The Markets Continue to React Negatively to Trumponomics
Making the Markets Dive Again.
Via CNN: Dow closes more than 700 points lower and the S&P 500 is on track for its worst quarter since 2022.
US stocks tumbled Friday and a broad selloff gripped Wall Street as investors digested slightly stubborn inflation data and weakening consumer sentiment while wrestling with continued tariff anxiety.
The Dow tumbled and closed lower by 716 points, or 1.7%. The broader S&P 500 fell 1.97% and the Nasdaq Composite slid 2.7%. The slide on Friday put all three major indexes in the red for this week.
The S&P 500 is down more than 5% this year. The benchmark index is on track for its first losing quarter since September 2023 and its worst quarter since September 2022.
Here’s the DJIA since Trump took office (through yesterday). Today’s Dow is at the top of the post.
There can be little doubt that investors do not like his tariffs. Further, consumers are not getting the prices they were promised. Not only were those promise fraudulent, but Trump’s trade policies are inflationary.
Meanwhile, consumer sentiment tanked 12% this month, according to the University of Michigan’s latest survey released Friday.
The selloff gradually turned into a rout as investors dumped stocks in industries including technology, autos and airlines. Google (GOOG) slid 4.9%, Stellantis (STLA) slid 4% and Delta Air Lines (DAL) slid 5%.
Lululemon (LULU) stock tumbled 14% on Friday after the company flagged concerns about the outlook for consumer spending on a call with investors.
No doubt supporters believe that this is all going to round shortly as manufacturing jobs magically onshore.
But we need to be clear: this is all a choice being made by the President of the United States.
And the malicious incompetence on display makes clips like the the following all the more galling.
Not only is the one is this trite and tired, it is just so very wrong. The federal government is not a business and should not, and cannot, be run like one.
Worse, the “businessman” in charge of our government is both not governing well, but is also creating problems for actual businesses.
Heckuva job, Trumpie!
Markets do better under Dems than Republicans. Just a fact.
https://en.wikipedia.org/wiki/U.S._economic_performance_by_presidential_party
I believe it was Bill Clinton who said if you want to live like a Republican, you better vote for a Democrat
But to listen to them everything is peaches.
And the cult believes what they’re told.
I am so glad I got out of the market and put it in high yield savings. My investment advisor was high on Trump crack in January….”You know, I hate the guy as a person, but his policies…..we’re gonna make a lot of money!”
No, we’re not, his policies suck, and I’m out.
An ode to a boring president would apply here, but nobody makes songs about boring Presidents.
Yes, I recently, um, opined about how the Democrats and other normal people need to start working on reversing the decades-long undermining of the government. This “run it like a business” meme is just one aspect of that.
The GOP has been playing the long game on this and other topics, and it’s paying off for them, to the detriment of most Americans.
@Slugger: And every Republican prez has had a recession in his first term. Back to 1900. I figure this as Trump’s second first term. But somehow they remain the party of business. Dems are the party that’s good for business. GOPs are good for some businessmen
@Jax:
Exactly the same, here. Got out and into T-Bills and savings. I’m barely staying ahead of inflation, but at least I didn’t invest in oil drilling stocks as Drew/Guarneri/Joe/Carmelita/Ichabod/Connor, The World’s Greatest Businessman, seemed to think was a sure thing because there was a bit of doggerel that goes, drill, baby drill. And rhyming doggerel is almost always predictive. That’s how warren Buffet does it.
@Michael Reynolds: I came out ahead when I cashed out, but I planned it for a Thursday, ahead of the big market downfall. Friday’s are the worst.
Poor Drew…Connor…whatever he calls himself now. I don’t even have big money in the market. I can’t even imagine how he’s feeling now.
@Daryl:
They were told the trump disease wasn’t dangerous while corpses were piling up. And they went and added to the cemetery population. Swallowing a trumpcession is nothing in comparison.
@Kathy: No, those were all “the poors”. They didn’t care. Not even one little bit.
There are very nasty forward indicators now obvious.
Not just re stocks, but also government bonds, including US Treasuries.
Given administration spokesfolks yattering on about how a dollar depreciation is a “good thing”.
I’ve had a chat with an economic historian who reckons the current situation is the most bottom-clenching since about 1929.
Basically, we have a load of drunk teenagers juggling candles in a fireworks factory, and saying “what could possibly go wrong?”
Dimwits.
Just look at how exposed much of the US “upper middle” is to a stocks value “correction”, and the US requirement for bond demand.
@Michael Reynolds:
US oil stocks might soar yet, if things in the Middle East go as sideways as seems possible.
otoh, US defence stocks may not be a very good bet.
As I’ve said for some years: the US wants Europe to spend more on defence?
Well, fine.
Expect Europe to buy Lockheed and Boeing?
Lol.
BAE, Thales, Dassault and Rheinmetall etc love a pay day as much as the next guy.
Politics gets interesting when you are talking about trillions.
As one that has lost $750K in a previous downturn, I have to admit that I was tempted to do the same as Michael and put it into bonds, CD ladders and short-term annuities.
After a conversation with my Fidelity guy, the net result was reducing stock holdings by 10%, rebalancing that which I hold to a greater international exposure, and creating a smaller “safety” amount that will likely be in a CD.
While there is no question that this downturn is completely self-inflicted by the current administration, the stock market can take these downturns and recover very well often just as quickly. (And, yes, sometimes slowly.)
I’m positioned well if there is a big hit: I’m selling a home that will result in a huge cash injection into my investments. (The contract was written last year with a close date of May 15th.) If there is a big downturn, then that means the upside will be that much better for the overall portfolio.
Still, hard to see how the Trump admin will try to sell all this as better than the Biden’s administration’s track record. I look forward to just some really outstanding amounts of bold-faced lies and and denial of reality.
