MISSTEPS ADDING UP
Markets uneasy over Trump
For months now, investors have pretty much shrugged off the missteps of Donald Trump and his administration in hopes of a payoff down the road. So what if a top national security adviser played footsie with the Russians, or if Trump alienated (insert name here). Investors have been comfortable holding their collective nose while waiting for Trump’s long-promised tax cuts and infrastructure spending.
But the spectacle de merde in Washington has now got dirtier, and investors might be waking up and smelling the, er, coffee. After allegations on Tuesday that Trump asked the FBI to drop its investigation of former NSA director Michael Flynn’s ties to Russia — just the latest in a long line of negative news stories — record-high markets began to sell off.
The Dow Jones Industrial Average shed more than 370 points on Wednesday, its biggest drop in eight months while the Nasdaq Composite Index plunged 2.6 per cent. Closer to home, the S&P/TSX Composite Index had its worst day of 2017, closing down nearly 270 points at 15,273.
Jitters are mounting that Trump won’t make good on his pro-growth promises, either because he will be so assailed that he can’t get things done, or because he won’t be around to do anything.
How did it come to this? Obviously, Trump and his minions have committed errors in judgment and in deed. But I’d argue that they are hamstrung by another problem: really, really bad communications practices.
But hang on: Wasn’t the Donald supposed to be this century’s Great Communicator? Wasn’t his surprise victory last year a testament to his powers of persuasion? Well, maybe fourthgrade diction and base emotional appeals helped him get to the White House. But his administration is in the throes of a crisis, and that’s the crucible in which communication skills are tested. And he’s failing.
How? First, and most obviously, he lacks discipline. The early-morning tweets and the ex tempore TV interviews, which often contradict official messages out of his own White House, used to be interesting, but now they’re just destructive. They no longer suggest a maverick unafraid to buck the rules: they suggest a man who doesn’t know what the rules are.
Second, Trump seems to think publicity is success. It’s not. His campaign strategy of dominating the media agenda through controversial statements may have worked to generate awareness among otherwise unengaged voters. Now everyone already knows who the president is, so what’s the point?
But there’s no such thing as bad publicity, right? Wrong. Awareness isn’t approval — as demonstrated by Trump’s approval numbers, which are plumbing historic lows for a presidency this young.
Third, Trump has been unable to adapt his personal brand to the presidency. He’s a celebrity, and he treats celebrity as if it were a virtue. Unlike Reagan, who managed to shrug off his B-movie past with self-deprecating humour, the current Great Communicator seems to take his fame dead seriously, even to the point of fabulism. Imagine Reagan boasting that Bedtime for Bonzo was the greatest box office hit of all time, and you can see the difference between the two.
Fourth, the President doesn’t take ownership. He has had a total of one solo press conference since he took office. Instead, he trundles out staff to answer to even the biggest issues and/or crises. Meanwhile, he hides from real interaction by appearing on friendly news programs or spouting on Twitter, which he uses almost exclusively as a one-way communications platform.
By the way, his nearly 30 million followers on Twitter comprise a fraction of Barack Obama’s (88 million) or Katy Perry’s (98 million). Trump is no master of social media; he simply uses it to issue statements he knows will get repeated in the mainstream media. Increasingly, that looks like evasion.
Fifth, he doesn’t show that he gets it. In the face of serious accusations, the strategy is deny, deny, deny. Take the Flynn scandal: Trump could have said he takes the allegations seriously and thrown in some bromides about keeping America safe. But he didn’t. Which only lent credence to the allegations.
Sixth, Trump isn’t demonstrating that he can fix his problems, in part because he isn’t effectively handling his staff. He seems to command little loyalty from them — the White House is leakier than the Titanic. Yet while he reportedly has threatened a big shakeup, he hasn’t pulled the trigger.
I could go on. Maybe Trump will right the ship and markets will get their long-awaited tax cuts. But for now, he’s committing errors that have applied to many a political or corporate leader who screws things up bigtime.
If you see any of them from the folks running companies you own, be careful.
As investors, we discount the “soft” elements of corporate leadership — how CEOs talk, treat people, and so on — at our peril.
He’s a celebrity, and he treats celebrity as if it were a virtue.