Stock Performance The last time a president ran for reelection was in 1968
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Lyndon B. Johnson and Joe Biden’s exit story
The highs and the lows of the stock market
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How stocks performed the last time a president ran for reelection - 1968

It is uncertain how the U.S. stock market will respond to President Biden's decision to withdraw from the 2024 presidential election. There is historical precedent in former President Lyndon B. Johnson's withdrawal from the 1968 election, but the differences between then and now make it difficult to draw direct parallels.
Initially, the historical parallel seems positive for stocks. When LBJ retired from the race on March 31, 1968, the S&P 500 closed the next day up 2.5%. Furthermore, Johnson's withdrawal coincided with a low point in the U.S. market in 1968, and by the end of the year, the S&P 500 had risen by 15.1%.
The expected event will likely already be factored into stock prices. However, there are significant differences between 1968 and the present, making it unlikely for the market to react in the same manner as it did back then.
Unlike the current situation, LBJ's withdrawal was a major surprise, according to historian Max Holland. Before Biden's announcement, there were already open discussions about his potential withdrawal, making it less of a surprise. According to Holland, widely anticipated events are generally already reflected in stock prices, reducing the market reaction. Thus, even if LBJ's announcement had a positive impact on the S&P 500, we can't assume that the current market will react similarly. It would also be unfair to attribute the market's positive reaction solely to LBJ's withdrawal, as there were other significant events at the time that impacted market sentiment.
Another notable difference relates to stock market sentiment. The sentiment index before LBJ's announcement indicated bullish sentiment, with only 10.3% of market timers being bullish. In contrast, current stock market sentiment is near historic highs, which could dampen the market's positive reaction to Biden's withdrawal.
In conclusion, while history often rhymes, there are not enough similarities between LBJ and Biden's situations for the market to draw direct comparisons.
Credit to Sources: Moomoo News, CBS news
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President Biden story, let's review what has happened in the past few weeks. 👇
Before today’s announcement
In the past few weeks, the American political landscape has seen major changes. President Biden has decided not to run for re-election in 2024, leading to unexpected events like a historic presidential debate and an assassination attempt. The 2024 election was previously expected to be mundane, with the same candidates from 2020. However, recent events have shifted the political atmosphere, making it more unpredictable. Biden proposed an early presidential debate in an attempt to revitalize his campaign, but it hasn't yielded the expected results.
At the time, Democrats complained that Biden's message wasn't getting through. Trump spent four days of the week in a Manhattan courtroom fighting criminal charges stemming from a 2016 hush-money payment to an adult film star. On May 30, Trump was convicted of 34 felony counts, becoming the first president ever to be criminally convicted. However, Trump's numerous legal disputes, once expected to dominate the campaign, didn't have enough impact to register in the polls as he continued to lead Biden by a slim margin. Cynical voters tried to dismiss such historic developments as part of the scandalous noise that continues to follow Trump.
The campaign took a sudden downturn during the June 27 debate. Democrats were surprised at Biden's lack of stability, relevance, and his inability to present a strong case against his rivals. Many party officials started openly discussing what had been considered taboo before. As more troubling reports surfaced about Biden's declining performance behind the scenes, they began openly questioning whether it was time to abandon the incumbent.
At the very least, Biden needed to demonstrate that the debate was a rare occurrence. He could have quickly scheduled numerous meetings, appearances, and interviews to prove himself. Instead, he adhered to his previous schedule, largely disappeared from public view, and took days to make individual calls to reassure top lawmakers. When he did accept one of the few television interviews, such as a 20-minute one with ABC's George Stephanopoulos more than a week after the debate, he did not inspire confidence. His poll numbers were starting to suffer.
On July 1, the Supreme Court made a historic decision to clear the president of several criminal charges. This has raised doubts about the possibility of prosecuting Trump. Trump had previously indicated that he would defy established legal and political standards during his second term. Democrats are concerned that he might become unrestrained and unanswerable. Many view the November election as crucial for the future of a nation governed by the principles of the rule of law.
With so much going on, Biden's inability to make his case against Trump has sparked a deep crisis within the party. The president has accused key voters of being "elites" who will convince him to reconsider even as he is singled out by his own party. Seeing that their private pleas have been ineffective, lawmakers have begun to publicly call for attention.
"It's not a political issue," Sen. Michael Bennet of Colorado said on July 9. "It's a moral issue for the future of the country."
With the national focus on Biden's predicament, more than 20 million people watched live on television as the president held a rare news conference on July 11 at the conclusion of the North Atlantic Treaty Organization summit in Washington. While the president was more accurate than he was in the debates, he soon made a mistake by mistaking Vice President Kamala Harris for "Vice President Trump" and Ukrainian President Zelensky for "President Putin." Many Democrats quickly came to the inescapable conclusion that his nomination was impossible unless the president acknowledged that fact. They simply felt he could not redeem himself.
