Note that I didn’t even bother to include the ridiculous three years leading up to the top of the dot-com bubble. The best period to invest started with the bottom of the market in 2009 after the crisis, but amazingly the latter Obama years had another rally that was slightly better than the rally of the last three years.

I wouldn’t say that the returns under Trump have transcended anything I thought possible, but I will happily admit that they have been much stronger than I thought likely, for the good reason that he started his term with stocks already expensive (Clinton and Obama both inherited a cheap stock market). As the stock market is already expensive, its continued gains are undeniably impressive. But the longer Trump stays in office, the greater the risk is that he will see markets revert back toward a valuation mean, as they did very violently near the beginning and again near the end of the presidency of George W. Bush.

For now, the president is buoyed by luck, by an economy that has stayed on its positive track, by very positive sentiment, and by opponents who are hopeless. And then of course, there is the macabre effect of the coronavirus, which is fueling an American comeback. 

Coronavirus: The Impact So Far

U.S. markets enjoyed a great day Tuesday, trading almost on the assumption that China’s virus epidemic can be contained without breaking out in the developed world. A month ago, reflation appeared to be under way, with emerging market currencies, and commodities, recovering after a long period in the doldrums. That has abruptly reversed:

Can we attribute this to the coronavirus? Probably. We don’t have much economic data yet, but the following charts, produced by Capital Economics Ltd. of London, show that average road congestion and passenger transport volumes in China are down massively this year compared to previous lunar new year holidays. A significant impact on the Chinese economy, and hence on the halo of emerging markets and commodities surrounding it, is a certainty—although the extent of that impact is still unknown. 

What has been the impact on markets? As the following chart produced by Torsten Slok of Deutsche Bank AG shows clearly, there have been serious falls for almost anything connected to the emerging world and reflation, along with a pickup in gold and a rise in volatility—and a rally in the S&P 500. At this point, the U.S. is seen as a sanctuary: