Trump administration roils a volatile stock market

For much of the Trump administration’s first two years, Republicans could take refuge in the stock market.

Sure, the administration was a mess and deeply compromised. But markets were rising. The economy was strong. The corporate tax cuts and deregulation were working. Rather than focusing on all of that “noise” coming out of Washington, these Republicans could confine themselves to more pleasant topics, such as the performance of their portfolios and 401(k) accounts.

More recently, however, the stock market hasn’t been such a good place to hide. Even after a year-end rally, the S&P 500 finished 2018 at 2,507 — down more than 6 percent for the year and 14 percent from its high in early October, marking the S&P’s worst annual performance since 2008.

When markets are volatile, a White House should adopt the physicians’ credo: First, do no harm. Instead, the Trump administration has undermined confidence in markets. It started by waging an ill-conceived and everevolving trade war. It then raised doubts — through its ongoing shuffling of personnel — about its overall competence and ability to handle international crises.

To make matters worse, this fall President Donald Trump got into the business of Fed bashing. Because he can’t take blame for anything, Trump began lighting into Federal Reserve Chairman Jerome Powell when stocks went down or interest rates went up. The president has even mused in recent days about firing Powell, as he has done with so many people in his administration.

That, of course, only spooked markets further. Investors see the Fed’s freedom to make monetary policy without political interference as one of the pillars of the American economic system.

To cap off the year, Treasury Secretary Steven Mnuchin blundered his way into an almost comical unforced error. The former Goldman Sachs executive announced that he had talked to leaders of the six largest banks and wanted to reassure the public that these financial institutions had plenty of money to lend.

In so doing, Mnuchin essentially raised the possibility of a liquidity crisis that no one was particularly concerned about. This bizarre incident was blamed for contributing to a 653-point drop in the Dow on Christmas Eve.

To be sure, markets frequently sell off for reasons that have nothing to do with presidents.

Stock prices of late have been particularly vulnerable to a correction, given that they have been on an upward trajectory since early 2009, marking it the longest bull market in American history. And volatility is fed by high-speed automated trading.

But never before has a president been so keen to take credit for rising stock prices and so quick to blame others when they fall.