The stock market has become a personality-driven casino betting on President Donald Trump's daily temperament, according to a new analysis.
Finance professionals are raising urgent alarms about an economy increasingly distorted by presidential caprice rather than rational capital allocation, Politico reported Friday.
Investors have abandoned traditional analysis of earnings and cash flow, pivoting instead to obsessive speculation about which companies will catch Trump's attention—or fall out of favor, according to the report.
Investors are frantically hunting for the administration's next beneficiary, they're systematically attempting to forecast which industries and firms will gain advantages from White House polices, Politico reported, noting they are "... weighing which CEOs have the White House’s ear, whether a presidential announcement could transform a company’s prospects overnight, or whether a public falling-out could wipe out billions in market value.
"I've been doing this for 20 years, I've never seen it like this," Henrietta Treyz, co-founder and director of economic policy at Veda Partners told Politico.
She pointed out that her firm's clients continuously inquire about whether specific industrial sectors—copper mining, polysilicon production, entire categories—will soon enter the administration's focus, "viewing government attention as a potential advantage but also a new source of risk."
It's not sustainable, finance expert Luigi Zingale argued.
"We're no longer trying to figure out what is the next good allocation of capital, we're trying to figure out what is the allocation of capital most favored by President Trump," he warned. "It's a terrible sign of not only the market, but the economy."
According to Politico's Yasmin Khorram, "For investors trying to read Washington, the question is no longer just where the government intervenes — but whether political favor has become a market signal in its own right."