Economy & Business

If Trump Wins, Buy the Dip. If Hillary Wins, Sell the Rally.

On the floor of the U.S. Stock Exchange, November 7, 2016 (Reuters photo: Brendan McDermid)
Clinton’s economy would be the real unsafe choice.

The wisdom on Wall Street is that Hillary Clinton is the safe choice. She’s the certainty candidate to Trump’s uncertainty. So when Jim Comey announced the reopening of the FBI’s Clinton investigation, stocks fell for nine days. And after he pulled back over the weekend, stocks rallied for over 300 points.

Is the market correct in viewing Hillary as the safe and certain choice? I don’t believe so.

I’m not going to predict tonight’s outcome, though I think it will be close. But I offer this advice: If Trump wins and stocks fall, buy the Trump dip. And if Hillary wins and stock rise, sell the Hillary rally.  

By the way, Strategas investment ace Dan Clifton points out that when stocks fall in the months before a presidential election, it usually means the incumbent will lose. And Hillary is the incumbent — Obama 3.0. Investment pundits beware.

But the idea that Clinton is the “safe hands” candidate is plain wrong. If she wins, investigations will swirl around the Clinton Foundation’s pay-for-play shenanigans. In this way, she has become the unsafe hand — the “high-risk candidate,” as Wall Street Journal columnist Holman Jenkins puts it.

But what makes her especially unsafe is her economic policies, which will damage growth, productivity, investment, wages, and jobs.

Clinton proposes across-the-board tax hikes on corporations, successful earners, health care, capital gains, and financial transactions. She would tax and spend her way to a nationalized, single-payer health system — a sure failure. She would end fossil fuels altogether. And rather than let market forces dictate America’s energy portfolio, she’d return to Solyndra-like energy subsidies.

That is not safe for the economy or stocks.

Essentially, her vision is to withdraw resources from the private free-enterprise economy — robbing business and workers of crucial incentives to perform — and use these resources for another vast expansion of government power. She envisions a larger regulator state, even after the massive Obama regulations clogged the wheels of commerce.  

What’s more, she has been a weak candidate. She had trouble putting away Bernie Sanders and is now in the fight of her life against Trump. Translation: Elizabeth Warren and Bernie Sanders are the new ideological architects of a far-left Democratic party that has completely written out of its history the great JFK tax reforms that spurred a massive boom in the 1960s.

Now, Donald Trump is a highly imperfect candidate. We all know that. But, and this is a big but, warts and all, Trump is an outsider who would work hard to drain the Washington, D.C., swamp of corruption, crony capitalism, and corporate welfare. And only an outsider stands a chance of fixing this mess.

What’s more, Trump is the growth candidate. His across-the-board tax-rate reductions for individuals and businesses will boost the economy. His tax cuts for large and small businesses will re-incentivize startups and investment, from which productivity and real wages spring.

We have had a dismal 16 years of below 2 percent growth, virtually no real wage hikes, and stagnant family incomes — or what Reagan called take-home pay. Trump’s economic plan will do for families what Democrats and Republicans have been unable to do in the past decade and a half.

In addition, Trump’s repatriation incentives will bring home trillions of dollars. And his policies for low tax rates and immediate expensing of new investment will keep American businesses at home and win the race for global capital.

#related#Tax reform likely will be the first policy action in a Trump administration. A close second will be a thorough repeal and rewrite of Obamacare, restoring a freer market with true consumer choice and competition among providers.

Trump also will roll back the massive Obama regulatory overkill. He will take all the handcuffs off U.S. energy production, push for school choice, protect the southern border, and send criminal illegal immigrants back home for good.

The biggest flaw in the Trump economic plan is the tilt toward protectionism. I have parted company with him on this. The question here is whether his campaign bark will turn out to be bigger than his government-policy bite.

Enforcing trade deals is spot on. Acting in the interest of American workers is correct. But large-scale tariffs are a terrible idea. My hunch is that Trump will promote better trade deals while minimizing tariffs. Ronald Reagan, Bill Clinton, George W. Bush, and Barack Obama all used temporarily targeted tariffs on specific industries. Hopefully Trump will go no further than that.

And as Trump has occasionally said, there are great benefits to trade. Let’s hope he holds that thought.

I believe Trump has a prosperity plan. I believe Clinton has a recession plan. And you need an outsider to shake up Washington, D.C.

On Monday I cast an absentee ballot for Donald Trump.

Larry Kudlow is the author of JFK and the Reagan Revolution: A Secret History of American Prosperity, written with Brian Domitrovic.

Most Popular

White House

The Democrats’ Burisma Bait and Switch

Imagine you get indicted in a swindle. The prosecutors represent that they can prove you and your alleged co-conspirators planned to fleece a major financial institution. You counter that you weren’t fleecing anyone. Sure, you were asking for millions in loans, but the collateral you were prepared to post was ... Read More
White House

The Democrats’ Burisma Bait and Switch

Imagine you get indicted in a swindle. The prosecutors represent that they can prove you and your alleged co-conspirators planned to fleece a major financial institution. You counter that you weren’t fleecing anyone. Sure, you were asking for millions in loans, but the collateral you were prepared to post was ... Read More

A Nation of Barbers

It seems almost inevitable that long hair is unwelcome at Barbers Hill High School. There’s a touch of aptronymic poetry in Texas public-school dress-code disputes. When I was in school in the 1980s, at the height of the Satanism panic, the local school-district superintendent circulated a list of ... Read More

A Nation of Barbers

It seems almost inevitable that long hair is unwelcome at Barbers Hill High School. There’s a touch of aptronymic poetry in Texas public-school dress-code disputes. When I was in school in the 1980s, at the height of the Satanism panic, the local school-district superintendent circulated a list of ... Read More
Politics & Policy

15 Flaws in Adam Schiff’s Case

Adam Schiff did most of the heavy lifting for the House managers, and if he performed ably, he also relied on arguments and tropes that don’t withstand scrutiny. The Democratic case for impeachment and removal is now heavily encrusted with clichés, widely accepted by the media, meant to give their ... Read More
Politics & Policy

15 Flaws in Adam Schiff’s Case

Adam Schiff did most of the heavy lifting for the House managers, and if he performed ably, he also relied on arguments and tropes that don’t withstand scrutiny. The Democratic case for impeachment and removal is now heavily encrusted with clichés, widely accepted by the media, meant to give their ... Read More

When There Is No Normal

One of the ancient and modern critiques of democracy is that radicals destroy norms for short-term political gain, norms that they themselves often later seek as refuge. Schadenfreude, irony, paradox, and karma are various descriptions of what happens to revolutionaries, and unfortunately the innocent, who ... Read More

When There Is No Normal

One of the ancient and modern critiques of democracy is that radicals destroy norms for short-term political gain, norms that they themselves often later seek as refuge. Schadenfreude, irony, paradox, and karma are various descriptions of what happens to revolutionaries, and unfortunately the innocent, who ... Read More