In the lead-up to the 2016 election, an array of economists, financial media, and academics were making rosy predictions of where financial markets would be headed after Hillary Clinton won, and correspondingly dire forecasts for the markets if “somehow Donald Trump shocked the world on Election Day.”

Typical was a CNN financial writer who gloomily wrote:

“If Donald Trump wins the election, U.S. stocks (and likely many other markets overseas) will almost certainly tank… A Trump victory would be ‘America’s Brexit’… it would shock U.S. and global markets… A Trump triumph would likely cause investors to flee stocks to the safety of gold and bonds.”

Another in Politico expressed the sentiment of the Democratic Party by saying that, “Wall Street is set up for a major crash if Donald Trump… wins the White House.”  In a Brookings Institution paper, university professors projected a “10-15% nosedive” and noted that “Wall Street clearly prefers a Clinton win certainly from the prospective of equity prices … Should Trump somehow manage to win you could see major Brexit-style selling.”

One Wall Street money manager went so far as to place a value on a Clinton victory, confidently asserting that “the stock market is worth 11 percent more under a Clinton presidency than a Trump presidency.”

On post-election Wednesday, Noble laureate Paul Krugman warned “the economic fallout of a Donald Trump presidency will probably be severe and widespread enough to plunge the world into recession.”

How did that all work out?

Stock market performance during the Trump administration’s first two years was the second-best first two years on record, trailing only that of Franklin D. Roosevelt.  As this past June ended, President Donald Trump celebrated the strongest second quarter stock market performance in more than the two decades.  When U.S. markets closed on Friday, June 29, the Dow Jones Industrial Average (DJIA) hit 26,599.  The S&P 500 reached 2,941, and the NASDAQ Composite Index eclipsed 8,000.  The S&P, the index many analysts hold as the best indicator of market strength, increased 3.8% from the previous quarter and 17% since the beginning of this year.  The former represents the largest increase since 1997.  Since then, the Dow Jones Industrial Average has surpassed the 27,000 mark for the first time in history.

Economic factors driving the markets back-up their strength.  Unemployment figures are historically low, dropping to 3.7 percent last September, a figure not seen since 1969.  Economists say there is no indication the labor market will weaken anytime soon.  Worker paychecks are also showing their biggest gains since the recovery began a decade ago, and are more than keeping up with inflation.  A tax cut was implemented, and the President is working to “level the playing field” in global trade to the benefit of American businesses and producers.  The current Federal Reserve’s “Beige Book” economic outlook for coming months is still “solidly positive” (albeit “modest”).

Conversely, as Democrats posture for 2020’s election, their emerging campaign slogan appears to be "Free, Free, Free," and is linked to ideas that include student loan forgiveness, “free college,” single-payer government-run health care, a mandated $15 minimum wage, and near-borderless immigration.  To pay for it all (because someone has to pay), Senator Ron Wyden (D, OR) proposes a confiscatory wealth tax.  Senator Sanders says he'll create a "Wall Street speculation tax," taxing stock, bond, and derivative trades, while conceding he would raise taxes on middle-class families to pay for universal health care under his administration.  As a lot, the 2020 Democratic presidential candidates endorse the repeal of the Trump tax cuts, some version of universal government-managed health care, as well as health care for undocumented immigrants.

In addition to increasing taxes, Democrats propose to bring back increased regulation of the business sector (like even more Dodd-Frank regulation on big banks), recommit to the Paris Climate Accords and its “voluntary” national actions, as well as impose some version of a “Green New Deal” that NPR characterized as a “massive policy package that would remake the U.S. economy and eliminate all U.S. carbon emissions.” House Speaker Nancy Pelosi was willing to hold the debt limit hostage to trillions in new spending – on social programs – in budget negotiations with the White House and risk America’s “full faith and credit” on its debt obligations.  (The recently announced budget agreement with the White House still leaves both parties with the national problem of runaway spending.)

Candidate Bill De Blasio may have captured the essence of the Democratic Party’s economic platform when he spoke not only for himself, but for his party too: "There is plenty of money in this world, and there's plenty of money in this country, it's just in the wrong hands.  Democrats have to fix that.”

Should Americans on Main Street be concerned with what happens to Wall Street due to an election?  In 2017, Gallup found that 54 percent of survey respondents owned stocks either directly or as part of a fund.  In mid-2017, an estimated 56.2 million households, or 44.5 percent of all U.S. households, owned mutual funds.  The current estimate of the number of individual investors owning mutual funds is 100.0 million.  In 2016, about 55 million American workers were active 401(k) participants, and there were nearly 555,000 401(k) plans.  As of March 31, 2019, 401(k) plans held an estimated $5.7 trillion in assets and represented more than 19 percent of the $29.1 trillion in U.S. retirement assets.  If participation, stock ownership, and the dollar amounts at stake are any indication, they should.  Even if one does not directly own stock, a stagnant or crippled economy “intersects” with all Americans.

Given the stark divide between the two parties’ approach to the U.S. economy, what direction do you suppose financial markets will head if any of the current Democrat candidates, given their expressed economic views and ideas, somehow wins in 2020?  Just how do you think global financial markets -- let alone Wall Street -- will react this time around?

For anyone sitting on the fence personally conflicted because of President Trump’s modus operandi, former Louisiana governor Bobby Jindal may have provided the most sage advice of anyone looking for the direction of the financial markets and the nation heading into the 2020 election.  In his recent Wall Street Journal op-ed, he opined: “Both parties have lost their heads, but radical left-wing policies are worse than intemperate tweets.”

Who will you and your fellow Americans vote for?  The choice will be glaring and distinct.  Vote wisely in 2020.

Chris J. Krisinger (Colonel, USAF Ret) served in policy advisory positions in both the Pentagon and the State Department.  He was a National Defense Fellow at Harvard University.  Contact him at: cjkrisinger@gmail.com