Trump’s Trade War Puts Animal Spirits on the Endangered List
Stock valuations are back to where they were when the president was elected.
Animal spirits could be slow to waken again.
Photographer: Mark Kolbe/Getty Images
The animal spirits have gone back to sleep, if ever they got up in the first place.
After plummeting on Monday amid trade-war tensions, stocks did rally on Tuesday and extended their gains on Wednesday on a report that President Donald Trump will delay tariffs on auto imports. Trump is always quick to point to the stock market as a barometer of his administration’s success — the S&P 500 Index remains up more than 13.5% for the year, after all — but price is not the best gauge of whether investors believe his policy mix of tax cuts and tariffs will lift the economy. The better measure of that is what investors are willing to pay for corporate America’s future profits. Based on that, investors and business managers are clearly less optimistic about Trump’s policies than they were the day he was elected.