During President Trump’s first year in office, he frequently took credit for soaring U.S. stock markets. Now, he says the reason they’re dropping is concern that Democrats who regained a measure of power in last week’s election will begin tormenting him.
“The prospect of presidential harassment by the Dems is causing the stock market big headaches,” he wrote on Twitter on Monday, as all three major U.S. stock indices tumbled. The blue-chip Dow Jones Industrial Average fell 602 points, or 2.3 percent, at the close of New York trading against a toxic backdrop of rising interest rates, concern that the White House’s trade dispute with China will undermine economic growth and speculation that Britain won’t be able to negotiate a trade deal with the European Union before bowing out.
The broader S&P 500 fell 2 percent, and the tech-heavy Nasdaq dropped 2.8 percent.
Analysts and economists have said the Democratic takeover of the U.S. House, by a wider margin than expected, will have little effect on market confidence in business, since the Republican-controlled Senate and White House are unlikely to agree to onerous legislation and Trump-appointed regulators will continue to wield power. Democrats have, however, indicated that they will use their House majority to step up oversight of the White House, which they say Republican incumbents failed to do.
Americans “want accountability with regard to this president,” Rep. Elijah Cummings, a Maryland Democrat who’s likely to chair the House Oversight Committee, said on ABC’s “This Week” on Sunday. “We’ve got to figure out when is he acting on behalf of the American people in a lot of his decisions, or is he acting on his own behalf?”
Rep. Maxine Waters, the California Democrat positioned to become the next chair of the chamber’s Financial Services Committee, has said she wants to review Trump’s relationship with banks including Deutsche, Germany’s largest lender.
The prospect of Presidential Harassment by the Dems is causing the Stock Market big headaches!
— Donald J. Trump (@realDonaldTrump) November 12, 2018
The president, meanwhile, promised in a contentious press conference the day after the election that the Republican Senate would respond to any Democratic probes of his administration with investigations of its own — targeting Democrats.
“We should get along and get deals done,” he said. “Now, we can investigate: They look at us, we look at them, it goes on for two years. Then, at the end of two years, nothing is done. Now, what’s bad for them is, being in the majority, I’m just going to blame them. You understand, I’m going to blame them. They’re the majority. Honestly, it makes it much simpler for me.”
While the Democrats won’t take over the House until January, the president’s Twitter account shows he has already started carrying out that strategy.
If the Democrats think they are going to waste Taxpayer Money investigating us at the House level, then we will likewise be forced to consider investigating them for all of the leaks of Classified Information, and much else, at the Senate level. Two can play that game!
— Donald J. Trump (@realDonaldTrump) November 7, 2018
Still, there has been virtually no suggestion from anyone other than the president that Congressional oversight of his White House is disturbing the market.
One result of the election that is causing unease is the risk that a divided Congress won’t approve Trump’s overhaul of the North American Free Trade Agreement, Tony Roth, chief investment officer for Wilmington Trust, told the Washington Examiner. That would increase the obstacles to completing a trade deal with China, where American tariffs on $250 billion of imports are pushing up supply costs for U.S. businesses.
Trump’s broader trade disputes, including the threat of more duties on Chinese goods, coupled with rising interest rates that have strengthened the U.S. dollar and pinched American companies doing business overseas, are eroding the confidence generated by a solid underlying global economy, Roth said.
“The signals have been so confusing for so long now that the market is just over-reacting,” he said. “I don’t think the market will find the direction it’s looking for until sometime in the first half of next year. It’s going to depend on the ability of government to act in a bipartisan way on some key initiatives” such as approving the U.S. trade agreement with Canada and Mexico and setting aside funds for highway and bridge upgrades.
With such steps, “there’s lots of upside in this market from these relatively slow levels,” he added. “We’re not going to know the answers to these questions for two or three months at a minimum.”
