'The stock market can predict the next U.S. president,' says CNN

'The stock market can predict the next U.S. president,' says CNN. August. 02, 2016 06:45. by 뉴욕=부형권특파원 bookum90@donga.com.

“Keep an eye on the stock market from August 1 through October 31…If stocks go up during that three-month stretch, expect Clinton to win. If stocks slide, Trump will likely prevail,” CNN Money said on Sunday quoting Sam Stovall, a stock market expert at S&P Global Market Intelligence.

Stovall looked at the S&P 500 index between July 31 to October 31, for every presidential election year from 1944 to 2012. “If stocks rose in price from July 31 to October 31, the party that currently controlled the White House won the election 82% of the time. Similarly, if stocks fell, voters opted to kick out the party in power and replace it 86% of the time,” he said. CNN Money reported, “If the economy is growing and people think the good times will continue, they are likely to want to stick with the same presidential party, while voters want new leadership if they are fearful and stocks tend to fall.”

There were only three times when such a prediction didn't work -- when England and France triggered the Suez Crisis in 1956 after Egypt nationalized the Suez Canal; when a strong third party candidate was a competitor in 1968 and 1980.