Markets tend to be high when people are confident in the government, low when the government is in disfavor.
So here is Trump, being stubborn about some really stupid economic delusional ideas. He is visibly deteriorating mentally pretty rapidly which is making him more and more stubborn, more and more stupid. The entire GOP feels obligated to pretend he is fine, nothing to see here, covering for him.
Meanwhile Musk, who is, contrary to his reputation, pretty clueless about technology and software, pushing the goal of migrating SSA (Social Security) away from COBOL to some more modern language, with a totally unrealistic deadline of a few months. What could go wrong? (Maybe something a bit like Xitter)? COBOL is really difficult and time consuming to write new code in, which is why it is long out of favor, but it is still the most efficient language for manipulating large files and large databases, once it is debugged and running. 80% of credit card transactions, 95% of ATM transactions are still processed in COBOL software.
There is a piece in Wired and discussion at LGM.
“LGM”
“Wired”
@Jax: “Poor Drew…Connor…whatever he calls himself now. I don’t even have big money in the market. I can’t even imagine how he’s feeling now. ”
Yeah, I’d really feel sad for him if I could convince myself he isn’t really some traveling sales guy living in a trailer in Arkansas.
@charontwo: “COBOL is really difficult and time consuming to write new code in, which is why it is long out of favor, but it is still the most efficient language for manipulating large files and large databases, once it is debugged and running. ”
I know absolutely nothing about computer programming, but this sure sounds like the knob and tube wiring that was in a 100 year old house I once bought. I thought we’d have to rip it all out, because I’d heard it caused a lot of fires. But every electrician I talked to said just the opposite — that the old wiring was great… and the only reason knob and tube had a reputation for fires was because it became dangerous once people who didn’t know what they were doing started splicing more modern wiring into it.
Sounds kind of like Elon’s plan here…
Selling now, while the markets are down, is the opposite of the core tenet of holding stocks: Buy low, sell high.
The best strategy is to determine your allocation during non-emotional times – for example 65% US S&P 500, 20% Foreign large cap, 15% US Bonds – or whatever allocation works for you.
Then, when things get out of whack because stocks went up or down, you rebalance back into your pre-determined allocation.
This, combined with having enough cash on hand to allow you to control the timing of the rebalancing, is the best method to ensure you always buy low and sell high.
It is critical to not change your strategy in response to market changes.
A study done a few years back showed that dead people’s portfolios outperform all other groups.
@Tony W:
Are they? Opinions vary.
https://finance.yahoo.com/quote/%5EGSPC/
Per the above link, S&P 500 currently stands at 5580.94.
Exactly one year ago, it was about 5250, roughly 6% lower.
Some interesting graphics re variance:
“Per year”
“Per month”
I find your confidence the markets are down reassuring, there is still enough of that view around to support them going down some more.
@Tony W:
Preparation for the trumpcession would have properly begun the day. after the election. Taking the felon seriously about tariffs and immigration should have guided an investment strategy. Those contraians that did are smiling and seeking buying opportunities.
The selective data doesn’t help your argument. In Dec 24 vs today markets are down only 2%. What is special about Jan 20-25. What is the right time frame to compare? Why? How do you know, other than it’s convenient for your assertions.
The link is probably instructive. PE multiples rose from Dec 24. They no doubt are correcting, as they reached+2 sigma from long term trend.
That said, the tariffs are probably having an effect, but probably more through uncertainty. But that’s the cost of the negotiation, and remediating our horrible trade policy of the past.
A point of order. Tariffs are not inflationary, if you understand the definition of inflation. No one here knows what the incidence of tariffs are or will be. But it just means there are fewer dollars to be spent on non/tariffed goods. That juggles the portfolio of prices, but does not change the money supply per unit of output.
Endeth Econ 101.
https://www.multpl.com/s-p-500-pe-ratio
@Connor: “Tariffs are not inflationary, if you understand the definition of inflation. ”
And the chocolate ration has been increased to 20 grams.
@Barry:
Doubleplus(un)good!
@Connor:
Trump inaugurated thus the initiation of experience of his actual performance. E.g., finding out how consequential Musk’s DOGE will be.
@Connor:
It is not just tariffs. Canadian tourism is off 70%, and Canadians are boycotting American imports. U.S. is not terribly popular in Europe now.
Sweden was prevented from selling its Gripen fighters to Ukraine because they contain General Electric jet engines. This precedent will affect U.S. defense industry and other exports going forward.
Government functions and employment are being disrupted.
Etc., etc.
@Connor:
So why buy now and pay for tariffs when the tariffs might be rescinded later, maybe, who knows?
@wr: Depends on how the wiring was done originally and what type of wire was used. Current loads back in the 1900s were nowhere near what we run now. So people would upsize the fuses without regard for the wire gauge and length that was installed. This is how fires happened. If you overload a wire it’s going to overheat and do bad things regardless of the design/age.
@Connor: It is impossible to take you seriously.
Is it really that hard to admit that the markets are reacting negatively to these tariffs?
It is really so hard to admit that your guy is choosing economic harm?
But, granted, reality can be a real bitch.
@Sleeping Dog: Absolutely. The tariffs are at Trump’s discretion (unless, lol, congressional repubs change the law to limit “emergency” tariffs) so it was clear that chaos and deal making (for the benefit of Trump & Co.) would be the norm.
We lowered from 50% to 10% equity when the S&P500 was at 5987 (now at 5581) and I have been relatively happy about our personal financial picture ever since (though I worry for our country and other folks who will get hurt). No regrets and lots of rest.
P.S. And as a contrarian have bought some oversold equities (IMHO, Boeing for example) YMMV.