump Organization, Michael Weisselberg, and tabloid executive, David Pecker, were granted immunity by the Southern District of New York regarding its investigation into Cohen.

更にいうと、トランプの前選対部長、Paul Manafortが税金や銀行口座に関する8件の罪を認めた。Manafortの聴聞会ではトランプ選挙対策本部とロシアの共謀に直接触れなかったが、これまでManafortが報告していないロシア寄りのウクライナの政党からの収入が明らかになった。最後に、Trump Organaizationの主任財務担当者のMichael Wisselberg、かつタブロイド紙取締役のDavid PeckerがCohen捜査に関して司法取引を行った。

All of this may or may not lead to impeachment, but the threat looks greater now than ever before. The outpouring of emotion over the death of John McCain, with whom President Trump also openly feuded and mocked for being captured during the Vietnam War, may also push public opinion further against Trump and make impeachment more possible. Perhaps sensing his vulnerability from these recent events, Trump himself said in a recent interview that impeachment would cause the stock market to fall. “If I ever got impeached, I think the market would crash. I think everybody would be very poor. Because without this thinking (pointing to his head) you would see numbers you wouldn’t believe – in reverse.”

これらの出来事が弾劾まで辿り着くかどうかわからないが、しかし以前よりもその可能性は大きくなっている。John McCainの死に関して感情が高まり、トランプ大統領はベトナム戦争に関して大っぴらに馬鹿にされている(訳注:Johna McCainはベトナム戦争で捕虜になり拷問を受け、それでも戦友開放まで自らは捕虜のままでいると宣言し実際にそうした。一方トランプはカカトの怪我を理由に徴兵逃れをしている、軍歴はない。)これがさらに大衆の意見を反トランプにするかもしれないし弾劾の可能性を高めている。最近の出来事からたぶん自らの脆弱性を感じ取り、トランプ自身が最近のインタビューで弾劾になると株式市場が下落すると言っている。「もし私が弾劾されると、市場は暴落するだろう。皆が貧乏になってしまうだろう。私のこの頭脳がなければ、皆さんは信じられないかもしれないが、すべてが反転する。」

But will it? Alex Shepard notes in the New Republic that stocks fell in 1974 when President Nixon resigned from office, but recovered the next year. (The S&P 500 Index lost 26% in 1974 and gained 37% in 1975.) Also, the stock market rose after Bill Clinton was impeached in late 1998. (The S&P 500 Index was up nearly 29% in 1998 and another 21% in 2009.) But Shepard argues that Nixon left before impeachment and that Clinton sailed through his problems with consistently high approval ratings. Trump, by contrast, remains unpopular, and almost certainly wouldn’t leave without a fight. Therefore, Trump’s reaction to impeachment would probably be bad for markets, Shepard concludes.

しかしそうなるだろうか? Alex ShepardがNew Republicで記事を書いたが、ニクソン大統領が引退して1974年に株価は下落したがその翌年には回復した。そしてビル・クリントンが1998年に弾劾訴追されたときには株式市場は上昇した。(S&P500は1974年に26%下落し、1975年に37%上昇した)しかしShepardはこう述べる、ニクソンは弾劾決議前に辞任した、そしてクリントンは綱渡りを続けて弾劾決議を回避した。これと比べてトランプはどうだろう、彼も不人気だ、しかし戦わずして職を辞することはないだろう。しかるに、トランプの弾劾に対する反応は市場に悪い影響を及ぼすだろう、とShepardは結論付ける。

Interestingly, Trump’s recent poll numbers haven’t moved much. And markets continue to surge, uninterrupted by political concerns or anything else. That should tell investors how hard it is to forecast market moves based on the political climate. President Trump just suffered his worst week in office, and the market’s aren’t registering the problems he’s facing at all.


None of this is to say that the market can’t fall on increasing political problems. But the real problem investors face is valuation – stock prices relative to earnings. Stocks are trading at higher prices relative to past earnings than they have in all but two other moments in history – 1929 and 2000. Investors are anticipating significant future earnings per share growth to justify current prices. Often, political tumult can sink a market already vulnerable from high valuations. So far it hasn’t. But if you own stocks, that’s your real problem – how much prices are divorced from past earnings and are, therefore, anticipating unachievable future earnings growth.


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John Coumarianos is an Analyst for Clarity Financial, LLC, and is a contributing editor to the Real Investment Advice Website. He has been an analyst at Morningstar and a writer for MarketWatch and the Wall Street Journal. Follow John on Twitter.