Stock Market Indicators: S&P 500 Presidential Cycles Yardeni Research, Inc.

January 5, 2017

Dr. Edward Yardeni 516-972-7683 [email protected]

Joe Abbott 732-497-5306 [email protected]

Please visit our sites at www.yardeni.com blog.yardeni.com

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Table Of Contents

Table Of Contents

Stocks & Politics First & Second Terms Presidential Cycles S&P 500 Index & P/E Misc.

January 5, 2017 / Stock Market Indicators: S&P 500 Presidential Cycles

1 2 3-4 5 6

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Stocks & Politics Figure 1. 3004 2504 2004 1504

FDR Truman

EisenhowerKennedy Johnson

Nixon Carter Ford

Reagan Bush I

Clinton

Bush II

Obama

3004 2504 2004 1504

Dec

1004

1004

S&P 500 INDEX* & PRESIDENTS BLUE DEMOCRATS vs. RED REPUBLICANS (ratio scale)

504

504

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285.6

118.7

78.7

3.5

26.3

220.9

203.0

-31.6

140.3

4

4

25

20

20

20

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* End-of-month daily data through 8/31/2016. Note: Blue (red) shades represents Democrats (Republicans) in White House. Data above timeline are percentage changes in S&P 500 for each shade. Source: Standard & Poor’s Corporation.

Figure 2. 2405 2005 1605 1205

2405 2005 1605 1205

Dec

S&P 500 INDEX* & MAJORITY CONGRESSIONAL PARTIES IN BOTH HOUSES BLUE DEMOCRATS vs. RED REPUBLICANS (ratio scale)

805

805

405

405

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15.2 -0.7 74.8 35.4

277.3

78.4

89.6

187.5 -33.4 61.2 -11.3 63.7 5.4

5

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* End-of-month daily data through 8/31/2016. Note: Shaded areas represent periods where one party holds both Houses regardless of who was in the White House. Blue shade represents Democrats. Red shade represents Republicans. Data above timeline are percentage changes for each shade. Source: Standard & Poor’s.

Page 1 / January 5, 2017 / Stock Market Indicators: S&P 500 Presidential Cycles

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First & Second Terms Figure 3. 3004 2504 2004 1504

Roosevelt

Eisenhower Truman

Kennedy Nixon Johnson Ford

Carter Reagan

Bush I Clinton

Bush II

Obama

3004 2504 2004 1504

Dec

1004

1004

S&P 500 INDEX* & PRESIDENTIAL FIRST TERMS (ratio scale)

504

504

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149.3

4

74.8 75.6

45.8

13.7

26.3 23.2

56.9 70.0

-8.2

57.9

4

25

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* End-of-month daily data through 8/31/2016. Note: Shaded areas represent first term of each president. Blue shade represents Democrats. Red shade represents Republicans. Data above timeline are percentage changes for each shade. Source: Standard & Poor’s.

Figure 4. 3504 3004 2504 2004 1504

Roosevelt

Eisenhower

Nixon

Reagan

Clinton

Bush II

3504 3004 2504 2004 1504

Obama

Dec

1004

1004

S&P 500 INDEX* & PRESIDENTIAL SECOND TERMS (ratio scale)

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504

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-38.4

4

24.5

-9.0

66.1

78.2

-25.5

52.2

4

5

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* End-of-month daily data through 8/31/2016. Note: Shaded areas represent second term of each president. Blue shade represents Democrats. Red shade represents Republicans. Data above timeline are percentage changes for each shade. Source: Standard & Poor’s.

Page 2 / January 5, 2017 / Stock Market Indicators: S&P 500 Presidential Cycles

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Presidential Cycles Figure 5. 2503 2003 1503

2503 2003 1503

Dec

S&P 500 INDEX* & FIRST YEAR OF PRESIDENTIAL TERMS: 1928-now (average = 5.2%, ratio scale)

1003

1003

503

503

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-11.9 46.6 -38.6 -17.9 30.7 10.3 -6.6 -14.3 23.1 9.1 -11.4 -17.4 -11.5 -9.7 26.3 27.3 7.1 31.0 -13.0 3.0 23.5 29.6 3

3

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* End-of-month daily data through 12/31/2016. Note: Shaded areas are the first years of presidential terms. Data above timeline are percentage changes for the first year using daily price data. Source: Standard & Poor’s.

