Trump Touts Markets as Vote of Confidence, But They Think He'll Lose 2020 Election

President Donald Trump has long touted the stock market's bullish success as being connected with his leadership.

In a recent White House release he took credit for the "fastest economic recovery in U.S. history."

And it's true that major indexes have been on a tear. The S&P 500 has gained 20.5 percent over the past year, shrugging off the economic bind elsewhere that the pandemic has left many businesses and people in trouble.

The Nasdaq has also surged by 43.6 percent, buoyed by the continued successes of large tech stocks, as people increasingly went digital during lockdowns.

"We had such a strong foundation that we're recovering much faster than anybody anticipated," President Trump said of the economy at a recent news conference.

But despite bullish markets, many investors and strategists would not bet on a Trump victory come November.

When he was elected, Trump's victory coincided with a surging stock market. It looks like the investor sentiment may mirror that if he is defeated.

In a poll conducted by CNBC, 14 of 20 strategists surveyed predicted a Joe Biden victory over Donald Trump. Ten of the 20 polled, not all of who are predicting a Biden win, expected the S&P 500 to waver in the month following the election.

A quarter of those polled predicted a rally post-election day, while a fifth thought it would be a range-bound market—stuck between certain highs and certain lows.

Two of the strategists polled forecast a 10% decline for the S&P 500 after the election—one of them picked Biden, the other Trump.

CNBC offered those polled anonymity in exchange for their views.

One explanation for markets anticipating a Trump loss could be that, while some sectors have rallied, there have been large stock drops in industries where Trump tends to poll well.

Steel, oil & gas, aluminum and coal were all recently trading below levels seen at the time when Trump was elected. This has meant key areas where he relies on investor confidence have eluded the broader rally.

There is also the question of history. Investors could be reading the tea leaves, looking to recent election trends when it comes to this.

"Since 1932, an incumbent US president has never failed to win re-election unless a recession has occurred during their time in office," said Maria Paola Toschi, executive director at JP Morgan in a recent note.

For other investors, the fear seems to hinge on not the fact that either Trump or Biden will win, but the result could be contested.

Protracted uncertainty from both an unclear election and how the coronavirus recovery may pan out will foster volatility.

And in a world where so much as a tweet or off-hand comment can roil markets, whether they back Trump or Biden, investors are in for a rocky ride.

Donald trump
U.S. President Donald Trump speaks at Flavor 1st Growers & Packers on August 24, 2020 in Mills River, North Carolina. Trump toured the facility to highlight the Farmers to Families Food Box program. Brian Blanco/Getty Images