Trump Is Dangerous And That’s Not Good For Stocks – Or More Importantly World Order

There is something not at all right when the weightiest decisions of a democratic republic depend so much on the mood of one man – Peggy Noonan, “A Republic, Not A Mood”, WSJ Saturday April 4

The world order has changed from a multi-lateral rules based world order led by the dominant US power and its allies (e.g., the G7) to a might is right world order with no single dominant power enforcing order, which means that we can expect more fighting – Ray Dalio, “We’re In A World War That Isn’t Going To End Anytime Soon”, April 7

The stock market is swinging wildly on a day to day basis based on the mood of President Trump. On Tuesday morning, he tweeted ominously that “A whole civilization will die tonight, never to be brought back” sending the market down hard in the morning. Wednesday morning he suggested that the same civilization may be on the verge of a “Golden Age” after announcing a two week ceasefire to negotiate with Iran – and the market was off to the races.

I’m not smart enough to know what side of the bed Trump is going to wake up on so I can’t trade these headlines. What I do know is that this kind of grandiose, impulsive deal making based on his moods is not good for stocks – or more importantly for a stable world order. The foundation of progress is order and the rule of the law. That’s the opposite of the way Trump is doing things. We saw this a year ago with the Liberation Day tariffs and we’re seeing it again now with Iran. He gets to the brink of disaster – and then pulls back when he fears that he’s gone too far.

While the market is focused on the headlines, I’m focused on this bigger picture. While the headline was good today, with the way Trump operates it won’t be long before he scares the market again. And sooner or later, when you play chicken one too many times, you get into an accident. Running the world via social media is not a recipe for the stability and order progress depends on.