No One has a real Clue, Not even the Donald…

This morning the market hypers seem to want the message to be that Trump will quickly start modifying his Liberation Story for the stock market. Musk’s big defeat in Wisconsin has supposedly sobered the MAGA Crowd.

Coming in to today and over the past couple of weeks the MAGA crowd and their two self-anointed gurus, David Hunter and Tom Lee on X have been posing a soft story. They both see stock prices melting up from here soon as they look out to tax cuts and de-regulation. I was in that camp back on January 7 when I forecast 7200 on the S&P this year. For reasons that we will discuss here I will need some real convincing to see that outcome as now the alternative scenario of a decline to the 4400 S&P level is real.

We will just have to watch the signals closely as both Up and Down scenarios are possible in this Chaotic environment.

The big factor is that Trump has lost the “Animal Spirits” piece of the stock market. In our post back on February 23, 2025 we labeled it the Market Multiplier and showed a study going back to 2004. We have since programmed in an algo that calculates this multiplier “Animal Spirits” every second. Here is the monthly version of that chart. In a coming post we will discuss this more in depth, but the point for today is that “Animal Spirits” are under pressure and other factors like earnings and sales don’t seem too good either. Today it is at 2.54, down from 2.94 in December. You can see from the chart that the prior cycle saw a peak in March 2021 with a decline into June of 2022.

Dynamic Stock Market Monetary based Multiplier (animal spirits)

In our past forecasts we have mentioned the Market Multiplier as we define and use it.

The algorithm compares market prices on a combined basis of indexed S&P, Nasdaq 100, and Russell markets and compares them to underlying market based monetary fundamentals, calculated into a formula, i.e., 1) the Dollar; 2) the 2 year interest rate; 3) the 30-05 year yield curve; 4) oil prices; 5) gold price. Earnings are left out of this calculation as we are attempting to compare the stock market to base factors.