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Stock markets shaken: But is this the first sign that a Trump-inspired correction is coming?

Even The Wall Street Journal has started to express doubts as the President’s ability to enact his agenda is increasingly questioned

James Moore
Chief Business Commentator
Wednesday 22 March 2017 11:55 GMT
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A lot of people deluded themselves that a businessman president would be good for business. They turned a blind eye to the record of this particular businessman
A lot of people deluded themselves that a businessman president would be good for business. They turned a blind eye to the record of this particular businessman

After US stocks took their biggest loss in five months, Asian markets went into reverse and European markets followed when they opened this morning.

It was a long way from being a rout. The better term would be a wobble.

What should play on investors’ minds, however, are the causes.

Liberal opinion might have been horrified when Donald Trump was elected as President of the US, but the markets responded rather positively. This guy will get growth going! Tax cuts! Infrastructure spending! Tax cuts!

The reaction among economists to Trumponomics was rather more mixed. But the markets weren’t listening to them. There’s a businessman in the Oval Office! He’s going to get things done!

When The Donald managed to sound a bit presidential in his victory speech, jettisoning the vindictive pledge to jail his opponent in the process, it only emboldened them.

All that bluster. It was just the campaign. Now he’s got his heart’s desire things will be different.

Of course, as we now know, normal Trumpian service was swiftly resumed. But the markets even took that in their stride. Alternative facts? The Russian stuff? That train wreck of a cabinet? Don’t worry! Tax cuts! Infrastructure spending! Tax cuts!

The latest furore over the President’s incredible claims that he was bugged by Barak Obama, aided and abetted by GCHQ in Cheltenham, might just be serving as a tipping point.

Even the Rupert Murdoch-owned Wall Street Journal, America’s conservative financial bible, was moved to voice its concern at the path the Trump administration is taking.

With a leader entitled “A President’s Credibility” it opined that Trump’s “seemingly endless stream of exaggerations, evidence-free accusations, implausible denials and other falsehoods” are damaging his presidency. No kidding.

It also warned that Trump’s agenda is being put at risk. To push it forward, it said, he needs to find support beyond “the Breitbart cheering section that will excuse anything”. Given the way he is conducting himself, that could prove difficult.

The leader concluded by warning that “if he doesn’t show more respect for the truth most Americans may conclude he’s a fake President”.

The Journal’s previous hesitancy to call Trump out as a liar has created tension internally with its reporters, and externally with readers who are, as a rule, a little more thoughtful that the “the Breitbart cheering section that will excuse anything”. So the leader needs to be seen in context.

Nonetheless, it got noticed. It played into the doubts that may have started to gnaw at even those with an optimistic take on Trump’s agenda and his ability to get it through. It was published as the President was desperately trying to rally support for the healthcare reforms that have been enduring a rough ride in the Republican-controlled Congress.

But tax cuts! Infrastructure spending! Tax cuts! Yes, yes. Let’s see whether they arrive in practice, shall we? Let’s see if worried American politicians are really prepared to enact the cuts that will be necessary to pay for them, or to approve the sort of borrowing that might make anyone with any concern about matters fiscal go green, let alone America’s budget hawks.

“Patience is running out,” said one investor, apparently among those who didn’t see this coming. They were hardly alone. A lot of people deluded themselves that a businessman president would be good for business. They turned a blind eye to the record of this particular businessman.

No wonder confidence is wobbling.

There are many who predicted a market correction at some point early in the Trump presidency. This is not that. A 1 per cent fall in the FTSE is almost nothing.

Still, the fact that even the President’s allies are starting to get worried has woken the bears from hibernation. They’re hungry, and the President looks set to provide them with plenty of meat.

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