The Dow Jones Industrial Average experienced its largest 2 week drop since 2016 as tensions from the Korean Peninsula drove down indexes last week and the political fallout from Charlottesville has soured investor sentiment this week. U.S. indexes fell across the board mid-week as President Trump dissolved two advisory councils after CEOs began an exodus after his comments on the rally. Chief economic advisor and former chief operating officer at Goldman Sachs Group Inc. (NYSE:GS) Gary Cohn was reportedly especially rattled by the reaction from Trump. Gary Cohn is widely regarded as one of the best hopes for making the pro-growth policies initially promised by the Trump administration a reality.
If Cohn were to depart it would likely send shockwaves in the markets as tax reform and the new infrastructure plan would be put in serious jeopardy. The Dow has fallen marginally as of the noon hour on Friday, August 18 – down 0.07% as of writing. Rallies in gold and silver and a weakening U.S. dollar also add legitimacy to the concern that investors have. If the political crisis in the United States continues to escalate, or if the pro-growth policies promises fall through, markets will undoubtedly react violently.
The “Trump Trade”, the market boom following Donald Trump’s election, has been powered by the promise of his economic policies. It could face an equally strong backlash if investors come to believe that the markets have been trading on conditions that will be unrealized.
