Stock Market

The Dow Is Down. The Dow Is Up. Either Way, It's Not Because of the President.

Markets respond to politics, but presidents shouldn't claim control.


President Donald Trump has been bragging pretty hard about how much the stock market is up under his presidency. Today is a good demonstration of why that's a bad idea. Because, while it's not quite true that what goes up must come down, markets don't tend to have four-year or eight-year uninterrupted booms. The Dow was down 1,500 points today. It popped back up a bit, but is still down about 1,000 points at the close of the market. And this probably isn't the end of the volatility.

The president has a bad habit of taking credit for things outside of his control—low airline fatalities and the incidence of Christmas wishes are among the things he's claimed just recently—and the stock market falls into that category.

During last week's State of the Union, the president grabbed big applause for this line: "The stock market has smashed one record after another, gaining $8 trillion in value."

But with the market down, suddenly it's: "We're always concerned when the market loses any value, but we're also confident in the economy's fundamentals," from unnamed spokesmen.

If the afternoon's rally continues, expect the POTUS to return to crowing. He shouldn't.

It's always tempting to see shifts in the market as evidence that our own pre-existing beliefs are being corroborated. But the markets do seem to be reacting to two big pieces of news out of Washington today: new debt figures, fueled by the tax cuts, which are going into effect now without any offsetting cuts in spending. That decision will push the deficit even higher and has pushed up that date at which Congress must once again grapple with the debt ceiling. Add to that concerns that the Federal Reserve will adjust interest rates in reaction to signs that the economy is heating up, including new wage data out Friday, and investors are freaking out a bit.

Presidents don't control markets. This isn't to say that markets don't respond to politics; of course they do. But when you try to take (misplaced) credit for the ups, you have to grapple with the downs, too. And that's something Trump's not willing or able to do.

P.S. Black unemployment, which was previously at a low that had the president boasting all over the place, has spiked back up as well. Same deal: The president neither gets all the credit nor all the blame.

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  1. I don’t like that Reason is normalizing Trump to the point of irrelevancy.

    1. He should have only ever said this:
      I have inherited a surging stock market that is propped up entirely by massive amounts of stimulus by the previous admin and constant fed manipulation of market prices and the accompanied capital misallocation in a desperate search for return.
      Recently the stock market responded positively to reductions in regulations and tax policies which always give a positive boost to the markets as they are the best barometer of economic confidence since government cannot direct markets adequately.

  2. This particular president may be more consequential than most, because he’s crazy. Stability matters to markets.

    1. You’re one of the premier psychoanalysts. Thank you for your brilliant insight.

      1. The problem is you don’t need a premier psychoanalyst for this case.

        1. Thank you. We’ll all rest better knowing you’re on the case.

          1. He just said Democrats were committing treason for not applauding during the SOTU.

            1. Which has nothing to do with market stability.

            2. His silly and crazy sounding rhetoric aside, reductions in regs and cutting taxes is a positive for all business owners and people who aren’t stupid sheep like you.

            3. Trolls gonna troll

    2. Tony = Hillary Clinton will NEVER EVER be president !!!!


      Fuckin’ A !!!!!!!!!


      1. You are behaving like an insane person.

  3. The mainstream media and Democrat partisans (excluding reason) have insisted this is all Obama’s economy and that Trump has nothing to do with it. While initially skeptical of such claims from commies and the “fake news” crowd recent events in financial markets have led me to reconsider.

    1. It was Obama’s economy until last Thursday afternoon.

      1. It was Obama’s economy until the tax cut bill, which was a deliberate economic policy decision. Fair?

        1. I guess. They’re not my talking points.

        2. “It was Obama’s economy until the tax cut bill, which was a deliberate economic policy decision. Fair?”

          It isn’t in place yet, and wasn’t enacted last week, so… no.

        3. It’s got to be SOMEBODY’S economy, otherwise the people might get the idea that politicians aren’t Gods after all!

  4. Now now, Ms. Mangu-Ward. How do you expect to get invited to those Georgetown cocktail parties with attitudes like that? Of course it’s Trump’s fault that the economy is crashing!!!

