I found this trading commentary wise for the timing of the “Trump Coronavirus Market Nightmare” and wanted to share this in our Bull & Bear Blog:
In this analysis, I’ll be shedding light using experience:
- How President Trump’s Covid-19 Positive news may impact the market
- Similarities and differences in historic cases
- Why Trump possibly announced his testing positive so quickly
Trump’s Testing Positive
- Trump testing positive for Covid-19, 4 weeks before the presidential elections, is not good news
- Especially considering that the current market is momentum-driven, such bad news is good enough to scare new investors from pouring money into the market
- We can see a similar case where the president’s medical condition negatively impacted the market
- President Eisenhower suffered a heart attack on September 25, 1955.
- Before this incident, the stock market was at an unprecedented rally
- Immediately after the news was released that he was hospitalized, the market fell by 6%, leading to $14 billion instantly vanishing
- Eisenhower recovered, and it was later announced that his condition was not serious
- Eventually, the market bounced and continued to rally upwards
- President Trump also announced his testing positive for Covid-19 a few hours ago
- Just as Eisenhower’s case, the stock market is in an uptrend, with significant momentum
- The market is correcting, due to bad news, but not as significant as that of the past
- Just as Eisenhower, considering the fact that Trump will be taken care of seriously, it’s most likely that he will recover from the virus
- As such, it’s reasonable to expect that the market will continue to rally upwards
- However, it’s also important to consider those market situations are not the same as the past
For a more in-depth explanation on what makes today’s market special, check out my previous analysis below:
Why did Trump announce his condition?
- This is an important question to ask, as Trump announced his testing positive for COVID via twitter
- Trump is arguably the most powerful person in the world. He could have concealed his condition if he really wanted to, and later justify it as “classified information”
- What could have been Trump’s intentions behind this?
- In the case of the Prime Minister of the UK, Boris Johnson, his support rate was at 48% prior to him testing positive
- After he got the virus, there was a sentiment of sympathy among the general public, leading to his support rate skyrocketing to 72%, an all-time high support rate ever since Tony Blair
- Given this case and the fact that the presidential elections will be held in 4 weeks, Trump could have been targeting this sympathetic sentiment among the general public
- It’s also highly likely that Trump recovers quickly, with the best medical staff from the country treating him
- As such, he will be qualified to talk about the issue (as someone who has caught the virus) and suggest that he’s the only one capable of solving the problem.
As past cases demonstrate, problems regarding the President’s medical condition is never good for the market. However, given that the president recovers quickly, this could end up being a massive ‘buy the dip’ opportunity.