After six days of social unrest which turned decisively violent over the weekend, Donald Trump held a video call with governors and law enforcement on Monday.
Considering frayed nerves and the fact that the president was forced to spend almost an hour in an underground bunker on Friday evening when protesters descended on the White House, hurling stones and attempting to breach police barricades, you’d be inclined to think Trump would at least consider adopting a conciliatory stance.
Alas, that was not the message.
Instead, he instructed state and local officials to “dominate”.
“If you don’t dominate, you’re wasting your time. They’re going to run over you, you’re going to look like a bunch of jerks. You have to dominate and you have to arrest people and you have to try people”, Trump said, on a recording of the call obtained by multiple news outlets.
“We’re strongly looking for arrests, we do have to get much tougher, you’re going to get overridden”, he added, threatening to “activate” Bill Barr, as though the attorney general were a battery-powered enforcer.
At the risk of stating the obvious, this is an ill-advised approach. Trump’s brazenness is almost guaranteed to embolden protesters, and now, his remarks will be cited in the event someone is injured or worse. (And that includes America’s law enforcement community, many of whom sympathize with the general message of the demonstrators, even as they’re obliged to protect property.)
Trump’s efforts to cast himself as a “law and order” president (he tweeted the three words in all-caps over the weekend) are undermined by his long history of antagonist rhetoric, which has (rightly or wrongly) been blamed for sowing domestic discord and deepening societal rifts.
By contrast, Andrew Cuomo struck a measured tone during his daily media briefing. Violence “obscures the righteousness of the message”, Cuomo said, of demonstrators who resort to theft and non-peaceful forms of protest. “It plays into the hands of people and forces who don’t want to make changes”. You’d be forgiven if you suggested that was an oblique reference to Trump and Barr.
The problem is that these protests are the direct result of excessive force by police, and now Trump is explicitly calling for more force. Barr directed the Bureau of Prisons to dispatch riot teams to Washington and Miami, for example. That’s according to ABC, which cited an unnamed Justice department official.
As documented here over the weekend, it’s too early to say whether property damage, store closures and delayed reopenings due to the protests will have a material effect on the economy, but they certainly do not help.
This comes at a time when analysts and other commentators are becoming increasingly comfortable with optimistic takes on the recovery and risk assets.
“Our view has been that this recession would be sharper but shorter. However, even we have been pleasantly surprised by incoming growth data and policy actions”, Morgan Stanley’s Chetan Ahya said over the weekend.
“These upside surprises are increasing our confidence in a deep V-shaped recovery”, he went on to muse, adding that “in the US, consumer activity… has been surprisingly strong [with] credit card transactions data tracking small business activity indicat[ing] that sales are now growing at 5%Y versus declines of ~30%Y seen just a few weeks ago”.
And then there was Bloomberg’s Cameron Crise. “One might ask why stocks should care about the protests. After all, equities went nowhere during the 1968 Democratic Convention which featured then-shocking scenes of unrest and confrontations with police, and rallied nicely for several months afterwards”, he wrote Monday, in a piece called “Stocks Yawn Despite Grim Headlines”.
According to his LinkedIn profile, Crise graduated from Duke in 1993, a quarter-century after the unrest he describes.
To be fair, he does add that back then (i.e., in a period he cannot possibly remember), “the economy was not in the midst of a brutal contraction, and there was no unfortunate tail risk that mass gatherings could re-ignite a second wave of pandemic infections”.
Not all market observers are taking a sanguine view of things.
Nomura’s Charlie McElligott, for example, called the events that transpired over the weekend in the US “heartbreaking”.
“Everywhere you look, decades are happening in weeks”, Rabobank’s Michael Every wrote, in his daily missive.
“Are they taking us towards US collapse or renaissance?”, he went on ask.
Referencing the push towards burden-sharing in Europe, Every wondered if the joint-debt proposal is taking the EU closer to “solidarity or division?”
And in Asia, where the politics of Chinese hegemony are center stage, Every asked whether we’re moving “towards a Chinese century – or very rapidly away from it?”
I’ll leave you with three short excerpts from AP’s coverage of Donald Trump’s brief visit to the basement.
Secret Service agents rushed President Donald Trump to a White House bunker on Friday night as hundreds of protesters gathered outside the executive mansion, some of them throwing rocks and tugging at police barricades.
Trump spent nearly an hour in the bunker, which was designed for use in emergencies like terrorist attacks, according to a Republican close to the White House who was not authorized to publicly discuss private matters and spoke on condition of anonymity. The account was confirmed by an administration official who also spoke on condition of anonymity.
The abrupt decision by the agents underscored the rattled mood inside the White House, where the chants from protesters in Lafayette Park could be heard all weekend and Secret Service agents and law enforcement officers struggled to contain the crowds.