Wow, that was even quicker than I expected.

Remember this from yesterday?

This isn’t to say that the market hasn’t reacted to bad news previously during the current administration. There have certainly been cases where a disastrous policy announcement has caused things to drop, but always with remarkable speed, investors have reverted back to the “this is fine” mode, even if the problem they were reacting to has by no means gone away. 

 

Let's see how things went. 

 

 

It took about two hours for the markets to revert to complacency and denial, which has to be some kind of a personal best.

From Allison Morrow's newsletter. 

Collective wisdom holds that an independent central bank is absolutely vital for any advanced economy. This isn’t even the sort of thing you have to ask an economist about — just look at Turkey or Argentina and you can see how disastrous it can be when you let executive power meddle with a country’s monetary authority.

 

And the US monetary authority, the Federal Reserve? Why, that’s the most important central bank of all, they’ll tell you. It’s the bedrock of global finance. For a president to tamper with the Fed is to cross a red line — to welcome panic and potential doom.

 

But also: YOLO, you know?

 

Financial markets were only briefly, moderately spooked by the news that the Justice Department had subpoenaed Fed Chair Jay Powell in a criminal investigation. And as for the leaders of Corporate America, for whom an independent Fed is a bottom-line concern? They’re similarly unmoved, at least in public.

 Just to be clear, the concern here isn't that the markets themselves; it's that market drops had one of the few types of feedback that could make Trump back down, the impetus for the TACOs.  It was far from an ideal system, but it might have been the last reality-based input the White House would listen to.