Topline
The U.S. stock market is in a freefall after President Donald Trump announced his all encompassing tariffs earlier this week, and Trump is trying to crash the stock market on purpose—at least according to a video he reposted to social media Friday riddled with inaccuracies.
The S&P 500 is down more than 13% since Trump won the election in November, with most losses … More
Key Facts
Trump reposted a link on his Truth Social platform Friday morning to the minute-long video which opened: “Trump is crashing the stock market…this month, but he’s doing it on purpose.”
The short video, which promotes several falsehoods or misinformed claims, offers insight into Trump’s thinking behind his new tariffs widely panned among economists and across Wall Street, leading a downright bloodbath in the market, as the S&P 500 index cratered 4.8% Thursday, the worst drop in nearly five years, followed by an even more painful 6% loss Friday.
According to the video, which traces back to a March 15 post from a TikTok account with less than 18,000 followers, Trump is making a “wild chess move” and playing a “secret game” to “force” the Federal Reserve to lower interest rates and refinance a chunk of the federal government’s $36 trillion in debt “very inexpensively.”
To that theory’s credit, yields for U.S. Treasury notes, which are a starting point for loans from mortgages to corporate bonds, have collapsed this week, as the benchmark 10-year Treasury fell more than 10 basis points to a six-month low of below 3.9%, which should translate to cheaper borrowing, but it’s arguably little more than a consolation prize if the U.S. sinks into a recession defined by higher inflation, cutting into consumer purchasing power, and far weaker corporate earnings from tariffs.
Lower Treasury yields also can be achieved in a far less damaging fashion, by restoring fixed income investors’ confidence in the federal government’s fiscal health through more austere spending— a narrative shaped the early days of Trump’s second term, when Elon Musk’s Department of Government Efficiency helped grow confidence the U.S. would address its ballooning debt.
And the 10-year Treasury is still far from being at a historically cheap level, as it sat below 3.6% as recently as September and below 3.5% from 2012 to 2021, and yields climbed again Friday afternoon to above 4%.
News Peg
Trump directly called on the Fed to lower the target federal funds rate in a Friday social media post, writing: “This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates.” Trump has repeatedly demanded for the politically independent Fed to acquiesce to his demands for lower rates dating back to his first presidential term. Powell did not seem interested in meeting Trump’s demands in prepared remarks Friday, observing: “While uncertainty remains elevated, it is now becoming clear that the tariff increases will be significantly larger than expected. The same is likely to be true of the economic effects, which will include higher inflation and slower growth.”
Does The Stock Market Only Benefit The Rich?
The video Trump reposted claimed he is “taking from the rich short-term and handing it to the middle class through lower prices,” explaining “94% of all stocks are owned only by 8% of Americans.” But this Robin Hood-eque notion of taking from the wealthy to enrich the less fortunate is misguided. For one, economists’ consensus overwhelmingly supports the idea that the president’s tariffs will lead to higher consumer prices. The statistic on stock ownership appears to reference a 2023 Federal Reserve study that 93% of stock market value is owned by the richest 10% of Americans, but that doesn’t mean the other 90% aren’t directly impacted by stock market losses. About 61% of Americans own stocks, according to Gallup, and a majority of Americans have IRA or 401(k) retirement accounts, according to the Census Bureau.
No, Warren Buffett Did Not Praise Trump’s ‘economic Moves’
The legendary investor Warren Buffett believes Trump is making the “best economic moves” in five decades, according to the video shared by Trump, but Buffett made no such comments. Buffett’s company Berkshire Hathaway confirmed the billionaire made no such flattering remarks in a Friday statement, calling the “comments allegedly made by Warren E. Buffett…false.” Buffett’s most recent comments on Trump came in a CBS News interview out last month in which he slammed tariffs, calling them an “an act of war” and a “tax on goods” paid by consumers.
Tangent
Trump’s celebration of stock losses is a major shift from how he viewed equity market returns as a barometer of presidential success in recent years. “If we lost this election, I think the market would go down the tubes,” Trump said in October, later bragging the “market has gone through the roof” and the stock market is “very important,” also celebrating returns during his first term as an “amazing achievement.” The S&P is down about 13% since November’s election.
Further Reading
