“Nouveau bulls” are nervous and the S&P’s one meaningful weekly loss away from creating the only kind of press Donald Trump doesn’t like: Bearish stock market headlines.
The S&P came into Friday on track for a second consecutive weekly decline and a fourth in five. The bad vibes are in no smart part attributable to pervasive uncertainty both regarding Trump’s domestic agenda (DOGE) and trade policies (tariffs).
US equities, which kicked off 2025 as the odds-on, consensus favorite to outperform consistent with a “US exceptionalism” narrative that investors had come to accept as a kind of natural law, are perilously close to erasing the entirety of their post election gain, Friday’s late-session stick save notwithstanding.
That’s enough to drive a man crazy, or I should say a man like Trump crazy. A man who views stock prices as the best real-time barometer of presidential performance. (He prefers the Dow to the S&P, and points to percentages, because in markets, like in all things, he doesn’t have the first idea what he’s talking about.)
The good news for Trump — and for markets — is that because he’s the locus of Wall Street’s concern, he has the power to turn it around with one or two tweets (or one or two “X”s or one or two “Truths”).
In this week’s edition of his popular weekly “Flow Show” series, BofA’s Michael Hartnett listed the post-election VWAPs which “need to hold to prevent nervous ‘nouveau bulls’ from selling.” Here they are: META $639, PLTR $80, QQQ $519, SPY $597. Bitcoin’s VWAP since the ballot is $97,600. “An inability to stay above $97,000 was the first sign that the ‘bro bubble’ is popping,” Hartnett wrote.
As a quick aside, Trump’s focus on equities as a gauge of presidential performance is ironic considering who he claims to represent electorally. The figure below’s a stark reminder: If you break American society down by income bucket, the bottom owns essentially no stocks (1%) as a share of total equity wealth.
By contrast, the top 1% of society owns 49.9% of corporate equity and mutual fund shares. That cohort’s share of the market peaked during Trump’s first term at 52.4%.
Some of you will say that’s fine — “That’s just the way the cookie crumbles,” you’ll quip. As ever, the jokes on you: You’re not capital. You just think you are. You’re labor. Every, single one of you — or damn near — is labor.
Anyway, “on election day, the S&P closed at 5783 [and] we say this is the first strike price of the ‘Trump put,'” Hartnett went on. Below that level, he wrote, the “‘Stocks Down Under Trump’ headlines begin,” and “investors currently long risk would very much expect and need some verbal support for markets.”
That’s to me one of the more interesting questions currently: whether Trump would try to “save” the stock market (at least pre-inflation) if it starts falling, e.g. by kicking Powell. Arguments for it are straightforward; his affinity for the Dow as a highscore is well known. Against is that he’s better off financially this term compared to 2016, and might consign to the far right idea that first everything must burn until it can be rebuilt. And if he for a change will be acting rationally in this matter he will simply ignore it.
Trump won’t like seeing his money burn.
I agree that his much-improved financial position since 2016 might have dimmed his obsession with the Dow. I think he might be much more interested in the price of gold this time around (btw — Stephanie Kelton recently speculated as to why which I found convincing), then Bitcoin (oops).
The best Trump put, however, might be if he goes on an around-the-world golf trip for a month or two and refrains from speaking to the press. Sadly, the bid-ask spread on that option is bigly to the point of untradeable.
Folks Trump isn’t that sharp. He is a con man who has figured out how to rule the idiocracy and leverage that to his benefit. Everything else is a random walk. We need luck and a lot of it to manage the next 4 years.
Why do so many still cling to the notion that Trump still is obsessed with the stock market? That’s so last term!
In fact, when he was first announcing tariffs on Mexico and Canada he explicitly stated that he did not care about the market’s poor reaction
This is yet another example of many investors ignoring what Trump says if it does not fit into their bullish narrative. Hope springs eternal.
The crowd that justifies billionaires keeping more of their wealth either argues out of ignorance or bad faith. All the arguments about work ethic, creating jobs, free markets, etc. ignore the simple fact that the government and Fed are the entities that underpin all of that wealth. Going back to the Great Recession (you can certainly find earlier examples, but it wasn’t quite so explicit), every potential incident that could have triggered a financial meltdown was effectively averted due to government and Fed intervention.
The ability of capital and entrepreneurs to take the kind of risks that created our most successful companies only exists because we give capital a massive government safety net. Instead of recognizing that and taxing capital appropriately, Republicans want to cut taxes even more for billionaires and further entrench rent-seeking in our society. Too bad that Joe MAGA doesn’t understand how welfare for the rich works and that free markets are a fairy tale except for poor people.