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[[image:TrumpAndTheDow_BakerInsititute.png|frameless|300px|right]] Some recent articles suggest that a Donald Trump presidency would be [https://www.washingtonpost.com/opinions/trumps-economic-plan-goes-from-worse-to-bad/2016/09/20/4d0808f2-7e94-11e6-9070-5c4905bf40dc_story.html?utm_term=.895296c06e89 bad for the U.S. economy], or at least [http://money.cnn.com/2016/09/26/investing/donald-trump-first-debate/ bad for investors in the markets]. One way to address whether this is true is to examine the relationship between Mr. Trump’s poll numbers and the market.
Trump and the Dow (Blog Post) (view source)
Revision as of 14:33, 29 October 2016
, 14:33, 29 October 2016→The Article
==The Article==
We took Donald Trump’s daily poll numbers from the [http://www.realclearpolitics.com/epolls/latest_polls/ Real Clear Politics National Average Poll data] and the close-of-day price for the [https://finance.yahoo.com/quote/%5EDJI?ltr=1 Dow Jones Industrial Average] from the 19<sup>th</sup> of July, 2016– the date that Mr. Trump officially became the Republican party nominee – to the 5<sup>th</sup> of October, 2016. We then estimated the relationship between them using Ordinary Least Squares.
At the time of writing, the Dow is at 18,281.03. A 65 point decrease is therefore just over a 1/3<sup>rd</sup> of a percent drop in the Dow.
[[image:TrumpAndTheDow_BakerInsititute.png|frameless|500px|right]]Donald Trump is currently polling at 43.8%, versus Hillary Clinton at 48.3%. If Mr. Trump were to poll at 50%, then these numbers suggest that the Dow would have a very bad day, losing more than 2.2% of its value and falling back below 17,900. Likewise, if Mr. Trump were to drop 6% in the polls, these numbers suggest that the Dow might surge to a new record high.
<h3>Statistical significance and explanatory power</h3>
The correlation between Donald Trump’s poll numbers and the performance of the Dow is highly statistically significant. The odds of finding this correlation by chance are less than one in ten thousand.
