Close
Enter your
text here

Donald Trump’s Reaction to the Stock Market’s Recent Turmoil

Donald Trump’s Reaction to the Stock Market’s Recent Turmoil 1000 426 Guardian Financing

President Donald Trump has broken his silence on the turmoil currently being experienced in the stock markets. According to him, investors are making a very big mistake by withdrawing from the market when there was nothing but good news concerning the economy.

In a tweet, which revealed his reaction, the real estate mogul laments that back in the day, markets would react positively when there was good news about the economy. Conversely, they would respond negatively when there was bad news about the economy.

The president’s sentiments, later on, suggested that he is not worried about the current plunge in the numbers, even as the Dow lost close to 1000 points. According to him, there is a lot to be celebrated in the economy and the negative reaction of the market to positive news regarding the economy should not be a bother. The White House also responded by reiterating that the president was more focused on long-term fundamentals, which were still very strong, even as the markets plunged.

It should be noted that markets plunging due to positive economic news is not something new, and it is a phenomenon with a very valid explanation. It is not only frustrating to the president, but also to investors who naturally fear losing their gains, when the markets go down.

One of the explanations is that at times, Wall Street focuses on the short-term, and investors do get worried they may lose their profits if wages grow, and as expected, the Federal Reserve is also worried about inflation.

If the Federal Reserve raises rates as a method of combating inflation, then one of the drivers of the bull market will be edged out. As a result of that fear, investors go on a selling spree to dispose of their bonds. As per the recent case, yields were increased to a 4-year high. High yields lead to risky stocks, which lead to a sell-off. From this perspective, therefore, Trump was right in claiming that good news for main street is perceived as bad news by the guys over on Wall Street.