Though the stock prices have increased after Donald Trump assumed his office, there is a threat as to where his policies and tweets would lead to. The recent week ended April 6 delivered a loss of 1.4 percent for S&P 500 index after his tweet on slapping of tariffs on China-based products. Investors are not sure whether his game plan will yield the result that he expects. As a result, Trump’s reputation is only taking a beating in the stock market.
According to a Bloombergquint, the American President’s ranking slipped to eighth place when it comes returns from the equity markets. Based on 444 days from the inauguration, Trump’s policies delivered a return of 20.7 percent for the Dow Jones Industrial Averages. This is a sharp drop from the third position he enjoyed in his first year. His predecessor, Barack Obama, was ranked fifth place with a return of 32.5 percent. The top position was enjoyed by Franklin Roosevelt with 70.4 percent during his first term. Ronald Reagan followed him with 41.4 percent return.
Reacting to the latest tweets or the policies of the President, Eaton Vance Management’s portfolio manager, Henry Peabody, told Bloomberg that it was not only exhausting but was also draining for a lot of people. He termed it as an unorthodox one. Trump tweets have rattled markets in the past too. This included the fate of NAFTA and size of his nuclear button. However, some business-friendly policies prevented the markets from the plunge in his first year.
In any case, the latest steps taken by the American president failed to get the necessary support from the Wall Street. This would lead to worries among the White House officials. This was also evident when the Treasury Secretary, Steven Mnuchin, conceded that there was a risk after the United States slapped tariffs on selected Chinese goods. In retaliation, the Asian country too came up with tariffs on selected American goods. There is a threat of a full-scale trade war between the two biggest economies in the world.
However, investors are not ready to face the consequence of a trade war. Aside from that, Trump dragged Amazon.com on Twitter aggravating the situation to a wider sell-off in the tech sector on Monday last. The biggest threat came on Thursday night when the president indicated that he would not mind ordering a review of much harsher tariffs on Chinese goods.
Dissonant Type of Message
Reacting to the latest developments, Washington Crossing Advisors’ senior portfolio manager, Kevin Caron, told Bloomberg, “From the market’s perspective, it was all a constant stream of lollipops. You’re going to cut the taxes, you’re going to have a pro-growth policy, and the federal government is going to invest a little more — all of that is happy stuff. Nasty, contentious trade negotiations? That’s a more dissonant kind of message.”
In short, portfolio managers are not sure as to what to expect next from the American president. They have not seen this kind of a situation for a long time.