I think I’ve been doing quite a good job sidestepping politics, as I pledged to do months ago. This post is not a departure from that. Don’t let the title fool you. This is a thought exercise and not an attack on the guy.
There are a gazillion possibilities about what’s going to happen on November 3rd and, far more important, November 4th forward. I’d like us to consider one possibility and what it might mean for the market. And I want to stress again, since I know a few of you are just bonkers about the guy, this isn’t a dig on the current POTUS but is an attempt at an objective mental exercise.
Having laid out sufficient preambles, I’ll offer this possibility: let’s say Trump loses and loses bad enough that he doesn’t really fight it. Let’s just say it’s quite evident that it’s time to hang it up, and he’s a one-termer.
Consider the man’s psychological disposition. I don’t think “wise, taciturn sage” leaps to mind. He tends to be, for lack of a better word, childish and impulsive, and he’s going to be really pissed off. Don’t take my word for it. Just listen to the recordings of any of his recent rallies (I have). A stock line is “If I lose, I’ll never come back to (put name of state here).” or “If I lose, I’ll never forgive you.” So he’s made it pretty plain, he’s going to be very grudge-ridden if he suffers a humiliatingly defeat.
Let me put it another way: you know how in past elections, late at night, the losing candidate comes out and says they’ve just spoken to the winner on the phone and graciously conceded? Yeah, that isn’t gonna happen. (And before you jump on me, I know Hillary didn’t do that, but most of the time, that’s how the night ends).
So, again, let’s say he’s lost, and he’s mad, and there’s a countdown as to the number of days left in office (about 75 days). I won’t speculate on all the other stuff he might do (like pardon himself), but one thing’s for sure: he’s going to want some kind of revenge against the public that voted him out. And he’ll want to be clear how badly they screwed up, and how much it’s going to hurt them. So one perfect target: the stock market.
Now, I’ll be the first to acknowledge that is someone wanted to torpedo the stock market, Powell would be the man for the job. He could literally, with one paragraph of text, create a cataclysmic market crash. That’s how powerful he is. He could wipe out trillions and trillions of dollars in equity in no time and all with about one minute of speaking time.
Trump can’t. The Federal Reserve is the stock market. Trump doesn’t run it.
There are other things he can do, however (and I’d be interested to hear your own theories). One thing that springs to mind for me is: scare the living hell out of people. Here, right off the cuff, let me make up three hypothetical tweets that would do the trick.
It seems completely plausible that the man will take out his rage and frustration on the stock market, “just to show them“. If you were in his shoes and wanted to cause some damage to equities, what would your ideas be?