The Trump Slump

The president claimed credit for stock market records. Does he deserve blame for the plunge?

- Peter Coy

Green means up and red means down in the stock market. Lately there have been many red days. But the true color of today’s market is golden orange—the hue of the pompadour atop the head of President Donald Trump. Because for better and for worse, this has become Trump’s stock market. Until October, the extended bull market was reasonably called the Trump Bump. The decline over the past few months, particularly since the start of December, is the Trump Slump.

Few would dispute that Trump is a volatile personality who’s having a volatile presidency. He’s shaken the establishment to its roots. Yet for most of his time in office, volatility in the stock market was below its long-term average, with the exception of a spell in February and March. Investors’ calm always seemed a bit out of step with reality. But fluctuations do tend to increase when prices are trending down, and that’s exactly what happened in 2018’s fourth quarter. The Chicago Board Options Exchange Volatility Index hit 36 the day before Christmas, up from below 15 in the summer and early fall.

America finally has a stock market to match the man in the Oval Office.

One question to ask at this point in the turmoil is how much Trump has affected the stock market—for better during the bump and for worse during the slump. The opposite question is how much the worst year for stocks since 2008 has affected Trump. Will the market rout chasten him, cause him to retreat from some of the policies and language that have sent markets into a tizzy? Or will it drive him to attack the status quo even more ferociously to prove himself right and recapture some of that bull-market magic?