Figure 6. 2503 2003 1503

2503 2003 1503

Dec

S&P 500 INDEX* & SECOND YEAR OF PRESIDENTIAL TERMS: 1928-now (average = 4.8%, ratio scale)

1003

1003

503

503

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-28.5 -5.9 25.2 12.4 -11.9 21.8 45.0 38.1 -11.8 -13.1 -0.1 -29.7 1.1 14.8 14.6 -6.6 -1.5 26.7 -23.4 13.6 12.8 11.4 3

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* End-of-month daily data through 12/31/2016. Note: Shaded areas are the second years of presidential terms. Data above timeline are percentage changes for the second year using daily price data Source: Standard & Poor’s.

Page 3 / January 5, 2017 / Stock Market Indicators: S&P 500 Presidential Cycles

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Presidential Cycles Figure 7. 2503 2003 1503

2503 2003 1503

Dec

S&P 500 INDEX* & THIRD YEAR OF PRESIDENTIAL TERMS: 1928-now (average = 12.8%, ratio scale)

1003

1003

503

503

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-47.1 41.4 -5.5 19.4 0.0 16.5 26.4 8.5 18.9 20.1 10.8 31.6 12.3 17.3 2.0 26.3 34.1 19.5 26.4 3.5

0.0 -0.7

3

3

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* End-of-month daily data through 12/31/2016. Note: Shaded areas are the third years of presidential terms. Data above timeline are percentage changes for the third year using daily price data. Source: Standard & Poor’s.

Figure 8. 2503 2003 1503

2503 2003 1503

Dec

S&P 500 INDEX* & FOURTH YEAR OF PRESIDENTIAL TERMS: 1928-now (average = 5.7%, ratio scale)

1003

1003

503

503

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-15.1 27.9 -15.3 13.8 -0.7 11.8 2.6 -3.0 13.0 7.7 15.8 19.1 25.8 1.4 12.4 4.5 20.3 -10.1 9.0 -38.5 13.4 9.5 3

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* End-of-month daily data through 12/31/2016. Note: Shaded areas are the fourth years of presidential terms. Data above timeline are percentage changes for the fourth year using daily data. Source: Standard & Poor’s.

Page 4 / January 5, 2017 / Stock Market Indicators: S&P 500 Presidential Cycles

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S&P 500 Index & P/E Figure 9. 2450 2050

Kennedy Johnson (+69.6)

1650

Nixon Ford (+1.3)

Carter (+27.9)

Reagan Bush I (+229.7)

Clinton (+209.9)

Bush II (-40.0)

2450 2050

1/4

Obama (+140.3)

1650

1250

1250

850

850

S&P 500 INDEX* & PRESIDENTS’ PARTIES (ratio scale) 450

450

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* End-of-month daily data through August 31, 2016. Note: Shaded areas represent periods where one party holds the presidency. Blue shade represents Democrats. Red shade represents Republicans. Numbers in parenthesis show S&P 500 increase or decrease during each president. Source: Standard & Poor’s.

Figure 10. 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5

FORWARD P/E RATIO FOR S&P 500* Carter

Reagan

Bush I

Clinton

Bush II

Obama

Trump

Dec

Average = 13.8

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28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5

77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 * Average monthly S&P 500 stock price index divided by S&P 500 12-month forward consensus expected operating earnings per share. Source: Thomson Reuters I/B/E/S.

Page 5 / January 5, 2017 / Stock Market Indicators: S&P 500 Presidential Cycles

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Misc. Figure 11. 2503 2003 1503

2503 2003 1503

Dec

S&P 500 INDEX* & FIRST YEAR OF FIRST PRESIDENTIAL TERMS: 1928-now (average = 6.4%, ratio scale)

1003

1003

503

503

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-11.9 46.6

10.3 -6.6

23.1 9.1 -11.4

-11.5 -9.7

27.3 7.1

-13.0

23.5

3

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* End-of-month daily data through 12/31/2016. Note: Shaded areas are the first years of presidential terms. Data above timeline are percentage changes for the first year using daily price data. Source: Standard & Poor’s.

Page 6 / January 5, 2017 / Stock Market Indicators: S&P 500 Presidential Cycles

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