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Biden holds onto stock market strategy- POLITICO


DON’T POKE THE BEAR — President Donald Trump and his aides in the White House watched and gabbed about markets constantly, even obsessively. CNBC and Fox Business shared time with Fox News on Trump’s very full TV-watching schedule. The Biden White House doesn’t do any of that.

Biden himself almost never mentions the stock market unless asked. And for very good reason at the moment. Stocks are on a massive slide for the year, driven down by fear of inflation, rate hikes and Russia’s war in Ukraine.

The tech-dominated Nasdaq has lost more than a quarter of its value this year (27 percent). The S&P is down close to 17 percent, and the Dow nearly 12 percent.

The major indices all tanked again today, with the Dow off another 2 percent, the S&P 3.2 percent and the Nasdaq a miserable 4.3 percent.

“Your 401k misses President Trump,” Rep. Jim Jordan (R-Ohio) tweeted this morning.

So should Biden just come out and talk about it? It seems untenable for Biden or some other senior official not to come out and say something significant about the state of the stock market.

It would be easy enough to cheerlead the low unemployment rate and suggest that market turbulence, while unsettling, is to be expected as the global economy adjusts following the worst of the pandemic and that people should maybe chill a little.

But market commentary is just not in the Democratic Party’s DNA. That goes back at least to the Clinton White House and admonishments from senior officials like top economic adviser and later Treasury Secretary Bob Rubin who warned staffers to never, ever talk about stock market moves.

“It was drilled into us pretty early at the time and a lot of people with Biden now were around then like Gene Sperling, Steve Richetti, Ron Klain and even Janet Yellen,” a former senior Clinton White House official told Nightly on condition they not be named talking about a sensitive issue within the party.

“The message was, ‘You shouldn’t talk about markets because in essence you have no control over them and they go down as well as up,’” the former staffer said. “The key was to get the economic fundamentals right and in the long-term the market would follow the fundamentals.”

Even so, having a strong stock market in addition to a good economy is clearly a recipe for winning. And Biden’s numbers on inflation and the economy are in the tank. All the talk of “transitory” inflation seems like mostly bunk now. And the stock market just keeps bleeding.

Trump Treasury Secretary Steven Mnuchin told CNBC in 2017 that the stock market was “absolutely” a good report card on that administration’s economic record. Markets generally went higher under Trump. But trade wars and then Covid also caused giant whipsaws in the market.

And Trump wound up with a lower annual return on the Dow (11.8 percent) than did Presidents Bill Clinton (15.9 percent) and Barack Obama (12.1 percent).

A White House official told Nightly of Biden and the stock market: “As the president has said, we don’t judge the economy by the daily movement of the stock market. And while the stock market is volatile, since President Biden took office the market is up considerably, which is good for the millions of Americans who have stocks or mutual funds in their retirement accounts.”

There’s another way for Democrats to counter GOP arguments about stocks: Say you’re on the side of labor, not capital. Forget about the big losses for all those Wall Street fat cats.

“IT’S THE TWO ECONOMIES,” Bloomberg’s Joe Weisenthal (@thestalwart) recently tweeted. “American workers are experiencing the tightest labor market in a generation, with unemployment at 3.6% … Meanwhile, the world’s 500 richest people have already lost $1 trillion this year.”

The problem with this approach is that while a small group does own a vast majority of stocks, millions more — around 56 percent of Americans — have exposure to the market through individual holdings, 401(k) and other retirement accounts and pensions. They don’t like giant drops, either financially or often mentally.

And even those not invested at all can get depressed by headlines of Wall Street chaos, darkening their view of the economy. The latest CNN poll found that only 23 percent of Americans view the economy as “at least somewhat good,” despite a tight jobs market and decent if much slower growth than earlier in the pandemic recovery.

So maybe Biden is right to keep quiet on the slump in the markets. At this point the risks could outweigh any benefits. Wall Street might take it as a panic move. And Biden’s record in economic forecasting is not that great.

“They kind of broke the mold a little with the president coming out and calling inflation ‘transitory,’ which obviously it hasn’t been,” the former Clinton aide said. “So I don’t know why they’d suddenly start talking about stocks given their terrible experience with inflation.”

Welcome to POLITICO Nightly. Reach out with news, tips and ideas at [email protected]. Or contact tonight’s author at [email protected], or on Twitter at @morningmoneyben.

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