Stockmarket trading for March ends on Friday night around the world (and a day earlier where Easter is celebrated) but it is already clear that instead of riding the so-called “Trump Bump”, as Trump apologists once claimed, markets around the world are facing some of their biggest losses for years.
The Dow is down nearly 4.8% so far in March. The S&P 500, the key global measure for investors (all other markets use it to compare their performance globally) is down 4% so far this month — a 6.4% slump back in March, 2001, as the tech- and net- boom was collapsing, is the previous worst monthly performance. The Nasdaq is off more than 4% as well — it has led markets lower as the so-called Super Techs have slumped. Courtesy of Cambridge Analytica, Facebook shares have slid 13% so far this month, but Apple is also down 4.8%, Microsoft 3.7%, Netflix 2%, Alphabet (Google) 6% and Twitter and Tesla both off around 22% (yes, 22%). Collectively, the loss of value has been well over US$400 billion in the past few days.
Funnily enough, Trump has stopped his once frequent taking of credit for stockmarket performance. Reuters says he tweeted 40 times between last October and January this year claiming credit for market gains. Since the first market rout in early February, he has only tweeted once (to complain about markets making “a big mistake”). Any rallies since then have exhausted themselves as Trump’s conduct has become more and more erratic, he’s ignited a trade war with China, and dumped mainstream Republican figures for far-right lightweights in the White House.
Share markets have performed poorly elsewhere too. According to the AMP’s Chief Economist Shane Oliver, big falls last week saw Chinese shares lose more than 11% of their value from their January high; Eurozone shares have dropped 9% from their January high and Japanese shares are down 15%. Here, the ASX is down 5.7% from its January high and 3.7% so far in March. Chinese iron ore prices also fell heavily last week (the government’s jubilation about returning to surplus early might be shortlived) and the Metal Bulletin price, the key global indicator, slumped 3% to US$63.12 (a 2018 low) a tonne on Wednesday on worries about Trump’s steel tariffs and the international response to them. That price is now more than 20% lower than the highs of January and early March — it fell 7.5% last week alone and more than 4% the week before.
The Trump Bumpers were always one-eyed. They were prepared to overlook not merely the obvious flaws of a Trump administration — its inexperience, its corruption, the flakiness of the man in the Oval Office and his family, the centrality of white nationalism and thus protectionism to Trump’s base — but what anyone could have told them would be the consequences — chaos and unpredictability at the highest levels. Along with the bad odour of Facebook and other poorly regulated major tech stocks and Trump’s trade war with China, the constant chaos and randomness in the White House is what is weighing down markets. A media report Wednesday that Trump had mused about whether he should “go after Amazon” (Jeff Bezos owns the Washington Post) knocked its shares down more than 4%, reinforcing the tech rout. The reports said Trump had been told by “friends” that Amazon was destroying “Mom and Pop” stores.
Trump Bumpers loved the idea of a president who promised handouts to corporations and the super rich and more spending on the military and infrastructure — all funded by more debt. In particular, more debt at a time when the US economy had already developed a head of steam with massive jobs growth in 2014, 2015 and 2016, which continued, with less vigour in 2017. By one estimate, Trump and Republicans recently agreed to another $300 billion in deficit stimulus over the next two years, on top of the boost from over $1 trillion in unfunded company tax cuts. That’s merely going to encourage the US Fed to “normalise” US interest rates. But in the longer term, it reduces the capacity of a future administration to respond when the jobs growth evaporates and growth flags — which it must do at some point. It’s then that the recklessness of Trump Bumpers will be seen for what it is.
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