    1. More like God’s Own Prohibitionists and Beauregard. Read the platform Trump is reciting and you will discover a plan to being back Herbert Hoover, Harry Anslinger, Dick Nixon, Reagan-Bush and Waffen Bush faith-based, shoot-first prohibitionism. And ain’t it the damndest coincidence that every single time the market hears the leper’s bell of the approaching looter zealot, money flees, the economy contracts, liquidity crunches and taxes and confiscations increase to prop up banks?

  5. It’s true when Trump’s greasy-haired supporters believe it.

    1. Trump’s greasy-haired supporters = totally racist !!!

    2. Everybody knows beaners aren’t his main constituent group 😉

      It’s more like ginger haired supports.

  6. The ongoing revelations about the activities of Negro Nixon provide a golden opportunity to deep six the Deep State.

    Not only should some of these agencies be put out of business, we’ll save a bunch of money as an added bonus!

    Drain the swamp.

  7. Trump supporters are too dumb to understand, but this is perversely a sign of a good economy (maybe–nobody really knows these things). But the idea is that investors in the stock market are afraid that rising wages will result in higher interest rates. The DJIA ? the economy, something Trump himself doesn’t understand, of course. Luckily he has no moral compass whatsoever or fealty to truth, so he’ll happily take credit for the good and blame Hillary for the bad.

    1. We can only be certain of one thing. Whether the Dow is up or down, Tony is always long on straw futures.

    2. What about Gary Johnson supporters? Are we too dumb to understand? I just want to know before wasting energy reading what you’ve written or making any market decisions. Tell me what to do.

      1. If you need my advice, or anyone’s advice, on making a market decision based on a one-day event in the stock market, you should just sit there and do nothing.

        1. Get your sarcasm detector recalibrated.

        2. Oh, good! That’s what I’m doing. Thanks for confirming my wisdom.

        3. “If you need my advice, or anyone’s advice, on making a market decision based on a one-day event in the stock market, you should just sit there and do nothing.”

          You just said Trump’s instability and the tax reform plan are partially responsible this recent crash. If you actually believe that to be true, then your emphatic advice should be to sell.

          1. I hope so. I love to see proggies bail on a low.

          2. No I didn’t.

    3. “Trump supporters are too dumb to understand, but this is perversely a sign of a good economy (maybe–nobody really knows these things).”

      They are too stupid to understand something nobody really knows?

      “But the idea is that investors in the stock market are afraid that rising wages will result in higher interest rates.”

      There is also the literal threat of higher interest rates, voiced by those who have the power to raise interest rates.

      1. The “threats” are a result of higher wages and other positive indicators–something Trump could be taking credit for if he didn’t tie his entire political fortune to the DJIA like the worst politician ever.

        1. I believe he has in fact talked positively about rising wages…

    4. From Tony the progressive !!

      “Trump supporters are too dumb to understand..”

      See, only progressive elites like Tony know what’s best for us common folk.

      Tony’s pro choice – he chooses what’s best for us common folk, and we must comply, or face the wrath of Antifa.

      1. Being a progressive doesn’t require one to tolerate ignorance.

        1. Hey Tony, does being a progressive require me sucking penises? Or is that optional? I’m on the fence, and I do like the idea of the state using guns to steal other peoples money to give to me… But not so down with the penises in my mouth thing… Inquiring minds want to know!

          1. More of a bonus.

            1. LOL

              Well I guess I’ll still have to pass… Even the dirtiest, slimiest, stinkiest, vaginas are more appealing than dicks. But that leaves more dicks for you! 🙂

      2. Progressive???

        Or, hipster?

        Too cool for his high tops.

  8. I just want to point out that employment figures in Britain are up considerably more than was expected, and the Asian Stock Markets are going like gang-busters! Thank you President Trump! MAGA! Although… South Africa is suffering a major drought… So I guess he should take responsibility for that… Oh heck! Who am I kidding .. They aren’t even all White, right?

