Trump Risks Reelection if Trade Tiff Messes Up the Market, Siegel Says

Donald Trump likes to point to the stock market’s and the US economy’s buoyant performances. But Jeremy Siegel, noted Wharton professor, warns that these two markers could take a dive—and pull down the president’s 2020 reelection prospects with them.

That’s why Trump needs to strike a deal ending the US-China trade war, Siegel told CNBC Wednesday.

“A year from now, we can’t be lower on the stock market than we are, and our economy has to be better,” Siegel said. “So it’s up to Trump to make a deal.”

Siegel ought to know. His famous investing book, “Stocks for the Long Run,” argues that equities on the whole advance over the decades, averaging 7% increases per year after inflation. An ardent bull, he of course acknowledges that there are times that things really don’t go well.

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Although the economy hasn’t loomed large as a political issue this early in the campaign season, that could change. Slumping economic and market numbers have been devilish for other incumbents seeking a second term. Just ask Jimmy Carter (losing in 1980) and George H.W. Bush (1992).

The S&P 500 is up 13.9% this year, and the economy grew 3.2% in the first quarter, which is an improvement on the 2% average in the pre-Trump years since the Great Recession.

Lately, however, the market is down as Trump has imposed new tariffs on China, inviting Beijing’s retaliatory levies, and talks between the two sides have broken off. One estimate has the S&P losing some $1.1 trillion since Trump imposed the new round of tariffs May 5.

“The market wants a solution,” Siegel said. “Don’t forget, the market didn’t really want this trade war to begin with. Let’s not rock a boat that’s going well.” Previously, he has forecasted that the US stock market could drop as much as 20% if the trade conflict continues.

Tags: China, Donald Trump, Jeremy Siegel, S&P 500, Tariffs, Trade War

Private pension funds are seeing a small decline in how long their beneficiaries live, according to new data from the Society of Actuaries.

Although the percentage change in plan member life expectancy was not significantly smaller, the numbers have gone down for both white- and blue-collar workers between 2006 and 2012, regardless of gender. The 2012 end point of the study reflects the data collection available to date.

From the total data aggregate, men live to be about age 84.7 years, compared to 85.0 in 2006, but women’s average lifespan was unchanged at 87.4. But for women, perhaps due to a statistical anomaly, there’s a fall-off when they are divided into blue- and white-collar workers. Life expectancies dipped a tiny bit for blue-collar women (86.9 versus 86.7) and more so for white-collar women (88.5 down to 87.9).

The slide among men showed much the same pattern, with less of a drop for blue-collar males (84.3 to 84.1) than for white-collar ones (86.7 to 85.9).

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Dale Hall, managing director of research at the Society of Actuaries, told CIO reasons for the mortality decline could be the type of businesses the pension plans cover, as well as issues affecting the total US population over the past decade.

“There’s a lot of new diseases, Alzheimer’s, the opioid epidemic effect, other things that are impacting the way mortality improvement has happened over time,” said Hall.

For CIOs and plan sponsors, their liabilities will also decrease slightly. Liabilities in blue-collar women and older men will shrink up to 1.5%, while liabilities for younger blue-collar men could see up to a 1.7% reduction.

Tags: Alzheimers, Dale Hall, mortality tables, Opioid Crisis, pension liabilities, Society of Actuaries