May 21, 2018

White House Plays Down Stock Market's Bad Day

07 February 2018, 12:52 | Rufus Hill

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For a connoisseur of cable news like Donald Trump, it was not a pretty picture. He has stayed silent in the face of market gyrations over the past week.

For any president, the split screen moment showing an apparent disconnect between his message of a roaring economy and hemorrhaging equities would be a little embarrassing. Or maybe even President Trump.

His reaction highlighted the risks for politicians who take credit for soaring stocks: the fall.

The White House downplayed the stock market's tumultuous day, with press secretary Sarah Huckabee Sanders saying in a statement: "The president's focus is on our long-term economic fundamentals, which remain exceptionally strong, with strengthening U.S. economic growth, historically low unemployment and increasing wages for American workers". One wonders if this sell-off continues, will the president take the same level of ownership with the slumping market?

This afternoon, the Dow Jones industrial average suffered a dramatic drop while President Trump delivered a speech about the economy.

"They were like death and un-American".

"Your paychecks are going way up", Mr. Trump said amid cheers and applause.

Monday's trading day saw stocks plunge, marking a second day of trading that led to steep declines.

The Dow, however, is still 23% higher than when Trump was inaugurated in January 2017.

"We broke it 84 times this year".

As many outlets are now pointing out, Trump has repeatedly boasted of the booming stock market. "Wait until you see what happens to our country", he said.

"If the Democrats won the election, the stock market would have gone down 50 percent from where it was, and now look at the percentage increase".

With stock markets declining again, the White House on Monday said the fundamentals of the US economy are "strong". The current conventional market wisdom is that the fundamentals of the economy and corporate profits, a key driver of valuations, are likely to remain solid, as is this rare period of synchronized global growth.

Still, there are reasons to be nervous. "You don't want the president owning those things". But what goes up inevitably must come down.

In Illinois, reality is catching up with Trump, and Republicans, in a less amusing way.

This prompted fears about an increase in inflation, meaning the Federal Reserve would have to raise interest rates to control it, prompting traders to ditch shares.

Ironically though, one of the contradictions of Trump's cheerleading about stocks could help him now.

It is pretty unusual to have the White House make any statements about the movements of the stock market unless they are particularly positive or downright terrible.

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