    1. There are almost no whites left in South Africa because of the black run government botching everything since they took over, and also turning a blind eye to the mass murder of white citizens of that country. It used to be over 20% white, but more than half of them have left. I believe it is under 10% now. I wonder what their excuse for the country falling apart will be once it’s like 3% or 5% of the whites left, AKA not enough to hold it together anymore. It’s kind of LOL to watch them destroy what was the best country in Africa through their incompetence… But it’s also sad for the white people that had to abandon their home where their ancestors had lived for centuries.

  9. This is a typical unReasonable essay based on dislike of Trump. You don’t understand that the fake news media are never going to give Trump credit for anything good. So Trump has to beat his own drum most of the time. People are getting the cue finally that the propaganda arm of the Demonrat party is the entire fake news media.

    1. Those meanies in the media made him take credit for things that he wasn’t responsible for!

  10. Trust me, I have made a prediction about the market that has never failed me: The market will fluctuate.

    I have yet to be wrong – you can bank on that.

  11. Don’t forget that in 2016, Trump warned that the stock market was “in a big, fat, ugly bubble.”

    Not that he is president, of course, it’s great ? and he is solely responsible.

  12. We all know it is foolish to tie one’s political office to the market.

    However djt did exactly that, crowing about his market advances.

    So, he owns the retreats as well.

    It was his choice.

  13. So if the market isn’t up because of anything President Trump did then why couldn’t the market be just as high for obama? Sounds like this author needs a new excuse

  14. Not to give Trump credit for a major part of the economic boom is to have little understanding of human nature.
    Under Obama business was looked down on, outlook was all bad unless you are a crony hooked to the gov’t. You did not build that……………….these “incentives” reduce economic output because no one likes to swim against the current.
    Trump loves business and promotes it at every chance. The current has changed direction and yet some people are surprised there are more swimmers??
    People who know that something fake, like the apple/alar scare can do major thinsg to an economy, but for some reason can not give Trump credit for the exact improved business conditions he said his election would yield.
    Reason has been so well funded and popular of late that some of it’s key people seem to be losing sight of what makes a better world and instead are focusing on the imperfect nature of the one person who can inadvertently do the most i the most to advance liberty in our lifetime. He does not fit the conventional molds for politicians ,yet those who cherish Liberty seem confused on how to take advantage of the situation, and instead focus on carping about his personality flaws and his ignorance of parts of economics. We would do better to encourage and engage than criticize and demean.

    1. The stock market, and other economic indicators, had been on an upward trend, beginning in the Obama administration, and the trend continued, (although it slowed a bit), during Trump’s year. If you’re going to credit any president with this trend, then you have to credit Obama.

      If you think Trump is somehow responsible for the rise in the stock market, what can you point to that he’s done? What is the cause and effect? There is none.

  15. If any of you have any idea of how/what makes the stock market works, you might make as much money as I. First off the market is a leading indicator, second it is manipulated by big money, the FED, and some SEC rules. Now the under currents are talking about possible IMF action that can devastate the U.S. economy. my March option straddles have paid big. You want to at a minimum be short through April expiration.

    If interest rates go up then all the margins will be more expensive, If a trader is stretched on margins then that trader is forced to sell. So when big money believes something is going to negatively effect pricing then big money shorts and margins are called in, These two things alone can drive valuations down, pumping volatility and increasing risk. All making options more expansive.

    The IMF action rumbling around, is the IMF is going to install crypto currency as a reserve for international trade clearing dethroning the U.S. dollar. And Trump gets blamed. The globalist will not give up power easily.

    1. Yeah, the IMF isn’t going to do anything with crypto anytime soon. Maybe in 2030…

  16. Stocks overshot on the up side. Now they will overshoot on the down side.

  17. I’ve been saying this for decades. The economy generally, and the stock market in particular, have very little to do with the president. And almost any idiot would realize they had no influence over the stock market when they’ve done nothing to…well, he’s really done nothing at all, except sign one bill, and stock regulatory agencies with saboteurs. He’s only been in office one year.
    But of course this loud-mouthed narcissist cannot stop himself taking credit for other people’s work. That’s pretty much how his business operates – slap your name on someone else’s work, and get paid for it. At least he’s shut up about the stock market since it tanked. I’m sure if it continues, he will be saying that it’s Obama’s fault.

