Markets Shocked to Discover Trump Still Trump

(Maybe they were expecting Mr. Rogers?)

Wall Street recoiled Monday after President Trump once again referred to a congressman as “little pencil-neck.” Oh wait, it wasn’t a congressman and the slur wasn’t little pencil-neck. This time, the recipient of POTUS’s virtual wrath was Federal Reserve Chair Jerome Powell, a “major loser” who apparently isn’t slashing interest rates fast enough to cushion the economic fallout from Trump’s tariff policies.

“‘Preemptive Cuts’ in Interest Rates are being called for by many. With Energy Costs way down, food prices (including Biden’s egg disaster!) substantially lower, and most other ‘things’ trending down, there is virtually No Inflation. With these costs trending so nicely downward, just what I predicted they would do, there can almost be no inflation, but there can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW. Europe has already ‘lowered’ seven times. Powell has always been ‘To Late,’ [*Trump typo, not mine*] except when it came to the Election period when he lowered in order to help Sleepy Joe Biden, later Kamala, get elected. How did that work out?” Trump wrote on Truth Social, less than a week after stating that Powell’s ‘termination can’t come fast enough.’

*Could someone—anyone—on Team Trump kindly school the man in the proper and judicious use of quotation marks and the shift key? Thank you for coming to my TED Talk.

While 47 has allegedly been considering replacing Powell—a move that basically isn’t his to make without a whole bunch of hoopla—the Fed chair said earlier this month, “I fully intend to serve all of my term.”

The market, clearly new here, is losing it a little bit over the diplomatic drama. Yesterday the Dow, S&P and Nasdaq all fell/slid/plunged/tumbled—depending on who you ask—a “staggering” 2.5%, while the dollar threw itself dramatically onto the floor, where it wallowed in its lowest low in years.

Just to recap: A president known for shade-throwing, middle of the night mean-tweeting, and threatening to fire people he doesn’t technically employ... the same one who famously adds descriptors such as crazy, crooked, sleepy, sneaky, sloppy, slippery, shady, psycho, little, laughin’, lyin’, leakin’, dumb, dopey, ditzy, fat, wacky, and meatball* to his enemies’ résumés… called someone a name.

*If you enjoy LingOL, don’t miss that link [1:00]

TRUMP: “Jerome Powell is a cotton-headed ninny-muggins!”
INVESTORS: “Whoa, okay, no one told us he was going to be this unhinged again. Sell something, anything, everything!”

Although I do pay peripheral attention to market trends, I’ll admit I know more about cat care and grooming than the inner workings of Wall Street. So, I asked ChatGPT to put the 2.5% slump into historical perspective. Its (their?) response:

A 2.5% dip in the stock market might sound dramatic when screamed across cable news tickers, but in historical context, it’s more of a speed bump than a crash barrier. Here's how to put it into perspective:

*Black Monday (1987): The Dow dropped 22.6% in a single day—the largest one-day percentage drop in U.S. history. That's nearly 10 times the size of a 2.5% dip. [Author’s note: Clearly ChatGPT thinks I’m exponentially bad at math.]

*COVID Crash (March 2020): Markets saw daily drops of 7–12%, multiple times over a matter of weeks. That was full panic mode. A 2.5% drop? That’s just a market raising an eyebrow.

*Average Market Fluctuations: Historically, the S&P 500 has experienced multiple 2%+ daily drops per year—it’s part of normal market volatility. In fact, it's not uncommon to see 30+ days a year where the market moves 1% or more.

*Corrections: A true correction is a drop of 10% or more from a recent high. Bear markets require a 20% drop. So, 2.5%? It’s a blip, not a bear.

Even in 2022, amid inflation and rate hikes, daily swings of 2% or more were common. And investors still made it through, portfolios mostly intact (except for the guy who bet everything on Peloton).

POTUS, of course, has been publicly bullying Powell since roughly ten minutes after appointing him in 2017. Powell, a man with the charisma of an unsalted rice cake, insists he has a job to do—a job he loves—and is in no rush to bow to any presidential demands.

Some are accusing Trump of manipulating the markets again by publicly criticizing the FED and setting off a wave of uncertainty (investors’ kryptonite). If people sell off stocks in a mass panic and the market drops dramatically, Powell—theoretically—could be strong-armed into slashing rates, a move that would make borrowing cheaper and stimulate investment in the short term. The result? The market rebounds and Trump gets to take all of that beautiful, tremendous credit.

It’s a big IF. (It could also fuel inflation and weaken the dollar in the long run, but we’re more of an instant gratification sort of country, you know? We can worry about tomorrow next week.)

The funny part is, Trump tantrums aren’t a new thing. Neither is his habit of stirring chaos and then yelling “fire” in the financial theater. One might have expected seasoned, savvy investors to yawn and go back to mainlining espresso and perfecting their golf swings. But instead, the moment Trump hurled a playground insult at J-Pow, the money movers and makers reacted like a herd of fainting goats. Maybe the next time Trump has a media conniption or digital meltdown, Powell should respond with, “I know you are but what am I?”—just to level the preschool playing field.

As always, LMK why you voted the way you did (and/or what I missed) in the comments. :)

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