By DAVID BARBSCIA
NEW YORK – Investors are trying to game out how much tolerance US President Donald Trump has for stock market losses after his latest tariff policies ignited a more than 10 percent wipeout on Wall Street, with some still holding out hope of eventual relief.
A so-called “Trump put” – the option market equivalent of a presidential backstop for equities – underpinned Trump’s first term, as he frequently cited stock market strength as proof his policies were working. Over the course of his first presidency the S&P benchmark rose 68 percent and scaled record highs, while Trump cheered its progress, tweeting more than 150 times about the stock market.
This time around, hope that such a Trump Put still exists is evaporating, or at the least, investors are coming around to the view that Trump is much more inclined to ride out sharp falls. The S&P and Nasdaq are down over 15 percent and 20 percent since his inauguration in January respectively.
“The whole notion of tariffs and trade policy has been such an integral part of Donald Trump’s psyche, I don’t see it abandoned,” said Michael Rosen, chief investment officer at Angeles Investments, who said any pain level likely to cause Trump to change course remained a long way away.
Previous assumptions that Trump’s pro-business agenda would buoy risk assets similarly had already been fading as his trade policies rattled investors over the past few weeks.
But the more-aggressive-than-anticipated tariffs unveiled on April 2 deepened the market selloff, leaving investors questioning whether the Trump put was gone, or might eventually reappear through tariff rollbacks after any trade deals.
For Bob Elliott, chief executive officer and chief investment officer of Unlimited Funds, the selloff still had a long way to go before any policy turnaround.
“It takes 20-30 percent declines in stocks to get there. So the decline so far is not big enough,” he said.
Some were more hopeful the market fall could eventually induce a change of course.
“I don’t think (Trump) is going to be highly tolerant of massive stock market declines – he’ll see his popularity tank, and it will endanger his whole agenda,” said Kevin Philip, partner at Bel Air Investment Advisors. “I don’t see any way out of this if he doesn’t come up with deals or reasons to change course.”
The huge market falls – not seen since the beginning of the COVID-19 pandemic in 2020 – even caused speculation online that Trump was intentionally “crashing” the market to force the US Federal Reserve to lower interest rates while making stocks more affordable to middle-class investors.
Trump on Friday retweeted a social media post bearing the caption “Trump is Purposely CRASHING The Market” and featuring images of the president pointing at a large downward red arrow and of him signing executive orders at the White House. – Reuters