  18. Trump can now add another unprecedented, record setting, remarkable achievement to his “presidency”: the largest 1 day drop in stock market history, by nearly 400 points! Go Trump.

    1. Maga is just shorthand for “Make everything happen the most ever!” And I dare say he’s racking up superlatives at an impressive rate.

      1. Tony is short for

        T = tiny
        o = obsolete
        n = neutered
        y = yarak

        1. Okay I loled at yarak.

    2. Was it the largest single day point drop? Yes. But was it the largest single day drop as a percentage of the DOW? I’ll wait till that happens before I get to excited.

  19. This president is certainly not the first (and I’m not even sure the foremost, although I could entertain that possibility) at claiming credit for things that probably are less than even marginally a response to his policies. The Democratic presidents also have the benefit of the media also making these sort of claims. It reminds me of one of the things we learned very early on in Statistics: Even when you have a correlation (two things tracking each other), you have no guarantee of causality (one thing causing the other). It’s bad enough that the office of president has usurped as much power as it actually has. We certainly don’t need to attribute even more power to what was essentially supposed to be a figurehead. People already put too much stock in who is president. We need to deflate expectations.

    1. Exactly!

      1. It was bad enough when the president became a celebrity. But now, the president is seen as a deity.

        At some point, it will end badly.

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  21. I think he’s made a mistake in talking up the stock market bubble. With this long of an expansion, it’s destined to correct down before long. Probably during his first term. If he were smart he’d have said “Well the market is due for a downturn any old time, and the economy will almost certainly go into a minor recession. However with all of my deregulation and cutting taxes, hopefully we can put it off a few years or keep it mild. But looking at the cycles it’s probably going to be here any time now.”

    That would be the truthful thing to say, but the problem is presidents aren’t supposed to ever say anything negative about the economy for fear it will MAKE it go south. But he’s not other presidents, and I think he could have got away with being a straight shooter. As much as I don’t want growth to end, the Fed DOES need to raise rates soon.

    1. There you go clouding the issue with logic again.

  22. I have a sense that a major contributor to the market’s uptick is not so much because of Trump but more because it’s not Obama. Just a changing of the guard seems to have brought benefits; ergo, it’s a sort of Hawthorne Effect on steroids. And that describes Trump, right?

  23. “The president has a bad habit of taking credit for things outside of his control”

    Apparently Reason was not paying attention to Obama, Bush, Clinton, Bush, Reagan, Carter, Ford, Nixon, Johnson, or Kennedy. I wasn’t around for Eisenhower. Claiming credit for things outside the control of the Presidency is the norm. Sometimes it takes twenty years for it to become obvious who should have claimed credit for what. Claiming credit for the stock market is not only normal, it is often justified. Deregulation and tax cuts directly affect stock prices. Reason seems to have a bad case of TDS- Trump Derangement Syndrome.

  24. Many stock liquidations reflect investor concerns that religious fanatics within the Legislative or Executive branches are bent on using asset forfeiture and tax laws to enforce draconian sumptuary legislation. This occurred in 1872 when postal regulations began censoring and confiscating mail, and worsened when the Comstock law added coercion to use the postal monopoly to prohibit birth control. One component of the Panic of 1893 was agitation for an income tax and another the sudden use of customs regulations to raid opium smuggling. A large fraction of total customs revenue was the high opium tariff. The Panic of 1907 was triggered by enlargement of the Pure Food and Drug law plus state prohibition. The 1914 crash was in part triggered by the income tax and making tax returns public. The 1920 crash coincided with Constitutional Prohibition. The Five & Ten making beer a felony as Hoover took office plus Internal Revenue forfeiture as enforcement brought about the Crash of 1929 because investors could clearly see the Depression was inevitable. Now The Don is sucking up to God’s Own Prohibitionists in the GOP and investors pull their money out… Hmmm… Surely KMW can detect that same inductive pattern here.

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