The US’ most innovative companies took an unprecedented beating in the early days of US President Donald Trump’s second term. Just take a look at Apple Inc. From its record US$3.9 trillion valuation as the world’s richest company on Dec. 26 last year, it lost as much as $1.3 trillion, a record devaluation for the 49-year-old creator of the iPhone and more than the stock markets of Sweden, South Korea or Ireland.
Apple is far from alone. Alphabet Inc, Amazon.com Inc, Meta Platforms Inc and Tesla Inc lost a combined US$2.2 trillion even after their founders and chief executive officers attended the Jan. 20 inauguration of the 47th President in the most visible sign of obeying in advance.
Apple CEO Tim Cook personally donated US$1 million to Trump’s inauguration, a sum matched by Meta, Amazon and Google-parent Alphabet. Tesla Inc’s Elon Musk spent at least US$288 million to help elect Trump and other Republican candidates last year.
Illustration: Yusha
So much for “Make America Great Again” cronyism, which is the opposite of “good to great” capitalism. The same companies, which appreciated more than US$4.5 trillion under former US president Joe Biden’s administration, saw more than US$2.7 trillion of that accumulated wealth vanish in Trump’s first 100 days.
The US economy, which The Economist and Wall Street Journal separately called the “envy of the world” under Biden before Americans voted in November last year, is losing its integrity in the chaos caused by Trump’s nonsensical strategy on tariffs. US equities and debt are underperforming their global peers this year, and the dollar has weakened against all 16 of the world’s most-traded currencies as tracked by Bloomberg.
The twice-impeached, convicted felon and insurrectionist who was found liable for sexual assault is the promulgator of “how to destroy 80 years of credibility in less than three months” as he ushers in “The Third-Worlding of America,” Nobel laureate economist Paul Krugman wrote on Substack last month.
“The combination of interest rates soaring amid a slump and the currency plunging despite rising interest rates isn’t what we normally expect for advanced countries, let alone the owner of the world’s leading reserve currency,” Krugman wrote. “It is, however, what we often see in emerging-market economies. That is, investors have started treating the United States like a third-world economy.”
Recovering from this Trump-made debacle will neither be easy nor swift, if the 125,000 companies that import through the Port of Los Angeles, the busiest seaport for container freight that supplies retailers and manufacturers — ground zero for the disruption of trade caused by Trump tariffs — are any indication.
“We’ve got a lot of small to medium-sized importers — retailers in particular — that are really caught in the crosshairs,” Gene Seroka, executive director of the port, said in an interview at Bloomberg’s New York headquarters earlier this month. “They have about five to seven weeks of normal inventory levels remaining. If nothing changes, then we start seeing fewer selections on the store shelves and on Web sites as we try to buy online, and that will cause price increases.”
Although trade talks with the UK and China suggest Trump is feeling the pressure, sparking some optimism in financial markets, it might be too late for the economy.
“This retreat hasn’t come soon enough to avoid high prices and empty shelves,” Krugman wrote on Substack earlier this month. The “uncertainty created by Trump’s arbitrary, ever-changing tariffs is at least as important as the level of those tariffs.”
The odds of a recession happening within the next 12 months doubled to 40 percent since the start of this year, based on a monthly survey of economists by Bloomberg.
The chaos is reflected in fluctuating market prices. The S&P 500 Index plummeted as much as 21 percent from Feb. 19 to April 7 based on intraday prices, a plunge repeated twice during Trump’s first term — first when the benchmark tumbled 20 percent between Sept. 21 and Dec. 24, 2018, and again when it cratered 35 percent between Feb. 19 and March 23, 2020, data compiled by Bloomberg showed.
While the S&P 500 is essentially unchanged for the year, it trails the 10.5 percent gain in the MSCI All-World Country Index excluding the US.
Bond markets, historically the most prescient indicators of trouble, are sending a similar message as equities. The Bloomberg US Aggregate Index of government, corporate and other types of fixed-income securities rose 1.81 percent this year through Monday last week, lagging behind the 3.71 percent jump in the Bloomberg Global Aggregate Index.
Rather than lowering borrowing costs for Americans, Trump’s policies have caused them to increase as measured by the average yield on US Treasuries, which has risen from 3.63 percent in September to 4.29 percent.
Foreign-exchange traders are rattled by the direction the Trump administration is taking the country, with the Bloomberg Dollar Spot Index — which measures the performance of the greenback against the euro, yen, pound and eight other major currencies — dropping 7.9 percent between Jan. 13 and April 21. That is not a welcome development, given a strong currency is crucial to efforts by the US to attract foreign investment to help finance a trillion-dollar budget deficit.
The rout in US financial assets coincided with CEOs telling Chief Executive magazine they anticipate a 29 percent deterioration in business conditions in the coming year, marking the lowest level of the indicator since 2012, data compiled by Bloomberg showed.
In a particularly ominous sign, the National Federation of Independent Business’ optimism index, which has always favored a Republican administration, dropped in each of the first four months of Trump’s second term. In the opposite of animal spirits, the part of the survey measuring capital spending plans fell to the lowest since the start of the COVID-19 pandemic in early 2020 and fear was predominant.
Few CEOs are saying much about the new administration publicly as the US economy transitions from “envy of the world,” to a looming recession, considered unlikely at the end of last year. Perhaps the silence is out of concern of retaliation from the White House.
However, in surveys, they are not holding back.
“A lack of a plan and the arbitrary nature of the tariffs are killing business,” is how one business described the Trump administration’s trade policy to the Federal Reserve Bank of Dallas in its latest monthly manufacturing survey released on April 28. “We all feel stuck and are unsure of what the future holds,” is how another put it.
US chief executives are required by law to tell their shareholders what is in store for them. The frequency of Russell 3000 Index members citing “recession,” “deterioration” and “economic tsunami” in their earnings calls doubled in the first quarter to 2,167 times, the most since the second quarter of 2023, data compiled by Bloomberg showed.
Making America great again? It looks more like making America small.
Matthew Winkler, editor in chief emeritus of Bloomberg News, writes about markets. This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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