For Donald Trump, the stock market has long been a real-time barometer of his economic record. When Wall Street was doing well, it meant he was doing well. When stocks values looked good, it meant the value of his presidency looked good.
None of this ever made sense. Not only are there important differences between the stock market and the economy, but Trump, ignoring warnings, apparently worked from the assumption that the major indexes only move in one direction.
Wall Street is now teaching the amateur president a lesson he didn't want to learn.
World stock markets nosedived for a fourth day running on Tuesday, having seen $4 trillion wiped off from what just eight days ago had been record high values.Europe's main markets started down as much as 3 percent and shares tumbled in Asia after a wild day for U.S. markets.Two days of steep losses have erased the U.S. market's gains from the start of this year, ending a spate of record-setting calm for stocks.
It's important not to respond to these events in lazy, partisan ways. In the Obama era, Trump and his allies used to respond to even modest drops on Wall Street as proof that the Democratic White House was failing.
The line of argument proved to be ridiculous, not only because the stock market's performance over the course of Obama's presidency was very strong, but also because blaming short-term Wall Street trends on the White House is always unwise.
The trouble, however, is that Trump has gone out of his way to take credit for stock market gains. It apparently never occurred to him that would mean taking responsibility when stock values started to decline.
Jay Carney, one of the Obama-era White House press secretaries, noted yesterday that it's a "good time to recall that in the previous administration, we NEVER boasted about the stock market -- even though the Dow more than doubled on Obama's watch -- because we knew two things: 1) the stock market is not the economy; and 2) if you claim the rise, you own the fall."
If recent history is any guide, Trump will either ignore the selloff or find someone else to blame it on. Maybe it'll be Obama's fault. Or Hillary's. Maybe he'll point the finger at James Comey. Perhaps the president will get creative and pin this on some combination of immigrants, the deep state, the New York Times, and Bigfoot.
Indeed, the White House has already begun scrambling to put some distance between the president and the stock market.
But isn't it a little late for that? Isn't it the exact opposite of what Trump has told Americans for over a year?
Charles Gabriel of Capital Alpha Partners, a Washington research firm, told Politico, "This is a risk that the president clearly set himself up for. Until now, Trump's had kind of a free ride in this market and taken so much credit for it, even though so much of it was due to easy-money policies from Janet Yellen and the Fed. Now she's out the door and volatility is back."