Investor Alert

New York Markets After Hours

Tim Mullaney

May 8, 2019, 4:31 p.m. EDT

Trump lost a lot of his money, but he’s losing a lot more of ours

Nearly everybody Trump promised to help is worse off

By Tim Mullaney

President Donald Trump and First Lady Melania Trump go back inside the White House after a Rose Garden celebration of her "Be Best" initiative on Tuesday.

So you lost almost 2% of your money in stocks yesterday because President Donald Trump opened his fool mouth about trade again, threatening 25% tariffs on Chinese goods that free markets have decided they want.

The president would like you to hold his beer.

Tuesday night’s bombshell report that transcripts of his tax returns show Trump managed to lose more money than any other American businessman for nearly a decade between 1985 and 1994 — a $1.17 billion cascade of other people’s (mostly banks’) up-in-smoke cash — is more than embarrassing. Though it is that — it means he was having a cash bonfire even as Ronald Reagan was crowing about Morning in America — if Trump were capable of embarrassment.

It’s of a piece with what happened in the markets Tuesday — to you, and to me.

The New York Times report on Trump’s taxes showed what a clown Trump was in business — a history of pratfalling interrupted from time to time by deals where partners did the work, he stole from suckers, or he simply failed to make his usual catastrophic mistakes. The same clown he is now, with his policies hurting industries as often as they help.

The mini-crash that followed Trump’s latest posturing on China trade talks also shows how clownish D.C. pundits are being in suddenly, again, heralding Trump’s economic leadership when, in fact, markets and the economy are not responding positively to his policies.

The numbers

In fact, Trump’s beloved financial markets tells the story.

Lay aside the fact that the Standard & Poor’s 500 (S&P:SPX)   is up 15% this year (after dropping last year) and up 27% since Trump was sworn in.

Instead, look at the connection between the policies he brays about, and the constituencies he has promised that only he can fix their problems, and the stocks they’re supposed to help.

Begin, naturally enough, with banks, which have played such an outsized role in Trump’s life. And which he has sought to grease by trying to repeal his predecessor’s Dodd-Frank law reining in excesses after the 2008 financial crisis (including, to be fair, a long list of practices connected only dubiously, or not at all, to that conflagration). Banks were also supposed to benefit from more borrowing amid the animal spirits (and higher interest rates) to be unleashed by Trump’s corporate tax cut.

The KBW Nasdaq Bank Index (AMERICAN:BKX)   is down 7.6% in the last year, even as the Dow Jones Industrial Average (DOW:DJIA)  is up 6.6%. That index includes all the usual suspects — JPMorgan (NYS:JPM)   Goldman Sachs (NYS:GS)   , Bank of America (NYS:BAC)   and more. Trump was supposed to help banks — by raising interest rates, and by gutting consumer protection. He hasn’t done either one effectively, so the stocks are slowly giving back their Trump bounce.

Taken to the cleaners

Then let’s talk about Whirlpool (NYS:WHR)  , the intended beneficiary of Trump’s tariffs on washing machines. Whirlpool’s down almost 17% in the last year, continuing a 35% belly flop since 2015. U.S. Steel (NYS:X)   is down by half, despite Trump’s loud promises to protect U.S. steel. Rival Nucor (NYS:NUE)   is off too.

Auto makers on whose behalf Trump has sallied into trade disputes are down — Ford (NYS:F)   down 13% since last June, and General Motors (NYS:GM)   is off 15% since October 2017. Of course, with global supply chains and Mexican factories, auto makers have never been huge fans of Trump’s trade policies anyway. Trump blusters about how they don’t know their own financial interests, but they, like most business people, know better than the stable genius does.

Remember how Trump loves farmers?

The market’s biggest ETF for agriculture commodities ain’t feelin’ that love — Invesco’s DB Agriculture Fund (PSE:DBA)  is down 18% since last May. One reason is that 14% of its holdings are in soybeans — and soybean producers’ access to China’s markets has been slashed by Trump’s tariffs and China’s retaliations.

And how he loves coal?

Energy’s big winners this year have been renewable-energy stocks like First Solar (NAS:FSLR)  . Renewable-energy funds as a whole are beating the market by about six percentage points this year. Even though Trump says that wind turbines give you cancer, that renewable energy is expensive and unreliable, and that he wants to let tax breaks for renewables expire. Coal, meanwhile, is down to firing 27% of U.S. electricity production, where it commanded 47% in 2010.

Where the action is

I could go on, but I only have 100 words left.

The action — in stocks, and in jobs growth — has been in industries that regard Trump with derision. Few technology executives will decide next year that they owe their 93% average three-year stock gain (versus the market’s 40%) to Trump. Health-care stocks have underperformed amid Trump’s efforts to repeal the Affordable Care Act, but hospitals and doctors’ offices have added 800,000 jobs. Exceptions like the surge in defense-related stocks riding Washington’s spending spree mostly prove the rule.

Remember all of this the next time pundits tell you Trump will ride a hot economy. It isn’t actually any hotter than in 2014 or much of 2015. There is no investment boom from the tax cut. There is no surge in job creation.

There’s just a carnival barker, barking away. Same as he ever has.

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