Nothing seems to be going President Trump’s way.
He’s been browbeating the Federal Reserve to stop raising interest rates, but the Fed hiked rates anyway.
He’s demanding $5 billion in border-wall money from Congress, which refuses to pony up. The impasse has triggered a partial government shutdown, with Congress unable to pass spending bills Trump will sign.
He’s pulling U.S. troops out of northern Syria, angering many fellow Republicans who feel the move would let ISIS off the mat and strengthen Russia and Iran. His Defense Secretary, James Mattis, quit following the announcement.
And financial markets are blowing Trump a raspberry. Trump insists his tax cuts and deregulatory policies should be stoking markets. But instead, stocks are down 10% for the year and are on track for the worst annual performance since the financial crash in 2008.
Conflict is normal in politics, but Trump deliberately picks fights and is needlessly destabilizing markets. For those reasons, our Trump-o-meter reads WEAK in the last readout before Christmas.
The stock selloff might be overdone. The real economy remains in good shape, with holiday spending likely to be strong and falling gas prices putting a bit of extra spending money in consumers’ pockets. Part of the selloff stems from fears of an economic slowdown, which might not materialize the way traders seem to think.
But part of the selloff stems from Trump. His shutdown threat affects $325 billion in federal spending and the suspension of paychecks for about 400,000 federal workers. A shutdown of two weeks or less probably wouldn’t cause harm. But he has warned of a “very long” shutdown, which would sap confidence about Washington’s ability to address important problems and show Trump’s willingness to damage the economy for purely political reasons.
Disputes over foreign policy don’t directly affect financial markets. But they reveal that Trump is facing mounting resistance from within his own party, as prominent Republicans such as senators Lindsey Graham and Marco Rubio openly bash Trump on the Syrian withdrawal, his coddling of a Saudi leader suspected of murder and his cheery attitude toward Russia. That signals Trump is losing political muscle, which could affect markets via his ability to resolve a trade dispute with China, as one example.
The darkest cloud over Trumpworld is the Robert Mueller investigation, which seems increasingly close to finding that Trump broke the law. Trump will fight all of this, needless to say, and he might even enjoy it. But markets won’t, and will disrespect Trump even more if the chaos deepens.
Rick Newman is the author of four books, including “Rebounders: How Winners Pivot from Setback to Success”