President TrumpDonald TrumpTrump takes shot at new GOP candidate in Ohio over Cleveland nickname GOP political operatives indicted over illegal campaign contribution from Russian national in 2016 On The Money — Dems dare GOP to vote for shutdown, default MORE has been in office with the most volatile stock market since the financial crisis. The market has shrugged off major headlines in the past. After Trump fired FBI Director James ComeyJames Brien ComeyGiuliani told investigators it was OK to 'throw a fake' during campaign DOJ watchdog unable to determine if FBI fed Giuliani information ahead of 2016 election Biden sister has book deal, set to publish in April MORE on May 9, the Dow shrugged. When John McCainJohn Sidney McCainBiden falters in pledge to strengthen US alliances 20 years after 9/11, US foreign policy still struggles for balance What the chaos in Afghanistan can remind us about the importance of protecting democracy at home MORE torpedoed the American Health Care Act on July 28, the Dow actually moved up a touch. When Stormy Daniels resurfaced in “In Touch” on March 25 in with the full interview of her affair with Trump, investors continued bidding the markets higher.
Today? A feather could tickle the market into a fit. Shell-shocked investors anxiously await Trump’s next bombshell, as the leader of the free world’s style of “governance by impulse” doesn’t jibe with the specter of a trade war with China nor a proxy fight with Russia, both of which the president has made jarring actions on.
In this new reality, there is no such thing as complacency. Markets no longer rally on any bit of news as they did in 2017. Wall Street and Main Street are losing the key elements that allowed the bull market to continue unfettered for so long. Trump has been perceived as business friendly and keen on making deals that benefit the private sector, but today, he is losing his financial legislation carrot. The departure of Paul RyanPaul Davis RyanPaul Ryan researched narcissistic personality disorder after Trump win: book Paul Ryan says it's 'really clear' Biden won election: 'It was not rigged. It was not stolen' Democrats fret over Trump-district retirements ahead of midterms MORE may cost Republicans control of Congress, a fate that would impede the president’s ability to push through legislation that benefits the stock market.
As for making deals, Trump’s hardline style of negotiating has the rest of the world waiting for a full-blown trade war or the tearing up of agreements. Trump has criticized trade deals worth hundreds of billions of dollars with Canada, China, Mexico and Germany. The cost of discovering that trade wars are actually not so easy to win came in the form of Chinese-backed tariffs aimed at U.S. farmers, which has spurred Trump to consider rejoining the Trans Pacific Partnership.
Then there’s Mike PompeoMike PompeoPoll: Biden, Trump statistically tied in favorability Majority of voters disapprove of execution of Afghanistan withdrawal: poll Sunday shows preview: Coronavirus dominates as country struggles with delta variant MORE, Trump’s choice for secretary of State, who has demonstrated an ability to think like the president and comes branded with the reputation of a hawk. Pompeo downplayed that image in his confirmation hearing. Yet, a mindmeld between Trump and Pompeo could push a strike Syria sooner rather than later, escalating a proxy war with Russia. As President Obama said in 2014, “Tough talk often draws headlines, but war rarely conforms to slogans.”
The sheer amount of glass balls in the air right now is terrifying to watch, but it’s hard to look away, especially if you have push notifications enabled. But with the second quarter ramping up, Wall Street can still look forward to a catalyst with earnings. Company fundamentals remain strong, global growth continues pacing along at a rapid clip, and consumer spending is at its highest in six years. Moreover, the S&P 500 is expected to see a 17 percent increase in earnings for the first quarter, the highest growth rate in seven years.
That’s only enough to keep investors content for so long. Emerging markets will need to continue growing if the bull market has any hopes of continuing, which won’t happen if investors are scared to invest outside of the United States as trade tensions play out around the globe. As Trump digs in his heels against an encircling Robert MuellerRobert (Bob) MuellerSenate Democrats urge Garland not to fight court order to release Trump obstruction memo Why a special counsel is guaranteed if Biden chooses Yates, Cuomo or Jones as AG Barr taps attorney investigating Russia probe origins as special counsel MORE, we’re witnessing a fight that has pushed the president into a corner.
There are two possible scenarios. In the first, Trump will continue pushing the red button on his desk if he believes it will sway headlines. If he leans in on his trade battles or moves quickly to strike Syria, it would temporarily dissipate the clouds surrounding the Russia investigation. In the second, Trump fires Mueller and opens a new can of constitutional worms that investors and America are not prepared for. Make sure your Twitter notifications are enabled.
John Kilhefner is deputy managing editor of InvestorPlace.com.