In Dow he trusts: Trump’s reassuring faith in stocks

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He may ride roughshod over many American institutions, but there is one that President Donald Trump respects. His belief in the power of the stock market knows no bounds. This faith offers a glimmer of hope for companies dismayed by the current geopolitical whirlwind.
Resolutely private in his own business dealings, Mr Trump nonetheless invests much significance in the share prices of public companies. Like most Americans over 70, Mr Trump’s preferred index is the tried, tested (and inherently flawed) Dow Jones Industrial Average.
Even before his election, he would draw lessons from the Dow’s performance — usually blaming president Barack Obama for any declines. He would also punt stock tips on CNBC, ranging from McDonald’s to DuPont. 
After his inauguration, barely a week went by without a tweet celebrating — and taking credit for — the strong Dow. More than 70 times since January 2017, he has highlighted the market’s performance.
He hired Kevin Hassett, co-author of notorious dotcom tome  Dow 36,000 , as head of The White House Council of Economic Advisers. Perhaps Mr Trump thought it was an instruction manual.
When Mr Trump started taking credit for the market — with increasing justification, as investors lapped up Republican tax cuts — commentators warned that this was a hostage to fortune: the market would fall and the president would be associated with its weakness. This assumed a logic to which the Trump administration is immune.
Now things look less rosy: the Dow is flat for the year and has fallen 7 per cent from its October high. (The S&P 500, broad based and more useful but not a White House favourite, has performed slightly worse.) But this president is hardly going to accept responsibility. 
Inevitably, the Dow tweets have become sparser. By February, Mr Trump was already complaining: “In the ‘old days’, when good news was reported, the Stock Market would go up. Today, when good news is reported, the Stock Market goes down. Big mistake…”
In November he identified a new scapegoat — Democrats and their threat to subject him to scrutiny after winning control of the House of Representatives: “The prospect of Presidential Harassment by the Dems is causing the Stock Market big headaches!”
By then he had largely switched to a new and more sympathetic barometer of presidential performance: “So great that oil prices are falling (thank you President T). Add that, which is like a big Tax Cut, to our other good Economic news. Inflation down (are you listening Fed)!”
Raging at the Federal Reserve is natural. If Mr Trump controlled interest rates, he could — and doubtless would — maintain ultra-loose monetary policy to offset the negative effects of his trade policies and prop up the stock market. But he does not and cannot. 
He may not admit it in public but Mr Trump, who likes to hang out with wealthy investors such as Michael Milken and Stephen Schwarzman, has to find any decline in prices worrisome. 
Hawks within his administration would pursue an all-out trade war no matter the short-term costs. But ultimately Mr Trump will pay more attention to a bear market. When Huawei’s chief financial officer is detained and the Dow falls 700 points, the White House takes note. A pronounced stock market fall will restrain the president’s more destructive impulses.

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