Is Donald Trump Still the Stock Market’s Best Friend?

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“I don’t watch the stock market.” With the major U.S. stock indexes down about 2% from last Friday through Tuesday—their worst three-day drop since early October—that’s what the nation’s No. 1 cheerleader for equities declared.

“I watch jobs,” President Donald Trump averred. Could that be a reflection of a half-century-low unemployment rate, in which he also takes pride? Or does the politically astute president hear the rhetoric of the left demonizing wealth and privilege symbolized by Wall Street?

If so, it’s despite his dozens of tweets touting the stock market’s rise to records. As reported here Tuesday, the president’s advisors say they often get asked about market moves and Trump reacts angrily if a stock drop is blamed on his trade policies.

The recent drop, which had the Dow Jones Industrial Average down as much as 400 points on Tuesday, was pinned on the waning expectations for the so-called phase-one deal to be done in time to stave off the next round of tariffs on Chinese goods set to be imposed on Dec. 15. On Wednesday, some of those losses were being recouped after reports the trade talks were back on track. The Dow was up just under 200 points Wednesday late morning.

The president later characterized the stock market’s Tuesday drop as “peanuts,” which is absolutely true in the context of the major averages’ year-to-date gains of around 25%. “We have picked up record numbers, so that’s OK. That’s how I feel,” he added.

“I watch jobs. Jobs are what I watch,” rather than the Dow, the president further said. On that score, he is likely looking ahead to the November employment report due out Friday morning, which is expected to show solid gains.

But the ADP report on private payrolls, released Wednesday, showed a much-weaker-than-expected increase of 67,000 for November, about half the rise predicted by economists. Evercore ISI lowered its forecast for the Labor Department’s November nonfarm payroll rise to 150,000. Before the ADP report, the consensus estimate called for a 190,000 payrolls increase, including about 45,000 returning General Motors strikers.

If the labor market’s strength is indeed beginning to wane, it would be politically astute for Trump to pay more attention to jobs than the stock market going into next year’s elections. There are far more workers who vote than there are investors with significant stakes in equities. An uptick in the jobless rate would hurt his reelection chances more than a normal correction in the stock market.

As for investors, Bill Blain, a strategist at Shard Capital in London, says the influence of “T’rump” (as he calls the president) “could be waning.”

“The bottom line is we may be past Peak-T’rump,” he writes in his Morning Porridge missive. “For the last three years, markets have been collectively happy to coat-tail his actions. I don’t believe many market participants ever had much time for him—at a personal level, (and the views I hear on his personality, or his actions as a blusterer, a finagler, a bully, and much much worse are more polarized than on any other politician—even [U.K. Prime Minister Boris Johnson] isn’t so divisive.) The collective market views was that as long as he kept delivering, fine…the market could put up with him.”

In which case, could the long-running relationship between the Donald and the Dow be over? Or just on the rocks?

Write to Randall W. Forsyth at randall.forsyth@barrons.com