‘What’s going on?’: Horror signal Donald Trump has ‘gone too far’ as markets crash

Markets are in crisis today as Donald Trump’s reign sparks terror across America. And we might not be able to escape the fallout.

ANALYSIS

Markets are in absolute free fall in America as Donald Trump’s reign sparks terror across American business.

Big markets are down a lot: the S&P 500 is down nearly 10 per cent from its February peak.

Smaller markets have plummeted even more.

The Nasdaq has collapsed around 12 per cent, while crypto is a total bloodbath.

Fortunes won swiftly on memecoins have been lost in the blink of an eye.

As the next chart shows, Bitcoin lost contact with the $100,000 level and is now doing its best impression of a cliff-diver.

Crypto is a total bloodbath.

Mr Trump promised to be the crypto-President, but the reality has been that crypto bros got the classic bait-and-switch.

Indeed, the more people sucked up to Mr Trump, the worse things seem to be going for them.

Facebook is down nearly 20 per cent from its peak, despite CEO Mark Zuckerberg enthusiastically falling to his knees as he converted to the church of Donald Trump.

And Tesla, wow.

Musk looked on the verge of tears during a recent interview about Tesla's bloodbath. Picture: X

Elon Musk has been the number one guy in the Trump cheer squad and has led a lot of the early work of the Trump presidency, slashing at the various sinews of governance and science. In return, his company has plunged in value by almost half, as the next chart shows.

Tesla surged in late 2024 as Mr Trump looked set to win the election.

It rose further after Mr Trump secured victory.

But markets have since decided there will be no net benefit for Mr Musk from his close association with the famously disloyal Mr Trump.

The price of Tesla stock has gone back to where it was in mid-2024.

The price of Tesla stock has gone back to where it was in mid-2024.

What’s going on?

The answer is, markets smell trouble.

A little bit of chaos is wonderful fun, but too much can cause a recession.

Take Mr Trump’s tariffs.

They are fine as a rhetorical device, great as a threat, but in actual practice, what they are is a tax. A tax on established lines of trade.

Businesses have been set up to do trade goods across borders – you spring a surprise tax on them they may go broke. Business does not like that.

The rapid change in geopolitics is also a risk for business. Russia is the good guy now? Europe is the enemy? America is going to take Greenland?

Things aren’t going well for Mark Zuckerberg, with Facebook down nearly 20 per cent from its peak. Picture: Drew Angerer/AFP

We’re not so deep into an Orwellian hole that everyone just swallows these ideas – instead, they rock the boat.

If the boat rocks enough, then the economy shrinks. A recession.

People stop spending, firms stop hiring, money stops flowing, people get made redundant, markets fall even further and everyone is left worse off.

Markets are very useful to us right now as a signal that Mr Trump has gone too far. They’re doing a better job of pointing out Mr Trump’s blunders than the rest of the government.

A democracy is a system of checks and balances. The various heads of power – courts, parliament, executive – are supposed to rein each other in. But Mr Trump has undermined the judiciary and outmanoeuvred the congress, creating a system with an awful lot of power centred in his hands.

Donald Trump’s reign has sparked terror across American business. Picture: Chris McGrath/Getty Images

Markets are in crisis in the US. Picture: iStock

But there’s still one major outpost of American power: markets. They’re the last great check and balance.

If Mr Trump does dumb stuff that causes markets to fall, the backlash is instant. Everyone can see how stupid the latest ideas are, quantified precisely in terms of dollars lost.

With luck, Mr Trump sees the current fall in markets and changes his ways. Because he is, more than anything else, a numbers guy.

Mr Trump loves ratings and crowd sizes and seeing the view count on his videos rise.

He loves to see poll numbers soaring and markets hitting record highs.

And he loves that, I’d wager, far more than he loves any ideology.

Given the choice between consistency and winning, I’d bet on him choosing winning.

Fingers crossed he changes path before the world ends up in recession.

Jason Murphy is an economist | @jasemurphy.bsky.social. He is the author of the book Incentivology

Originally published as ‘What’s going on?’: Horror signal Donald Trump has ‘gone too far’ as markets crash