Did you hear?  The stock market crashed…then recovered…then crashed again…then recovered some more.  Down, up, down, up – some fairly wild swings in some fairly short periods of time.  Profit taking?  An inevitable “correction?”  Did the stock market take such a rough ride because of the jobs reports that showed modest growth in real wages?  Maybe.  Real wage gains was one of the myriad suggestions out there.  I hope that one is wrong, though.  It’s not a good sign – the suggestion that the market might crash if workers start to get more fair wages.  It DOES, however, support my contention that the “Dow” reflects only the happiness of CEOs and has nothing to do with the state of the economy so…victory lap?

I can’t pretend I’ve heard each and every one of the possible explanations out there but the one I DIDN’T hear was this: 45’s policies are starting to take effect.  For reasons I can’t explain, FAR too many Americans don’t seem to realize that the first year of a President’s term – any President – plays out under the LAST year of the previous President’s budget.  So all of this “good” economic news that’s been playing out over the last year has REALLY been the “end” of the Obama administration.

It seems quite possible to me that one of the problems is that the GOP can’t seem to get it’s financial house in order.  They’ve been trying to come up with their own budget and, so far, we’ve measured not one but two “government shutdowns” as the GOP careens between “cruel” and “not cruel enough” for the various “Republican” factions.  When they DID finally come up with…something…it added over one TRILLION dollars to THIS YEAR’S deficit.  Talk about “fiscal responsibility…”

But, in addition to the jobs report on the Friday the crash “started”, another event took place on the subsequent Monday: Janet Yellen was replaced as Fed Chair by a Trump pick, Jerome Powell.  Okay, “Trump pick” isn’t exactly right.  Powell was already on the Board and he was put there by Obama.  But Yellen was doing a good job as the Chairperson and it is described as “highly unusual” for a competent Chair to NOT be recommended for a second term.  Replacing Yellen with Powell introduced uncertainty and one of the things the markets hate beyond any other is uncertainty.

So, why the change?  Acknowledging that Trump and I haven’t spoken on the subject, I’d have to submit that, perhaps, the driving factor was Powell’s known aversion to “regulatory burdens.”  He was once a partner in the Carlyle Group – a Washington based private equity firm.  OF COURSE he wants to reduce “regulatory burdens.”  How the hell can banks game the system and rip off their customers if regulations prevent them from doing so?  And, sure, that will help usher in new instabilities as the economy returns to the boom and bust days of old…

I’ll tell you this: “Uncertainty” and “instability” are words regularly associated with this maladministration.  Sadly, they’re also the very intangibles investment markets try to avoid at all costs.  Perhaps Mr. Trump’s Wild Ride has only just begun…