DOWN, DOWN, DOWN – AT 11:53 A.M. ET:   And no one's happy.  The economy is ending 2018 on a wobbly note, and the political implications for 2019, absent a quick recovery, are ominous.  From Bloomberg: 

(Bloomberg) -- U.S. stocks fell to the lowest since May 2017 as the turmoil in Washington kept investors on edge after the worst week for American equities in almost a decade. Crude sank below $45 a barrel and the dollar tumbled.

The S&P 500 slid for a fourth day, edging ever closer to a bear market after breaking below 2,400, while the Dow dropped more than 300 points. The broader index is down 14 percent this month, headed for its worst December since the Great Depression. Trading in S&P 500 stocks was 40 percent above the 30-day average on a day that’s normally subdued ahead of the Christmas holiday.

Investors looking to Washington for signs of stability that might bolster confidence instead got further rattled. President Donald Trump blasted the Federal Reserve, blaming the central bank for the three-month equity rout days after Bloomberg reported he inquired about firing the chairman.

The comments came after Steven Mnuchin called a crisis meeting with financial regulators, who reportedly told the Treasury secretary that nothing was out of ordinary in the markets. Traders also assessed the threat to the economy from a government shutdown that looks set to persist into the new year.

“I don’t know that you can read too much into the markets reaction today but it’s signaling they’re not impressed,” said Chris Zaccarelli, chief investment officer at the Independent Advisor Alliance. “If we were up, I’d potentially say the message he was sending was well received but it seems like now they’re largely ignoring that message.”

COMMENT:  I think that's a reasonable assessment.  The president had a terrible week, with the real damage done not by the government shutdown, but by his Syria decision and the way he made it.  In parliamentary systems, when a government is brought down it's usually by a "no confidence" vote in the parliament.  And I do believe that last week marked the worst loss of confidence in President Trump that we've seen in his administration.

Always watch for breaks in support from a leader's own party.  On Syria, we saw immediate opposition from key Republicans.

The greatest thing the president might have going for him is the incompetence and unpopularity of the Democratic Party.  But that's like saying that the greatest thing the Titanic had going for it was that there weren't that many icebergs.

December 23, 2018