South Asian Insider
Trump breaks his silence on market chaos
President Trump doesn’t sound happy with the stock market.
(News Agencies) He broke his silence Wednesday about the market turmoil: “In the ‘old days,’ when good news was reported, the Stock Market would go up,” he wrote on Twitter.
He added, “Today, when good news is reported, the Stock Market goes down. Big mistake, and we have so much good (Great) news about the economy!”
Trump’s complaints came two days after an awkward split-screen moment: The Dow was plunging more than 1,000 points just as he was giving a televised speech touting the economic benefits of his tax plan.
Wall Street’s darkest day since 2011 put the president in a tough spot because he took so much credit for the market’s big gains after he was elected.
So what is Trump talking about?
He has a point about good news and bad news: The market did indeed plunge in recent days after positive economic news. Though that’s not a new thing — it happens from time to time. And there is some logic behind it, even if it’s frustrating to presidents and everyday investors alike.
Consider the rude reaction on Wall Street to Friday’s jobs report, which showed that wages grew at the fastest pace since 2009. That’s a clear win for Main Street after years of weak pay increases for workers.
Yet the stock market had a hellish day. The Dow plunged 666 points, or 2.5%, its worst day in more than a year.
Wall Street was focused on the short term. Investors worried that wages could grow so quickly that they will put a dent in record corporate profits and make the Federal Reserve nervous about inflation.
“We’re back in this perplexing phase where good news for the economy is treated as bad news for financial markets,” said Candice Bangsund, portfolio manager at Fiera Capital.
If the Fed aggressively raises interest rates to fight inflation, it will remove one of the drivers of the bull market. Because of that fear, investors sold bonds, which drove yields to four-year highs. Higher yields make risky stocks look less attractive by comparison. Thus the sell-off.
So in that sense, Trump was right: Good news for Main Street was viewed as bad news by Wall Street.
But this happened under Trump’s predecessors, too.
More than once under President Barack Obama, Wall Street became nervous that good economic news would force the Fed to raise rates. And in other cases, the opposite happened: Bad jobs news drove stocks higher because it meant the easy money wasn’t going anywhere.
This inverse reaction was so common that sometimes, as with a strong jobs report in August 2016, it was noteworthy that good news was treated as good news.
Of course, the recent market turbulence is about more than the good news/bad news situation Trump alluded to.
The stock market boom since Trump’s election became overheated. Euphoria set in, making the market more vulnerable to sharp setbacks. A cool-off period was long overdue — and may prove to be a healthy thing.
“Markets do better over the long term when they experience corrections periodically,” Capital Group CEO Tim Armour said in a recent report. “They can’t go up all the time.”
In the past, Trump himself loudly cheered for the market to keep rallying. After the Dow hit 20,000 in early 2017, he said “Now we have to go up, up, up.” It was a big reversal from during the 2016 campaign when he called the market a “big, fat, ugly bubble.”
(SAI Bureau) : Parkland , Fla. — The suspect in one of the deadliest school shootings in modern American history confessed to t...
‘Sikh Extremists In Canada, The UK And Italy Are Working With ISI Or Independently’
On returning as Punjab chief minister last year, Captain Amarinder Singh found the state reeling under a drug problem and attemp...
India-China Tensions Flare Vying for Indian Ocean Region Control
The competition between India and China is heating up in the Indian Ocean region with the regional powers’ moves to exert influenc...
Finance Ministry Has No Information About Vijay Mallya’s Loans
(By Our Staff Reporter) New DelhiThe Central Information Commission (CIC) has pulled up the union finance ministry for saying that...
Panth And A Foreign Hand
For those who believe history moves in a straight line, and what’s past is past, some signs can set you thinking. Like you’re bein...
Trump’s State of the Union address, No change in stand on immigration and trade
United States President Donald Trump’s first State of the Union address on Wednesday showed how little the original agenda that he...
Uttar Pradesh To Repeal 1000 British-Era Laws In One Go, And Most of Them Are 150 Years Old
In a first, Uttar Pradesh is set to repeal 1000 British era laws, most of which are some 150 years old. The Times of India reporte...
A Nation Within 4 Temples
Patriotism, nationalism, nation and country are not independent concepts. They are so inter-related that none of them can be com...
Trump Plus One: Did He Keep His Promises?
President Donald Trump’s first speech to Congress, initially hailed as a triumphant pivot from Keystone Kops chaos to presidential...
Union Budget 2018
The political message of the last full Union Budget before the 2019 Lok Sabha elections is that from a ‘vikas purush’ in 2014, Nar...
© All rights Reserved. The south Asian, Published Weekly from New york.