To be sure, we already knew that markets are nervous about Gary Cohn.
If you want to know how nervous, all you have to do is look back at what happened to stocks in mid-August when a rumor started circulating early in the session that Cohn was set to resign in disgust following Trump’s infrastructure press conference-turned Civil War history lesson.
We got another taste of the market’s distaste for Cohn exit rumors last week, when a WSJ piece suggesting Cohn’s revulsion to Trump’s Charlottesville response had effectively cost the former Goldmanite his shot at Fed Chair sent S&P futs tumbling, erasing the entirety of the gains logged following the announcement of Trump debt-ceiling deal with Democrats:
This is of course all predicated upon the idea that the market hates uncertainty and nothing says “uncertain” like a vacant spot atop the Fed and a tax reform plan the architect of which ends up getting fired for not being racist enough.
Well on Tuesday, Ray Dalio (who has repeatedly warned that the shift towards populism in Western democracies is a threat that should be taken seriously) told CNBC’s Delivering Alpha conference that it would be “terrible” for the market if Cohn were to leave the administration.
Again, this isn’t about whether you like Gary Cohn or whether you think he’s a good choice for the Fed. This is about uncertainty in markets and the extent to which Donald Trump’s ineptitude is setting the stage for all manner of volatility down the road.
Of course Dalio’s warning will be summarily dismissed right up until the day when Trump either fires Cohn or Cohn resigns and the market plunges.