Discussing Trump's stock market performance inexplicably leads to a conversation about the Great Depression.
Stock markets are making a feeble recovery today, climbing back after a dismal day in the market. However, Wall Street is echoing a loud and clear message: Trump's trade war is making the United States an iffy place to invest.
This sentiment is evident when we glance at the overall market and the assets traders are buying and, well, mostly selling.
US Stocks
Trump's stock market is putting up some jaw-dropping statistics. We've even started making comparisons to the Great Depression.
The Dow Jones Industrial Average has taken a nosedive, dropping 9.1% in the first three weeks of April. This is the index's worst performance for any April since 1932, with April 1931 being the only other month that was worse. The S&P 500, on the other hand, has plummeted 14% throughout Trump's presidency, marking the worst performance through April 21 for any president since records began in 1928. Even though there was a modest rebound on Tuesday, major indexes rose over 2%, Trump still has a long way to go to avoid leaving a dismal mark in history.
Dollar
Investors have seemingly given up on the U.S. dollar. During Trump's new term, the dollar has fallen 5.5%, marking a record low dating back to the data collection during former President Gerald Ford's term beginning in 1974. The only other presidential term for which the dollar started off even remotely close to this dismal beginning: Trump during his first term, when the dollar fell 3% in the first 63 days of trading.
Bonds
Typically, when investors get jittery, they pile money into the perceived safety of American Treasury bonds – the gold standard of safe-haven assets. But not this time: Government bonds have sold off sharply. Yields, which trade in opposite direction to prices, have surged.
The 10-year US Treasury yield has climbed to 4.4% just a month after it dropped below 4%. This kind of steep rise usually takes longer.
Foreign stocks
As investors have pulled money out of American stocks and bonds, they've been pouring money into investments around the world. The MSCI All World index, excluding the United States, has risen 2.9% over the course of Trump's new term. This is roughly on par with the start to former President Joe Biden's term and only slightly below Trump's first term – two periods when US stocks were also booming.
Oil
Fearful of a global recession, traders have offloaded oil significantly, giving US crude its worst start to any presidential administration since former President Bill Clinton's second term, according to Bespoke. Oil has fallen 19% during Trump's second term as traders worry that demand for travel and shipping will crumble. Oil fell nearly 24% during the first few months of 1997, as Clinton started his second term.
Gold
Amidst all this, investors are looking for secure places to park their money. Among the best-performing assets is gold, which surged again Tuesday above $3,500 an ounce, hitting yet another record.
Gold has skyrocketed nearly 25% during Trump's new term, absolutely crushing the previous record of 13.5% during former President Jimmy Carter's start to his term in 1977. No other president in the early days of their administrations has come close to matching Trump's recent gold boom.
What's Going On?
Trump's trade war is sending shockwaves through the global economy, according to the International Monetary Fund's (IMF) latest report. The IMF warned that we are entering a new era as the global economic system that has operated for the last 80 years is being reset. The report predicted a slowing economic growth – particularly in the United States – while inflation is expected to reignite. This potentially disastrous combination of slowing growth and rising inflation is tough to navigate.
Though economists don’t expect anything close to the so-called stagflation of the 1970s, the rapid reordering of global trade dynamics is causing confusion and unease among consumers, businesses, and traders.
"The April 2 Rose Garden announcement forced us to jettison our projections," the IMF noted, referring to Trump’s “Liberation Day” tariff announcement in which he imposed 10% across-the-board tariffs and announced punishing "reciprocal" tariffs on dozens of countries that have since been paused for 90 days.
Goldman Sachs CEO David Solomon noted on CNBC Tuesday that the confusion around Trump’s ever-changing policy has hurt businesses' ability to make necessary adjustments. “The level of uncertainty is too high. It’s not productive,” he said. “It will have an effect on the growth of the economy, and we will see that, in my opinion, relatively quickly.”
- Wall Street's sentiments indicate that Trump's trade war is making the United States a questionable place for investing, as illustrated by the poor performance of the Dow Jones Industrial Average and the S&P 500.
- The Dow Jones Industrial Average has witnessed a drastic drop, with its worst performance in any April since 1932, thereby raising concerns about Trump leaving a dismal mark in history.
- Similarly, the S&P 500 has plummeted by 14% throughout Trump's tenure, marking the worst performance for any president since records began in 1928.
- Conversely, as fear of a global recession grows, investors are flocking to safe-haven assets like gold, which has surged by nearly 25% during Trump's new term, setting new records.
- The International Monetary Fund (IMF) warns that Trump's trade war is causing shockwaves through the global economy, and their report predicts a slowing economic growth and rising inflation, posing challenging economic conditions.
