Fourteen minutes before the markets opened, Trump cited his decision to restrict travel from certain parts of the world as a game-changer in the spread of the coronavirus.
With 13 minutes to go, he decried the “FAKE NEWS” — apparently about the coronavirus.
Once the sell-off began, he reached for a silver lining in all of this, saying consumers would actually benefit from lower gas prices.
He followed that up by arguing that the drop wasn’t really about the coronavirus crisis but rather a reaction to oil-price bickering between Saudi Arabia and Russia and “the Fake News.”
Finally, he pointed out that despite tens of thousands of people dying from the flu each year, “life & the economy go on” — a rather transparent attempt to soothe twitchy investors about the future of the U.S. economy.
Through it all, though, the sell-off continued.
As president, Trump has made the stock market his calling card and often relished his ability to affect it with a tweet or a public comment. But the coronavirus has shown the limits of his ability to calm public fears with his thumbs. And perhaps more than ever before, his sustained undermining of his own credibility has come back to haunt him.
Throughout the trade war with China, the markets have jumped or dropped significantly in reaction to Trump’s public pronouncements. In one two-week period, Forbes estimated that the Dow Jones industrial average shifted a total of 3,000 points thanks to signals about whether the situation was getting better or worse.
Early this year, following Iranian missile attacks on bases in Iraq that house U.S. troops, Trump calmed fears on Wall Street by tweeting that “all is well.”
Goldman Sachs published research in October showing that investors lowered their expectations about the Federal Reserve’s interest rates based upon Trump’s social media activity.
The difference between all of that and what we see today, though, is that those were things over which he had some control. He could unilaterally ramp up or scale back the trade war with China and de-escalate with Iran. His pressure on Fed Chair Jerome H. Powell could ostensibly affect the decisions that Powell made. And when it comes to individual companies, a president has some power to dictate how they are treated by his administration and Congress.
With coronavirus, though, it’s not about reading Trump’s intentions; it’s almost completely about whether what he is saying is true. Trump has said that the coronavirus is contained and that the threat isn’t all that serious. If investors truly believed that, we wouldn’t be seeing what we’re seeing right now. They don’t.
And that shouldn’t be terribly surprising. One constant throughout Trump’s presidency is that a strong majority of the American people simply have no faith in him being honest. When Trump ran for president, the cliche was that his voters took him “seriously but not literally” — implicit in which is that Trump can’t be taken at face value. Since then, polls suggest that even people who like him know he’s serially dishonest.
Quinnipiac University has long polled whether people think Trump was honest. In its most recent survey, a month ago, 58 percent of Americans said Trump isn’t honest and 37 percent said he is. At one point, the number of Republicans who said Trump wasn’t honest hit as high as 26 percent and the number of independents spiked to 69 percent.
I’d argue, though, that these numbers actually undersell Trump’s credibility problem — especially with his supporters. An Associated Press-NORC poll in October dug a little deeper on this question, asking people not just a binary “is he trustworthy or not” question but offering them several options. It asked whether the words “honest” describes Trump “extremely” well, “very” well, “moderately” well, “not very” well or “not at all.” In that case, just 53 percent of Republicans said that word described him at least “very” well. Nearly as many — 47 percent — chose only “moderately” well or below.
Overall, just 24 percent of Americans said the word “honest” described Trump at least “very” well.
The people who matter when it comes to the stock market, of course, are investors — not so much working-class Americans who make up a large chunk of these surveys. And the investors generally make decisions based on fundamentals. But it’s not difficult to see how some well-timed reassurances about the U.S. economy and the coronavirus effort by a president more mindful of his credibility would probably calm people’s fears. Instead, we have divergent messages from Trump and the health officials who surround him.
If anything, Trump’s persistent all-is-well stance at this particular moment in time, when compared with the signals we’re getting from those health officials, might be making things worse. Part of handling these situations is about having faith in the government, and if the chief executive sounds as if he’s not taking the crisis seriously enough and isn’t clued in about the true nature of the threat (as Trump has repeatedly indicated), that’s a recipe for making a bad situation worse.
More than anything, though, it’s a moment at which the administration probably wishes it wasn’t run by a president with more than 16,000 false and misleading claims to his name.