Around Wall Street, the fear of what President Trump’s new tariffs will do to the markets dominates every C-suite discussion, On The Money has learned. Even more so after Thursday’s 1,000-plus tariff-inspired decline in the Dow and tumult in other markets.
And yet there’s an unmistakable silence in public. The reason: part of the job description of every CEO on Wall Street these days, maybe every CEO in corporate America, is keeping on The Donald’s good side. Being honest about his economic policies could be costly, people at the big banks tell me.
These are highly regulated institutions, so why risk a surprise audit, or a mean tweet that could lead to days of bad publicity.
It’s quite a contrast to what people like Jamie Dimon of JPMorgan, Brian Moynihan of Bank of America and David Solomon of Goldman Sachs, are doing behind the scenes.
They are frantically meeting with top corporate clients to hear what they think and how they will adjust to the fact that global trade has been upended with Trump’s tariff tantrum announced on Wednesday that led to the global market selloff. Doing business with one the world’s largest economies, China, will never be the same for some time and maybe forever. Dittos for the EU as well as Mexico and Canada.
That’s why the CEOs and their minions are discussing tariffs with their top economists and market strategists, and passing the grim news, albeit quietly, to their clients. Even before Wednesday’s announced significant tariffs on all imported goods, businesses have been cutting back on spending. They will do more cutting as the trade war persists.
Markets priced in a more modest 20% levy, so stocks rose around the time of the Wednesday announcement, but the volatility is just beginning as the tariff magnitude became clear. One big worry: We could get stagflation like we had in the 1970s — slower growth and more inflation as higher tariffs on imports get passed on to consumers and US exports face barriers.
Look at the S&P during the 1970s and you will know what an ugly market is like: Wild swings up and down, and overall paltry gains that were below the inflation rate.
Scary stuff for Dimon, Moynihan and Solomon, which is why it’s so out-of-character to hear crickets from the usually brash Jamie Dimon. Moynihan has been doing TV of late, and what little he says of note, has been Trump positive. Ditto for Solomon.
Like I said, it’s all a marked difference from their private convos, and the reason, I am told, comes down to unadulterated fear of The Donald. Or as one senior executive at one of the big banks told On The Money: “They don’t want to catch the ire of Trump, so they are laying low.”
