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The legendary stock market will have to work harder than this to tame Donald Trump.
Since Trump's re -election, many investors and analysts clung to the concept that he is fine, the president will not do anything brutally with an economic policy because he uses stocks as popular standards in actual time and will avoid doing anything to disturb them. The sharp short decline in stocks in response to any strange advertisement will soon be forced to change the heart, or thus the theory goes.
This may still be true at some point. But it is not now. Instead, the direct market reaction to the Trump advertisement during the weekend of the impending sharp taxes on the goods than the neighbors and allies in Canada and Mexico, and additional duties were more moderate on the goods than China, to some extent.
The standard S&P 500 has opened by 1.4 percent – not great, but barely disaster. There may be 5 per cent immediately in the index and perhaps some comments in the worst shares of large names that are affected by the president's warning, but not this.
One of the potential reasons for relative calm is that a large segment of investors believes that starting a trade war with NATO allies is an active in the American economy, for geopolitical stability, or both. Money managers may feel cheerful through the American Agency for International Development Scene, which is placed in danger or by the Ministry of Governmental Efficiency in Elon Musk, enabling them to reach plumbing in the Treasury Department. Let's say at the present time that this is the theoretical possibility, but it is not likely to be interpreted.
Instead, the Ho-Hum reaction, which is also reflected in dollars (a little higher, there is nothing very) and in Asian and European stocks (a little bottom, not a bloodbath) reflects some important assumptions.
The first is that, according to John McKanro, it cannot be serious. The inevitable rise in consumer costs of imported goods, the potential appearance of inflation that Trump pledged to defeat, and the damages of all global relationships indicate the change of the heart at one time. Self -harm is just very great. As Jean -Hatzius and others said in Goldman Sachs, “While the look is unclear, we believe that the definitions focused on Mexico and Mexico are likely to be short -lived,” said Jean Hatzius and others in Goldman Sachs.
This turned to some extent. Even before the start of the new taxes, Trump president and President of Mexico said they were suspended for a month. But the evidence so far this year indicates that it is dangerous to assume that quiet heads will prevail.
Another possibility is that investors are really bad in Trump's reading. He was a fan of definitions for decades. He used them freely during his first term in his position. Talk about them constantly on the campaign path. Talk about them in his inauguration. But the markets failed to take him in his speech.
Investors believe that the informed self -interest will give the president temporarily. Then they believed that Treasury Secretary Scott Besent would work as an adult in the room, which is sensitive to the difficult cold facts of the economy and is able to direct the president away from his dark pulse. None of this did.
“Trump has put an end to self -deception in the markets, the media and politics whose introductory threats must be taken.”
Now that the markets are on a low -salt diet, it is worth the Trump to take completely and very seriously on a set of geopolitical issues. One is Europe. The stock there on a Wonderful operation Recently, as the very early days of Trump 2.0 have not spared the definitions of the mass. But as we mentioned Trump today, he is serious about the European Union, who accused him on Monday of doing.AtrocityIn its commercial relations with the United States. buckle.
Another is Panama and Greenland. I still ask bankers and investors about what will happen if Trump really tries to secure a new area there. They continue to laugh at Ali, although the director of the fund suggested to buy German government bonds. This becomes less funny every day.
Even in the scenario of the best condition where Trump extracts any concessions that want to back down from some or all new definitions, great damage has already been caused. “Even if the filmed tariff has two definitions,” Paul Donovan said at UBS. “Lack of confidence in making commercial deals may lead to more difficult. If the news cycle makes us consumers fear of real income growth or job security, they may be less likely to spend.”
Economic pain, then, can be real, even from threats. But it is ambitious to assume that waking stocks will stop them. Trump will wear this early reaction as wins and verify Wall Street for his efforts to make America great again.
katie.martin@ft.com
