Trump lauds 'tidal wave of good news' while Dow plummets

US President Donald Trump recounted "a tidal wave of good news" about the economy in a speech at Sheffer Corp, a factory in Ohio, on Feb 5, 2018. PHOTO: REUTERS

WASHINGTON (BLOOMBERG) - US President Donald Trump has repeatedly claimed credit for the stock market's rise over his first year in office, and now he risks taking the blame if there's a prolonged downturn.

Stocks plunged the most in more than six years on Monday (Feb 5), with the Dow Jones Industrial Average closing down 1,175 points. During Trump's speech at a Cincinnati-area manufacturer, the Dow was down 1,597 points at one point.

Trump often boasts about the stock market in speeches - "how's your 401k doing?" has become a favorite refrain. But he didn't mention the market during his remarks on Monday at Sheffer Corp, a factory in Blue Ash, Ohio, where he recounted "a tidal wave of good news" about the economy - even as stocks tumbled.

The episode highlights the political risk Trump runs tying his presidency too closely to a bull market.

"Stock markets go up and down, so it's not a great bet for long-term political success," said Julian Zelizer, a political historian at Princeton University.

Though the Dow and the broader S&P 500 are now down for the calendar year, US stocks are up since election day, the Dow rose more than 25 percent last year, unemployment remains low and gross domestic product has increased every quarter he's been in office.

"Your paychecks are going way up," Trump said. "Your taxes are going way down."

Aboard Air Force One The TV in Air Force One's board room is usually turned to Fox News, but when White House staff boarded the plane after Trump's speech, the network was broadcasting a red chart illustrating the market decline. Aides turned it off.

At 4:46pm, Treasury Secretary Steven Mnuchin - who returned to Washington with Trump, along with tax policy adviser Shahira Knight, Representative Jim Renacci and Senator Rob Portman, both Ohio Republicans - approached the press cabin. He waved off questions about the stock market and insisted that Fox News, which covered the market downturn throughout the flight, had remained on the TV.

It hadn't been. Aides only turned it back on toward the end of the flight.

Trump spent part of the flight talking with Portman, Mnuchin and senior adviser Stephen Miller and was in good spirits, aides said. As the plane approached Washington, the National Security Council's chief of staff, Keith Kellogg, fetched a bag from the galley. "At least it's not an air sickness bag," he joked to reporters.

Later the White House issued a statement drawing on a familiar Washington strategy for addressing market downturns. Like George W Bush, Ronald Reagan and even Herbert Hoover in their own moments of market distress, the Trump team struck an upbeat note, trying to shift the focus to economic "fundamentals."

"The President's focus is on our long-term economic fundamentals, which remain exceptionally strong, with strengthening US economic growth, historically low unemployment, and increasing wages for American workers," Press Secretary Sarah Huckabee Sanders said in a statement after the plane landed.

"The President's tax cuts and regulatory reforms will further enhance the US economy and continue to increase prosperity for the American people."

Trump told workers at the factory that the Republican tax overhaul "set off" a wave of favorable economic news. He cited a commitment Apple announced in January to invest US$350 billion in its US operations and also lauded bonuses some companies have given workers since the tax overhaul was passed.

Trump has sought to highlight companies that have doled out employee bonuses and raises, citing the tax cuts as the reason, White House aides said. Four corporate chief executives, each of whom paid employees US$1,000 bonuses, were at the Ohio event: Jeff Norris of Sheffer; Greg Carmichael of Fifth Third Bancorp; Christopher Irion of e-Cycle; and Matt Schron of Jergens Inc.

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