Trump’s Key Ally, the Stock Market, May be Abandoning Him, Facing Reality
With a volatile stock market, it’s hard to draw firm conclusions. Evidence does suggest, however, that Trump’s strongest ally, the stock market, may be abandoning him, no longer able to cooperate with Trump in denying the reality of the economic devastation so many Americans are suffering.
A week ago Monday, after the S&P 500 index posted its first four-day losing streak since February and the Dow Jones Industrial plummeted 500 points, CNBC’s Fred Imbert pinned this decline on “fears about the potential worsening of the coronavirus pandemic, as well as uncertainty on further U.S. fiscal stimulus,” which had both “rattled traders.”
That brutal Monday for the stock market began a week that would end marking a four-week losing streak for both the Dow and the S&P 500, their longest losing streaks since August 2019.
Trump has long touted the performance of the stock market as a key index of his success, though he has been largely silent of late when it comes to matters of the economy and the performance of the stock market. He has instead deflected attention from these issues by fanning fears that he will challenge election results if they don’t favor him and resist a peaceful transition in power.
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While Trump continues to engage in his incessant denial of reality — whether it is the reality of the coronavirus, of systemic racism, or the economic distress Americans are suffering — the stock market is now seemingly refusing to participate in Trump’s panglossian denials of what we are all witnessing, should we care to pay attention, right before our eyes, particularly when it comes to Trump’s abject failure to manage, much less care about, the pandemic, as well as his penchant for generating political chaos rather than leading his party in passing more fiscal relief for desperate Americans.
As Brad Kinkelaar, a global portfolio manager at Barrow Hanley, told CNBC, “This is a health-care issue and we still really haven’t made any progress. We still don’t have a vaccine; obviously, there’s still no cure and we’re still figuring out how to deal with the crisis.”
According to Kinkelaar, the markets had, at least for a while, bought into Trump’s magical thinking that the coronavirus would just fade away without taking action with a national coordinated response, returning us to normalcy. He explained, “So it’s not surprising we’ve gone from a market that was essentially pricing in a resumption of normal activity, within a reasonable time frame, to one pricing in the notion that we haven’t figured this out yet.”
As strategists at another firm noted, “After a buoyant and hopeful summer, financial markets are cooling in the face of reality.”
Even the momentary “recovery” was a “K-shaped” one, benefiting really only the already-wealthy. Economists call this so-called recovery “K-shaped” because of its two distinct dimensions: the sideways “V’ that is part of the “K” represents the chart of the recovery for the wealthiest of Americans; those already rich are bouncing back quite well, accumulating wealth hand over fist. The straight line of the “K” represents the flat-lining chart for the other 99% of us.
So, the reality that Wall Street is recognizing is that the economic damage is now filtering up.
Senate Republicans have refused to pass an additional relief package to ensure ongoing support for unemployed Americans, for small businesses on the edge or facing closure, and for cash-strapped states and municipalities that will themselves need to begin executing draconian cuts resulting in layoffs and loss of vital services.
The writing is on the wall that an economy heavily reliant on consumer spending for its functioning will cease to do so without helping unemployed Americans so they can spend to meet at least their most basic needs. Nearly two-thirds of U.S. households struck by the coronavirus are experiencing significant financial hardship.
And Trump’s political malfeasance has only exacerbated these market jitters. The Republican’s controversial, if not outright nefarious, bid to replace Justice Ruth Bader Ginsburg’s seat on the Supreme Court Bench is now distracting Congress, analysts worry, from focusing on passing the relief package Americans — and the markets — so desperately need.
When asked by a reporter recently why he hasn’t said anything about the 200,000 people in America who have died from the coronavirus, Trump ignored the question and turned away from the reporter and sought another question: “Go ahead. Anybody else?”
While markets are volatile and we can’t conclude the verdict is in on the stock market’s performance, we are potentially seeing Trump’s key ally jumping ship, coming to terms with the reality of his political and economic failures.
Obviously, deterioration in the stock market is not a good thing, promising more pain for more Americans, but hopefully it will be a signal to Americans, a wake-up call to face the reality Trump is and has been inflicting on Americans.