America’s political establishment, Democrats and Republican alike, never trusted Donald Trump. Neither did the mainstream media, Silicon Valley, academics or policy wonks. But Wall Street and the business community have been devotees of the Donald since the day after Election Day, when contrary to all expectations, the Dow soared 257 points, and brushed up close to its all-time high.
Until recently, nothing seemed able to make investors change their mind. The Dow kept going higher and higher. Though Trump's behavior has ranged from the bewildering to the terrifying, in many minds, under him, the Dow posted its biggest rise in the first year following a presidential election, barring Roosevelt’s fourth term.
Of course, share prices don’t rise or fall based solely on the prevailing sentiment about the president. Nor is Wall Street synonymous with business. The fact is a lot of America’s corporate establishment grew disgusted with Trump by last summer, as evident when the business advisory councils he had set up crumbled amid an exodus of CEOs.
The pro-Donald sentiments among investors are easy to understand. Trump is supposed to be pro-business, a businessman himself who supposedly had an innate understanding of the corporate world’s needs. His treasury secretary Steve Mnuchin is an ex-hedge fund manager, his first National Economic Council director was a former Goldman Sachs president and he put a corporate attorney at the helm of the Securities and Exchange Commission. Even the State Department was run by an ex-CEO.
Trump promised tax reform that would benefit business and delivered, giving the stock market another boost. He also promised deregulation, which is happening. He vowed to get tough on China’s intellectual property theft and discrimination against foreign investment. He also held out the juicy prospect of a giant infrastructure program funded mostly by private capital. But what Wall Street forgot to consider is the man himself: He is neither “stable” or a “genius” as he claims.
For a time that could be ignored: The theory was the president could tweet away and pursue pipe dreams like the wall on the Mexican border. The fact that Trump also had some distinctly business-unfriendly ideas on immigration and trade pacts, and that he launched personal attacks on businesses like Amazon and Comcast was just background noise. In the end it would be his advisers and cabinet appointees who would run the government responsibly and preside over a conventional pro-business policy agenda like the GOP always has.
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The first year or so of the Trump administration more or less met those expectations. But that has begun to change.
First of all, it has become obvious that administration’s failure to get much accomplished on its business-friendly agenda besides tax reform wasn’t simply due to a new administration learning the ropes. It was a function of fundamental incompetence in the Oval Office.
Far from being an expert of negotiating deals, Trump couldn’t get what he wanted from a Congress controlled by his own party and seemed to be at a loss about how to handle diplomatic challenges like North Korea, China and Iran. He would bluster on his Twitter account and then nothing.
Worse still, the grown-ups who were supposed to be taking care of things have given up in frustration or have been fired. Out has gone investment banker Gary Cohen at the National Economic Council, in comes the television personality Larry Kadlow. At State, oil tycoon Rex Tillerson has been replaced by the sabre-ratting Mike Pompeo, and at the National Security Council the thoughtful H.R. McMaster desk is now occupied by the bombastic John Bolton.
Far from settling into conventional Republican orthodoxy, Trump seems to have grown dangerously confident about his own abilities, and about the value of his grab-bag of ideas about trade, immigration and other issues. Worse still, his presidential style of thoughtless musings on policy issues, gathering intel from Fox News, employing schoolyard language in the international area and an inability to follow through or appoint people who have that ability has come to the fore.
In the Trump White House, the crises don’t just come fast and furious, they are often ignited by the president himself with no thought other than to shake up the establishment, please his voter base and bring attention to himself. On Syria alone – an issue in which the president seems to have little real interest – he and his Twitter account have sent stock markets down and put his allies (including Israel) into a tizzy.
The Dow has lost 9% since the end of January and Trump can take most of the responsibility for that.
Wall Street likes business-friendly government, but it also values stability, predictability and follow-through. In the ordinary course of events there are enough uncertainly and unavoidable crises. Investors don’t need extra ones generated by the president.
Indeed, Trump’s leadership qualities are so poor that even those who think American should rip up the nuclear agreement with Iran, do battle with China over tariffs or negotiate with North Korea should be seriously pausing for thought. Is Trump really the leader you want playing such high-stakes game of diplomacy that could lead to war?
Wall Street is finally learning who Trump really is, which leaves the Israeli right as one of the last holdouts – still convinced that the president has Israel’s interests at heart. He doesn’t, and if he did, he doesn’t have the strategic vision, internal discipline or leadership skills to do anything about it.