Somehow, Donald Trump managed to make things worse for investors on a day when it would have been nearly impossible for sentiment to deteriorate further.
And this is the “miracle” of Trump. He continually one-ups himself when it comes to abject absurdity. Just when you think it can’t possibly get any more outlandish and/or surreal, he takes it up another notch. For the Spinal Tap fans, “these” don’t just “go to 11” when it comes to Trumpian bombast – “these go to 12” or even “13”.
Trump surely knows that the proximate cause of Friday’s tumult in markets was the shutdown. Similarly, he is undoubtedly aware that rumors he may attempt to fire Jerome Powell are in part responsible for the selloff on Monday. Indeed, sources privately told CNBC that one of the reasons Steve Mnuchin reached out to bank CEOs on Sunday and convened a “plunge protection” meeting on Monday was to discuss that rumor.
Given that, and given that stocks were in free fall again on Monday morning, the last thing Trump should be doing is tweeting about Jerome Powell. But not only did he tweet about his beleaguered Fed chair, he actually managed to craft a tweet that rolled up everything the market is concerned about into a golf metaphor. To wit, from the President:
The only problem our economy has is the Fed. They don’t have a feel for the Market, they don’t understand necessary Trade Wars or Strong Dollars or even Democrat Shutdowns over Borders. The Fed is like a powerful golfer who can’t score because he has no touch – he can’t putt!
Stocks, which were attempting a rebound, immediately started to plunge back to day lows. Here’s S&P futs, just so you can get a sense of this in the context of Monday morning’s mini-“flash” event:
And, more poignantly, here’s the Dow:
On Friday, we suggested – somewhat jokingly, but not entirely in jest – that a part of Trump might actually be doing this on purpose. We quoted Notes From Disgraceland on that point. To wit, from a piece they published back in June of 2017:
One can sense something almost vindictive in his pursuit of the symbolic self. Trump’s conduct is a suicide from the ambush. His presidency represents a rebellion of the hysterical person against his symbolic persona, an attempt of Donald Trump the citizen to take out Donald Trump the president.
So much of what’s playing out right now is entirely contrived. The shutdown is contrived, for instance. A stopgap funding bill had already passed the Senate. The White House was reportedly ready to move ahead with it as late as last Thursday morning. Then, suddenly, “steel slat barrier” was trending on Twitter and before anybody knew what was happening, Trump delivered a government shutdown for Christmas.
On Sunday evening, investors were just hoping to get through Monday’s shortened session unscathed, and out of the blue, Steve Mnuchin pops up on Twitter talking about emergency calls with bank executives necessitated by rumors that Trump is about to fire Jerome Powell.
Fast forward 12 hours and, literally just as stocks looked like they might be able to recover amid headlines that Mnuchin’s entirely unnecessary call with regulators ended with everyone telling Steve that everything is generally fine, Trump accused Powell of not being able to “putt”.
And you think I’m exaggerating. But I’m not. Look at the time stamp on the Bloomberg headlines from Mnuchin’s plunge protection meeting:
Now look at the time stamp on Trump’s tweet:
Again, you almost wonder if he’s intentionally sabotaging himself out of sheer spite for decorum. If so, it’s working. Have a look at this:
And here’s the Monday market map for the S&P:
It was an absolute bloodbath for the fourth consecutive session.
Meet the bear.
The VIX is now above 34 and the Nasdaq VIX is pushing towards 2018 highs.
This kind of erratic behavior is fine (although that depends on your definition of “fine”, I suppose) as long as he’s “private citizen Trump”. But when he’s “President Trump”, that kind of insanity manifests itself in real-world outcomes with far-reaching ramifications – and not just for markets.
At some point, you’d think Republicans would begrudgingly come to terms with the reality of this situation, which is that the rationale for removing Trump from the Oval Office need not be couched in terms of “collusion” or “obstruction”. There is now voluminous evidence to support the contention that Trump is simply not all there.
In any event, Trump wishes you (and your P/L) a Merry Christmas.