Meanwhile, Trump was gaining momentum, teasing out who his running mate would be in the run-up to the Republican convention, and many thought he was leaning toward Senator J.D. Vance (R-Ohio) when he was scheduled to hold a rally in Butler on the Ohio-Pennsylvania border on Saturday night, July 13. But at approximately 6:12 ET, tragedy struck: a gunman with a high-powered rifle opened fire on the former president, miraculously grazing his head and piercing his ear, killing one rally-goer and severely wounding two others.
The nation was deeply affected by this crisis. This impactful moment brought seriousness and elegance to the Milwaukee convention, which is known for establishing the modern GOP. On July 15, just last Monday, Trump nominated Senator J.D. Vance, a key figure among the new generation of Magna Movement politicians. This shows that he is not aligned with the Republican Party of George W. Bush, Mitt Romney, or Mike Pence. It also indicates that he is committed to his chosen leader and will not compromise in politics. On the same day, a Florida judge dismissed criminal charges against Trump related to his handling of classified documents. This was once considered a major event, but now seems more like a minor incident.
As an idling, crisis-ridden GOP celebrated the new ticket in Milwaukee, Biden fell ill with COVID-19 and retreated to his Delaware beach house to recuperate. But the pressure to withdraw from him did not abate, and in a show of Republican unity and enthusiasm, Democrats were driven by fears that Biden was up against a wall and needed to be rewritten. After the convention ended, the stream of lawmakers calling for the president to withdraw grew; 12 of them did so in a week alone, signaling that they would be publicly humiliated if the president did not push back. Campaign and White House officials insist the president was determined to continue, but the patience of even his closest associates was wearing thin. On Sunday afternoon, Biden finally publicly acknowledged what was obvious -- a signal that even his closest allies, in many cases, were prepared to be publicly humiliated if he refused.
All this political shift is set against the backdrop of a nation and world in turmoil. Wars that US interests fight for continue in the Middle East and Europe, and Americans are deeply unhappy about the economy, our borders, and the future of our democracy. While all this is unfolding, we're experiencing heat waves and hurricanes, major software outages, and the discovery of the first cave on the moon.
Since Trump won the 2016 GOP nomination and ran against Hillary Clinton in that year's election, there has been a series of unpredictable political events. His tumultuous presidency, the COVID pandemic, the 2020 protests, and the storming of the Capitol on Jan. 6, 2021, along with the overturning of 50 years of abortion rights have left many feeling like the country has descended into chaos with no one to guide it to safety.
After Biden's withdrawal, people are wondering if this is just another twist in the roller coaster ride or a welcome break from it. The Lincoln Institute of Democracy, an anti-Trump organization, recently asked a group of swing voters in Arizona, Michigan, Wisconsin, and Pennsylvania how they would feel if Biden pulled out. Among the 311 participants, the most common emotion was "relief," followed by "pleased" and "disappointed." As Democrats edge closer to endorsing Vice President Harris, many are hoping for a fresh start and a new way forward. (Republicans argue that her short-lived 2020 campaign shows she is unfit to campaign.)
In the past century, there have been two instances when a sitting president chose not to seek reelection: Truman and Lyndon Johnson in 1968. Unlike Biden, both faced challenges from within their own parties. Historian Timothy Naftali notes that both Truman and Johnson were able to retire on their own terms, but in both cases, their parties ended up losing in November.
Naftali believes that Biden's legacy will depend on the outcome of the November election, and a lot may depend on whether he can take over the nomination process in an orderly way that calms voter anxiety. "If they can do it without chaos, they will be able to break the cycle," he said. "Biden's 2020 mandate was to bring stability back to the country, shore up our institutions, restore Americans' faith in their government, and regain the confidence of the United States in its allies. He achieved that, but if Donald Trump returns to the White House again in 2025, all Biden did was postpone chaos."
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Let’s delve deeper into the current state of the stock market and the drama surrounding the US election. 👇
The stock market is in free fall.
The market's "Magnificent Seven" group of technology stocks has recently stumbled, while the market's laggards have shown signs of improvement. Investors are paying even closer attention to company performance, trying to anticipate future developments.
According to Dow Jones Market Data, the Russell 2000 index of small-cap stocks outperformed the S&P 500 by the largest margin over the past seven days since 1986. Additionally, the Russell 1000 Value index posted its largest victory margin over growth stocks since the dot-com bubble burst.
Many investors were taken by surprise by this shift and are trying to understand its causes. Some have speculated whether it's due to changing expectations of a Federal Reserve rate cut, hopes of Donald Trump returning to the White House, or a change in the technology trade landscape.
