You Have Reason to be Yippy

On Wednesday, April 9th, President Trump announced that he was going to pause the implementation of the punitive tariffs he had announced only a week before onwhat he called “Liberation Day.” In the four trading days after “Liberation Day” the Dow Jones Industrial Average had dropped 4,988 points or almost 12%. The tech heavy NASDAQ dropped even more, more than 13%. And it wasn’t just US stocks. Germany’s DAX index was off 12% and Japan’s Nikkei was off 13%. Even worse, Treasury yields plummeted sending prices higher as everyone sought a safe haven from collapsing equity markets. I don’t know about you but I am afraid to take a peak at my 401(k).

The Wall Street Journal stated that the “pause” indicated that President Trump had blinked at tumbling markets and a weakening dollar. The WSJ was joined by many other newspapers and internet reporters around the world. White House staffers insisted to an incredulous public that the “pause” had been part of the plan all along. The “pause” sent the market rocketing in the opposite direction as the Dow jumped almost three thousand points. Sorry, your 401(k) is still in the red. Another WSJ commentary questioned whether the pause was method or madness quoting Moritz Schularick, head of the Kiel Institute for the World Economy, a think tank saying , “Everyone will likely conclude that [Trump’s] credibility as a negotiator has diminished. Next time, people will believe him even less and will consider at what point he might buckle again. It certainly hasn’t become easier for the U.S. to negotiate.”

I don’t know. Maybe his method is madness. President Trump has always liked being unpredictable, he believes it gives him an advantage in negotiations. That may be good for playing poker but not so much for running a country. Millions of people depend on Donald Trump not just for their economic well-being but for their very lives and those of their families. In his private businesses, Mr. Trump ‘s business plan was to screw the other guy to maximize his return. He screwed his lenders, his business partners, his suppliers and even his employees. But this business plan only works when you are dealing with weaker counterparts who have a limited ability to retaliate.

Donald Trump may be out of his league when dealing with Vladimir Putin and Xi Jinping. Mr. Trump’s narcissism makes him vulnerable to the flattery of wily opponents. He has a very thin skin as even Kamala Harris was able to use to her advantage. But we are all bozos on this Trump bus (flagrantly borrowing from the Firesign Theater). His failure is our failure.

When he announced the pause, President Trump accused investors of being yippy (what we would call scaredy cats). As if violent market reactions and angry world leaders were our fault. I believe he likes having the power to do so much damage just by calling a press conference. But that makes me yippy and it’s not my fault.