Issue of the week: the fading faith in Trump
The “Trump Bump” is fading and corporate chiefs have deserted the President en masse. What next for US business?
When Donald Trump won the race for the White House last year, the so-called “Trump trade” saw markets rally in the hope that the US president would deliver business-friendly reforms that would boost growth. But now leading players are turning “defensive”, said Robin Wigglesworth in the FT. This week, the world’s biggest hedge-fund manager, Bridgewater founder Ray Dalio, said his firm was “reducing our risk” for fear that intensifying conflicts in the White House would not be “handled well”. Other investors seem to agree. After touching a fresh record high on 8 August, the S&P 500 is set to record its “worst month for almost a year”.
The fading faith in Trump has been exacerbated by rumours that Gary Cohn, head of the administration’s National Economic Council, might quit “in disgust” over Trump’s reaction to the Charlottesville white-supremacist rally, said William Watts on Marketwatch. Cohn is viewed by markets as the “indispensable man” most likely to deliver on Trump’s promises. For now he remains in place. But Charlottesville prompted such a mass exodus of corporate chiefs from the White House’s advisory business panels that Trump was forced “to disband them”. That must have been a bitter pill for a “businessman-president”, who boasted that his “corporate acumen would unleash a new era for American business”, said The Economist. Indeed, it marks the “end of the affair” between Trump and the corporate bosses who initially flocked to his side. For many, the move “seems as much a clear-eyed business calculation as a moral awakening”. Continuing to serve on the councils “increasingly seemed to serve little purpose other than to anger consumers and staff”. As for the “recent jumps in share prices, these have been largely attributable to firms’ own performance, despite Trump’s tweets claiming credit”.
Anyone believing that the business world has collectively “washed its hands of Washington and Trump” should think again, said Andrew Ross Sorkin in The New York Times. Many executives will continue courting the president in private. Yet the Charlottesville episode has led to “almost existential questions about the role of corporations as a new form of moral authority, filling a vacuum left by our political leaders”. Are we entering “an era of the statesman chief executive?” The concept isn’t as far-fetched as it sounds, said Rana Foroohar in the FT. In the decades after WWII, business chiefs regularly articulated “American values” of inclusiveness and liberal democracy, both at home and abroad. That changed in the 1990s, the era of self-interested “celebrity” bosses. Yet given the “dearth of moral and economic leadership coming out of this White House”, there is “surely a role for corporate leaders who think about more than share prices”.