The markets are spooked by Trump's volatility — and 'showing increasing signs of concern': report
With the Ukraine scandal and House Speaker Nancy Pelosi’s support of an impeachment inquiry dominating the news this week, the media have been paying less attention to the state of the U.S. economy. But on Wall Street, the economy is always a topic of conversation, and journalist Felix Salmon — in a report for Axios — warns that President Donald Trump’s volatility is scaring the markets.
“The markets don’t trust Trump — nor his Treasury secretary, Steven Mnuchin — to be a calming influence in times of stress,” Salmon reports.
By “times of stress,” Salmon is referring to reports that the U.S. economy is softening and that the country could be heading into a recession. Salmon notes that JPMorgan Chase’s Volfefe index (which monitors the effect that Trump’s Twitter posts have on financial markets) “demonstrates that Trump’s tweets have also increased volatility in the futures market more broadly.”
Mnuchin, Salmon stresses, is part of the problem. The Axios reporter notes that “the markets normally look to the U.S. Treasury secretary for reassurance during difficult times,” adding that “when Mnuchin weighs in on issues like Trump’s conversations with Ukrainian president Volodymyr Zelensky, that damages his credibility more broadly.”
Trump has one of the largest Twitter audiences: a whopping 64.9 million followers. And the markets, Salmon stresses, are well aware of how often he tweets.
“The stock market has done a pretty good job of shrugging off Trump’s tweets, most of the time,” Salmon explains. “But money markets — the places where businesses keep most of their cash — are much more important for a smooth-functioning economy than the stock market is. And they’re showing increasing signs of concern.”