With a Nobel Prize in the subject, you’d expect The New York Times’ Paul Krugman to know his stuff when it comes to economics. (Though, of course, after Barack Obama received a Nobel Prize for the mere “hope” he’d do something meaningful, it definitely took some of the luster off the honor.) Unfortunately, Krugman’s extreme partisanship too often colors his rational thinking. For example, the man believes that the media was biased against Hillary, not Trump, for crying out loud.
One could walk through a number of predictions Krugman’s gotten dead wrong in the past, but his gaffes are the funniest when proven wrong immediately… like on election night.
While the stock market officially closes at 4PM EST, in the middle of the night as election returns rolled in, the futures market was alive and hectic. The Dow Jones Industrial Average was down an astounding 800 points when a Trump presidency started looking certain. It was a decline in the market from which we may never recover, predicted Krugman that night.
If by “never” Krugman meant within the next eight hours, he would’ve been right. By the time the markets opened, all the major indices recovered nearly all their overnight losses, and as we reported yesterday, the Dow Jones closed just a fraction of a percent off its all-time high.
Today, the Dow did officially set a new record. As CNBC reported: The Dow Jones industrial average hit a new all-time intraday of 18,873.6, and closed more than 200 points higher, with IBM and Goldman Sachs contributing the most gains to the tune of 34 points and 52 points, respectively.
The S&P 500 gyrated between gains and losses, closing about 0.2 percent higher, with financials rising 3.7 percent to lead advancers. Bank stocks rose, with the SPDR S&P Bank ETF (KBE) holding about 4 percent higher after hitting its highest level since September 2008.
Donald Trump’s victory over Democrat Hillary Clinton sent shock waves through global financial markets, with Dow futures falling more than 800 points as election results kept coming in. But Wednesday’s cash session saw a 1 percent rally, as investors and traders unwound several trades associated with a Clinton victory, particularly within the financials and health care sectors.
Who would’ve thought the people who got literally everything wrong about Donald Trump’s candidacy would also be wrong about the consequences of the thing they said would never happen?
[Note: This post was authored by Matt Palumbo. Follow him on Twitter @MattPalumbo12]