President Biden's recent announcement that he won't seek reelection has added to the uncertainty and refocused the markets' attention on the upcoming presidential election. Now, investors are trying to determine whether the current trend of winners and losers is a temporary occurrence in the tech era or signals a more long-lasting shift.
The small-cap index rose 1.7% last week, extending its gains to 7.8% in 2024, while the S&P 500 fell 2%, narrowing its gains to 15%.
The Federal Reserve has been raising interest rates to combat inflation, leading investors to favor large corporations, believing they can withstand economic uncertainty. Some of these companies are also well-positioned to capitalize on advances in artificial intelligence.
Meanwhile, shares of small, cyclical companies are more susceptible to high finance costs, and traders are skeptical about the potential impact of central bank interest rate hikes on the economy, fearing a possible recession.
The markets seemed unstoppable until a surprising inflation report on July 11th changed the outlook. Investors had long expected the Federal Reserve to start cutting interest rates, and the data made it almost certain that those cuts would begin in September. Investors who believed in an imminent shift towards lower interest rates rushed to move the stock market back into less risky parts of the market.
Rahil Siddiqui, senior investment strategist at Neuberger Berman, mentioned, "Who benefits from the rate cut? The answer is those who suffered the most from the rate hike, basically the weaker players."
As the Federal Reserve commenced its interest rate hike campaign in March 2022, the yield on the benchmark 10-year U.S. Treasury note was around 2.2%. In the months that followed, the Fed continued to raise rates, and yields rose, exceeding 5% in October 2023 for the first time in 16 years. As investors began to anticipate rate cuts, yields fell, but then rose in 2024 as inflation persisted stubbornly. In anticipation of a stock market rally due to lower interest rates, investors shifted away from technology winners to parts of the market where they expected the economy to rise and borrowing rates to fall.
An additional factor at play in the market is the expectation of Trump returning to the White House after the November election, potentially leading to tax reform and deregulation.
For the shift in market leadership to continue, it's widely believed that individual company results and forecasts will need to align with the view that small, cyclical businesses are poised to thrive.
This week, investors will be focusing on quarterly reports from approximately 300 companies, along with the Russell 2000, a small-cap group that includes tech giants like Google parent Alphabet Inc. and electric-car maker Tesla Inc. Next week, we can expect reports from tech giants such as Microsoft Corp., Meta Platforms Inc., Apple Inc., and Amazon.com Inc., which will provide further insights into the performance of Big Tech.
Investor interest in these tech companies is not just due to excitement, as these companies hold significant market dominance and operate at a scale that offers them some protection from economic fluctuations.
According to Ryan Grabinski, an investment strategist at Strategas, seven companies including Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla saw their profits increase by 52% in January. This is in contrast to an 8.7% decline seen in the remaining 493 companies in the S&P 500 during the same period. Analysts expect these seven companies to post a 28% rise in profits in the second quarter, whereas profits from the rest of the S&P 500 are anticipated to fall by 1%.
On the other hand, small-cap companies in the Russell 2000 are on track to see second-quarter profits increase by almost 18%, reversing a trend of five straight quarters of year-over-year declines.
Sumari Sanyal, senior portfolio manager at Xponance, highlighted the importance of earnings growth in both small-cap and large tech companies in determining future trends.
It's worth noting that smaller companies are usually more susceptible to high interest rates compared to larger corporations. Goldman Sachs research earlier this year found that 30% of the Russell 2000's debt has floating interest rates, whereas only 6% of the S&P 500's debt does. Additionally, historically, unprofitable companies have made up the majority of the Russell 2000.
These factors, combined with the Federal Reserve's efforts to maintain high interest rates, have contributed to subdued investor enthusiasm for the Russell 2000, with the index only rising 1% in the first half of the year.
The increase in the stock prices of major corporations has provided some relief for the S&P 500. Year-to-date, chipmaker Nvidia alone contributed 30% of the S&P 500's total return of 15%, including dividends, according to S&P Dow Jones Indices. If we include Microsoft, Amazon, Meta Platforms, Alphabet, and Apple, these companies account for more than 50% of the index.
However, the reliance on a handful of stocks to drive the S&P 500 has raised investors' concerns about this trend's sustainability.
That's really dangerous and it's good to see the spread," said Nancy Curtin, chief investment officer at AlTi Tiedemann Global. "That's what's going to create a healthier market, a more stable market, and really build a bull market.
That’s it for this episode!
Watch out for the stocks relevant to Kamala Harris's goal of becoming the first female PUTOS coming out soon!
Remember: Investing is a journey, not a destination. It's about making informed decisions, managing risk, and staying committed to your long-term goals. So, take the time to research, experiment, and find the perfect recipe for your balanced portfolio.
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Cheers to wealth, wisdom, and a dash of madness!
The Investing Wise Academy Team
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