WASHINGTON – Wall Street's Trump rally, if that's what it was, is over.
The Dow Jones Industrial Average plummeted again Thursday, this time by more than 1,000 points, adding to losses that make for a market downturn of more than 10 percent. This is what's called a market correction.
And it's all President Trump's fault, right? After all, he claimed credit for the market's remarkable rally in a number of tweets over the past year. So he must be responsible for the big sell-off, too, right?
Wrong. And wrong. And two wrongs don't make a right.
Trump now seems to be learning a hard fact the hard way. Financial markets are fickle creatures, powered along by mass psychology, global economic trends and automated trading.
And this particular correction seems to be in part the product of good news, as investors feared that higher wages may be a sign of inflationary times ahead.
This is just the most recent sign that markets move of their own momentum, largely apart from the actions of any president. For proof, think back – if you're old enough – to Oct. 19, 1987, a day I remember well because I wrote a stock market column for The News as a young business reporter at the time. Veteran investors recall that day as "Black Monday," the day the Dow dropped 22.61 percent in one day.
By way of perspective, that's nearly five times worse than this past Monday's 1,175-point drop in the Dow. But nobody calls Black Monday "Reagan's Crash." That's because Black Monday was a one-off, an aberration in an otherwise growing economy that America enjoyed through much of Ronald Reagan's two terms as president.
Then there was the Dow's 7 percent drop on Sept. 29, 2008, amid the larger sell-off marking the beginning of the Great Recession. But do we call that the "W Drop?" No. The presidency of George W. Bush is remembered for many things, but a one-day drop in the Dow isn't one of them.
Of course, President Herbert Hoover remains the poster boy for the Great Crash of 1929 and the ensuing depression, but that fact has more to do with Hoover's dithering response to it all rather than any one thing he did to cause the stock market crash – because he didn't cause it. Instead, an economic decline, which had already begun, took the life out of stock prices and caused the Great Crash.
There's a lesson in all this.
In the short term, presidents and the fans that follow them tend to give their leader too much credit when things go well on Wall Street -- and their critics react with glee when the market, which sometimes seems to have a deranged mind of its own, proves the president wrong.
The lesson is that's the wrong way to look at things.
Market indexes, over time, have risen at remarkable rates because the world economy has made incredible progress, lifting millions out of poverty and creating new markets in places the current president might dismiss as ...well, you know. Barring calamity – such as a large-scale war or phenomenally bad long-term economic decisions or radical effects of climate change – that long-term trend is likely to continue over the next decades.
That means the current dip is something Wall Street periodically sees: a correction that brings stock prices back down to the more reasonable level where they belong, for now.
They will likely bounce back up again, eventually, no matter what the president has to tweet about it.
Not much! Friday is often Washington's quietest workday, and given that the House finally passed its two-year budget deal at 5:32 a.m., sleep likely tops today's agenda on Capitol Hill ... Meantime, President Trump has a light schedule including meetings with Secretary of State Rex Tillerson and Environmental Protection Agency Administrator Scott Pruitt ... And the Centers for Disease Control offer an update on the nationwide flu epidemic.
It happened when most of us were sleeping, but there was a government shutdown last night, which ended when Congress passed a two-year spending plan in the wee hours of the morning. In retrospect, and wisely, Politico labels this "the dumbest shutdown ever." ... The News reported what the spending deal means for Buffalo a couple of days ago, but today the Washington Post explains in short-order form what it really means for the country ... The domestic violence accusations against White House aide Rob Porter continue to roil the Trump White House, Vanity Fair's Gabe Sherman says ... Vox's Matthew Yglesias argues that Congress still isn't taking the opioid crisis seriously ... Imagine narrative master Michael Lewis watching the State of the Union with Steve Bannon, the say-anything Trump campaign manager and now exiled Breitbart chief. Wait – you don't have to imagine it. It really happened, and in Bloomberg View, Lewis tells us all about it.