It’s safe to say that the markets have not responded well to recent developments at the White House. From a high of 6,100 on February 19th to a low of 5,600 today, the S&P 500 is feeling the strain. And, traditionally, it’s the S&P 500 and the Dow Jones Industrial Average that have had the biggest correlation with what Trump has been doing when in the White House. Today it is clear that we might be heading for a stock market crash.
In 2020 we wrote a story about how Trump’s activity on Twitter correlated with the performance of the Dow Jones Industrial Average Companies (DJIA). In the story we showed how analysts at JP Morgan had created the Volfefe Index which found a correlation between Trump’s tweets and the performance of various stock exchanges around the world. Not just in New York.
In Trump’s previous presidency the value of the S&P 500 rose from 2,350 to 3,700. This time things are a little different. The same index has dropped since Trump’s inauguration leaving traders across the globe worried about the future. And many commentators blaming Trump for a recession that appears to have reared its ugly head.
How are Market Participants Reacting to the Downturn?
A swift review of posts on the X platform show that tariffs are being blamed for much of the confustion. Other posts suggest that the market under Biden’s administration was overvalued or inflated and is now correcting. The truth maybe somewhere in between.
Long term investors will be used to market corrections. Short term investors will also find ways to monetize the downturn. The question is how much of a correction are we seeing, and how long will it last? And the answer is as elusive as a Canadian wanting to buy a new Tesla.
On Sunday, Trump was asked if he expected a recession this year. He retorted by stating how “there is a period of transition, because what we’re doing is very big. We’re bringing wealth back to America. It takes a little time.”
Trade wars are a concern to all participants in the global economy. Markets don’t like the uncertainty that comes with tariffs and trade wars. Trump has not helped the jitters with his strategy thus far. The threat of tariffs, like we have seen in the case of Canada, have not always followed a logical path. Canada’s tariffs are related to the drug fentanyl, very little of which gets smuggled in from the U.S.’s northern neighbour. But tariffs have been applied, nevertheless.
Fentanyl or defence spending, or freedom of speech, there are so many different reasons for placing tariffs that the markets could be confused in how things will end up. And it’s hard to create monetary policy around shifting priorities.
Big Tech is Losing Big on Trump’s Policies so Far
Elsewhere, Elon Musk has seen his Tesla stock slump since Trump came back into power. But he isn’t the only tech giant who is experiencing a downturn. Jeff Bezos and Mark Zuckerberg’s empires have taken a hit too.
Bloomberg highlighted in its recent story how Musk is down $148 billion, Bezos down $29 billion, Brin of Google down $22 billion, Zuckerberg down $5 billion, all since the inauguration.
Whilst Musk also must contend with mass boycotting and vandalism of Tesla cars across the U.S., the other tech giants have had less to contend with. But nearly all of them have had to watch the markets collapse over the last few weeks. Whilst themselves committing millions in investment into Trump’s new America.
How long the stock market crash will continue is a hard question. We really are only just seeing Trump getting started, as he has claimed himself. There may be further pain ahead before any improvements can be felt.
#stockmarketcrash #Trump #tradewars #S&P500 #DJIA #BigTech
Author: Andy Samu
The editorial team at #DisruptionBanking has taken all precautions to ensure that no persons or organizations have been adversely affected or offered any sort of financial advice in this article. This article is most definitely not financial advice.
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2 Responses
Nobody’s fault. The Market was way too high so no real surprise.
Blame the ones that voted for the guy….lol