Economy & Business

Wall Street’s Adventures with Trump

Traders at the New York Stock Exchange (Brendan McDermid/Reuters)
The markets seem to be hearing only what they want to hear from the president-elect.

The Dow Jones Industrial Average hit a record high this week, continuing the string of stock-market giddiness that has followed the election of Donald Trump. The S & P 500 also hit a record high. The NASDAQ is up. The Russell 2000, which, as MarketWatch put it, “is most sensitive to economic prospects for the country,” has shot up more than 12 percent. For its part, CNBC has celebrated these market highs by trotting out a terrifying graphic of a shadowy, sinister-looking bull with unearthly glowing green eyes that look like they could zap you into oblivion at any moment.

With this in mind, let’s take a trip down memory lane. On the day after Trump’s election, the New Yorker’s David Remnick predicted that the president-elect would “set markets tumbling.” Deep into the wee hours of election night, Paul Krugman penned the following bleak prediction for the New York Times: “It really does now look like President Donald J. Trump, and markets are plunging. When might we expect them to recover? . . . A first-pass answer is never. . . . We are very probably looking at a global recession, with no end in sight.”

Well. Caramba.

If we delve further into the pre-election “Trump will sink the market” genre, we can find this representative paragraph from CNN Money, which catalogs several wildly incorrect predictions: “Almost everyone on Wall Street currently predicts Hillary Clinton will win the White House.” (Woops.) “A Trump triumph would likely cause investors to flee stocks to the safety of gold and bonds.” (Nope! Wrong-o!) “Trump is the king of unpredictability (something Wall Street hates)” — oddly, so far, Wall Street doesn’t seem to care — “and he’s campaigned on an anti-trade agenda, which wouldn’t be good for big business.”

Congratulations to the last half of that last sentence, which has yet to be proved incorrect! To be fair, it’s remarkably easy to be wrong about the stock market. In fact, it’s a surprisingly popular American hobby. If it weren’t so easy to be wrong about the stock market, we’d all be jaunting around in private jets with our last names cheerfully emblazoned on the side, Trump-style — and man, would that be a mess for air-traffic control.

Moreover, if writing about the stock market is anything like the infamous Sports Illustrated curse — you know, the one where whichever star appears on the magazine’s cover immediately gets benched or fired or mauled by a pack of wild armadillos — the market will suddenly flip tomorrow, leaving all the “Trump rally” financial commentary for naught.

Some investors — along with a whole lot of politicos — appear to have entered an age of selective hearing.

But in the short term, perhaps there’s something to learn. Perhaps Wall Street’s go-bananas response to a future Trump presidency applies to more than the market.

Here’s the first lesson: Some investors — along with a whole lot of politicos — appear to have entered an age of selective hearing.

Trump has certainly called for lower taxes and fewer regulations. But in the past few weeks, he has also advocated 35 percent tariffs and railed at China. He wildly overestimated the cost of a Boeing project, tweeted about cancelling that same Boeing project, and promptly caused the company’s shares to plummet. In Time magazine, Trump blithely declared that he would lower drug prices, leading Biotech stocks to immediately falter. The incoming Trump administration has suggested it will host haphazard interventions into the market, handling companies such as Indiana’s Carrier, as incoming vice president Mike Pence put it, on a “case by case basis.” As for the potential conflicts of interest created by Trump’s vast business holdings, House speaker Paul Ryan sure doesn’t seem concerned. The incoming president can handle them “however he wants to,” he told the press.

The market’s response, together with much of America, seems to be this: Who cares? What the president-elect says, we are told, doesn’t really matter. Paul Ryan and the GOP congress will write reasonable bills cutting taxes and regulation, the theory goes, and a President Trump will sign them, so you can ignore what he says on Twitter. Perhaps this is accurate. Perhaps it’s not. But in the history of presidential politics, it’s fairly unprecedented. 

#related#The second lesson goes out to the political left, though I doubt they’ll process it any time soon, amid their panicked calls to either abolish the Electoral College or convince various Trump electors to revolt. Here’s the news, left-leaning friends: A significant segment of America — including, for now, the financial markets — is downright thrilled that you are out of power, so much so that it isn’t too stressed about the details.

There’s an irony here, of course: Many of Trump’s economic suggestions — a massive infrastructure project here, a stimulus there, some government economic favoritism over there — could have come straight out of the Obama playbook. But it simply doesn’t matter. It’s a new day. We’re apparently on a new page. And for now, the stock market — and much of America — would much rather have Trumpian uncertainty than the stale, tired, sanctimonious certainty of the Democratic party.

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