Terence Corcoran: Trump-fuelled trade fiascos are failing to swamp the markets. Why?

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President Donald Trump is a bombastic blowhard, a high-profile manifestation of what the late United States philosopher Harry G. Frankfurt once described as a bullshitter, someone who is “not constrained by any consideration of what may or may not be true. In making his assertion, he is indifferent to whether what he says is true or false. His goal is not to report facts. It is, rather, to shape the beliefs and attitudes of his listeners in a certain way.” Frankfurt — whose 2005 book On Bullshit was a bestseller — passed away in 2023, but there is no reason to doubt he would repeat his 2016 assessment of Trump if he were writing today.

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At least for the next year, or maybe longer, the world will be rolling forward under Trump’s influence, although where the world economy is going nobody knows. Certainly there is no consensus. While media, political and economic discussion is filled with negative angst over the destructive impact of tariff wars on national and international economic performance — job losses, rising prices, investment crises, trade blockages — the investment markets are booming.

This almost global investment boom raises a question: Are we in a bull market or driving into what Frankfurt might call a bullshit market?

For people who don’t spend time tracking the ups and downs of global stock markets, below is a graph that reflects the near-global trend toward record-setting market prices. While the Trump trade wars are supposedly threatening Canadian jobs and investment, the leading Canadian stock index — the S&P/TSX Composite — this week hit a record high 25,600, a 35 per cent gain from just two years ago.

In the United States, the S&P 500 index crossed the 6,000 mark two weeks ago and hasn’t stopped, even though it is 30 per cent higher than just two years ago. The Dow Jones Industrial average hit an all-time high around 44,500 shortly after Trump’s re-election in November and is still in the 44,000 range this week, a gain of 30 per cent from two years ago. The Nasdaq Composite index also shot up to hit a near record 19,700 this week, fuelled in part by the rise of U.S. steel and aluminum stocks looking to benefit from Trump’s import tariffs. As the Wall Street Journal noted in an editorial Monday, the steel tariffs are a product of corporate “political rent-seeking at its most brazen.”

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The same stock market pattern exists in Europe. The FTSE 100 Index of London Stock Exchange listings hit a record 8,700 on Monday. In Germany, a country supposedly undergoing a difficult decline, the DAX Performance Index rose to the 22,000 mark this week, a record that sits more than 36 per cent above a year ago.

Markets in China are down, but the global investment trends are flying over the Trump winds (some call it Hurricane Trump), as if the president’s threatened and allegedly destructive tariff wars have in fact created a major boost to Western economies rather than a bust.

One explanation for this seeming contradiction is that the professional investment community views Trump’s trade war stance as a giant fake. Financial Times columnist Robert Armstrong quoted a British investment manger’s conclusion: “The experts see Trump’s discussion of tariffs as a bluff.”

Another aspect of the stocks versus tariffs gap is that while tariffs may hit some companies and industries, the much broader economies of each country may continue along some normal growth path to profitability. A senior investment strategy director with U.S. Bank Asset Management summarized the optimistic market perspective last week: “At this point, markets have a difficult time pricing to policy, so the focus is still on solid earnings, steady consumer spending and the economy still achieving a soft landing.” That, he said, “leaves us with an equity market on solid footing.”

Pricing to policy — that’s the problem. Are we Canadians too wrapped up in policy and missing bull market fundamentals?

• Email: tcorcoran@postmedia.com

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