This has been another winning year for the financial markets. Stock prices keep making new records. Markets outside the US are following along with America. Inflation continues tepid, job growth is steady, the prospects of the Fed taking away the punch bowl with higher rates is diminishing. Perhaps best of all consumer confidence is solid.
There are several things that make today’s investment environment differ from the past. There is a growing and healthy amount of skepticism on the part of Wall Street Economists, investment strategists and other talking heads. Without going into all the boring detail, each presents a well reasoned cause(s) why the market is in store for a significant correction.
It could be interest rates shooting up, wage stagnation, global warming, the North Korean thing, or a number of visible well identified issues. There are plenty to choose from. But sharp corrections are always caused by surprise events. The big issues of today are so well known and thoroughly documented, how could any of these surprise investors. Let’s look elsewhere.
The Market Enigma
It doesn’t take much research to document that market corrections are virtually always created by some surprise event. Hence by this very definition, market corrections cannot be predicted. At best you can only prepare for an unknown future.
The Trump Enigma
There are plenty of mental health professionals with far greater skills than I have pronouncing POTUS as a full-blown narcissist. This is the guy that a minority of America voted into office knowing his personal flaws fully.
Trump is a quirky cannonball loaded with surprises.
In the beginning, his quirks were so amusing that comedians all over were licking their comedic chops looking forward to eight years of fresh material. That day is over.
Since Inauguration Day, I have read several books about narcissistic personality types. There are at least a dozen available online so there must be lots of interest in the topic.
There are several traits about narcissists that stand out. According to psychiatric studies, 75% of cases are men. There is a constant need to create tension and anxiety with the people in their inner circle.
They are easily offended and have perfected the art of blaming literally everyone (except themselves) for causing trouble. The absolute inability to take responsibility for their actions makes it impossible for anyone to bring about a change in their behavior.
Could Charlottesville Be The Surprise
How could a small little Virginia town of about 49,000 people shake the world? It could happen. The events of August 12th represent the most severe test. The White House response was not the first time they bungled the job of communicating with the public. However, given the emotional nature of events, this is where Trumps narcissism gets really costly.
Even if you are a life long Trump fan, you must admit he screwed up in as big a way as possible. Then came the Intel and Merck CEO resignations from the Business Council followed by the dissolution of the entire Council.
The Trump response was pure and predictable narcissism, blame, insult, and diminish. Now in addition to a verbal war with North Korea, there is an exploding war with corporate America. A narcissist thrives on tension.
Now the media headlines are shifting to an even wider focus. Has the mess in handling Charlottesville become so bad, it is driving White House advisors to the brink of resigning? Names like Gary Cohn and recently appointed Chief of Staff John Kelly are bellwethers. Without Cohn, the Presidents tax reform legislation is crippled and without Kelly, the White House continues to be dysfunctional.
There are calls from all over the business and political community from Ken Langone, founder of The Home Despot to Mitt Romney and throughout Congress for Trump to acknowledge his mistake and to apologize to the American people for the mistake. The odds of this happening are extremely low. Mental health experts say the more the narcissist feels attacked, the stronger their reaction.