Trump’s Enthusiasm for Stock Market Collides With His Trade Plans

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WASHINGTON — He boasted about it at a banquet given by the Communist president of Vietnam. He crowed about it during a pep rally for anti-abortion marchers in the Rose Garden. He even slipped it into his Thanksgiving Day greeting to American troops serving abroad.

No president has taken more delight, or claimed more credit, for the roaring stock market than Donald J. Trump. The Dow Jones industrial average has become for him what the Rasmussen Poll was during the 2016 presidential election: a daily source of validation.

“Had the other side gotten in, the market would have gone down 50 percent from where it was,” Mr. Trump told a gathering of women at the White House last week, diplomatically avoiding the name Hillary Clinton. “Remember that.”

Now, though, Mr. Trump’s fixation with Wall Street is colliding with one of his most cherished legislative projects — a more protectionist trade policy — and it is not clear which one will win.

Mr. Trump, for example, has repeatedly threatened to pull the United States out of the North American Free Trade Agreement and the Korea Free Trade Agreement. But two top economic advisers, Gary D. Cohn and Treasury Secretary Steven Mnuchin, have warned him that withdrawing from those deals would hurt the stock market, several officials said.

Tellingly, those threats have receded. On Wednesday, at the World Economic Forum in Davos, Switzerland, Mr. Trump’s commerce secretary, Wilbur Ross, expressed optimism that the United States would be able to renegotiate the deal with Canada and Mexico.

The president himself is scheduled to speak in Davos on Friday, and Mr. Cohn promised that his message would reassure the market makers who flock there every January. “America first is not America alone,” he said. “When we grow, the world grows; when the world grows, we grow. We’re part of it, and we’re part of a world economy.”

And yet other people briefed by the White House said they expected Mr. Trump to use the occasion to deliver a defiantly nationalist speech. While Mr. Ross was conciliatory about Nafta, he also said that “U.S. troops are now coming to the ramparts” to wage other potential trade wars, including with China. Those remarks briefly rattled markets.

Presidents have generally avoided talking about the stock market — for good reasons. Their words have the power to move markets, and not always in the direction they want. Moreover, if they claim credit for a bull market, they find it harder to evade blame for a bear market.

In March 2009, President Barack Obama made a foray into market analysis during an appearance with Prime Minister Gordon Brown of Britain. The stock market, he said, is “sort of like a tracking poll in politics.”

“It bobs up and down day to day, and if you spend all your time worrying about that, then you’re probably going to get the long-term strategy wrong,” he said.

At the same time, he observed, stocks had fallen so far after the financial crisis that their price-to-earnings ratios were nearing their bottom. Given that, and the government’s enormous fiscal stimulus program, Mr. Obama said it might be a good time to get back into the market.

“He got substantial blowback for those comments and was advised — and took the advice — not to prognosticate on the market again,” said Jason Furman, who was one of Mr. Obama’s economic advisers.

For all the mocking he got, Mr. Furman noted that Mr. Obama was right. The stock market bottomed out six days after his remarks and had bounced back 21 percent a month later. Mr. Obama mentioned the market several other times during his presidency, but Mr. Furman said he stayed away from commenting on day-to-day gyrations.

President Bill Clinton also presided over a bubbly stock market but resisted the urge to gloat about it. Former aides said he was repeatedly invited to ring the bell at the New York Stock Exchange to open trading, but they always told him to decline. That reluctance proved wise when the bubble in technology stocks began bursting almost a year before Mr. Clinton left office.

“We had a view that markets could go up, markets could go down, markets could be overvalued, markets could be undervalued,” said Gene Sperling, an economic adviser to Mr. Clinton. “But it would take your eye off the ball to focus on that rather than on the real economy.”

Not that these presidents or their aides are shy about their contributions to the market: Mr. Sperling said Mr. Clinton’s 1993 budget plan, and the ensuing decline in long-term interest rates, helped power the bull market of the 1990s. Even with the bursting of the tech bubble, he said, investors were way ahead at the end of the Clinton years.

But all of them, said Robert Dallek, a presidential historian, were mindful that what goes up can come down. Mr. Dallek, who recently published a biography of Franklin D. Roosevelt, noted that Roosevelt rarely talked about the stock market, which rose steadily during his presidency until 1937, when the Federal Reserve abruptly tightened the money supply — one of the factors that plunged the United States into recession.

“All these presidents have paid attention to the stock market,” Mr. Dallek said. “But he finds it irresistible, if finds any sign of strength in his administration, that he is going to seize on that and publicize it.”

No president has tied his fortunes so directly to the market as has Mr. Trump. “We’re setting a record literally all the time,” he said last week. “And I’m telling you, we have a long way to go.”

Sometimes, Mr. Trump does not even wait for the market to open to claim victory. Before the opening bell in New York on Nov. 29, he tweeted, “Looks like another great day for the Stock Market. Consumer Confidence is at a Record High. I guess somebody likes me (my policies)!”

The Dow Jones industrial average closed 104 points higher that day.