Trump Influence on Markets Falls Flat  03/31 06:16

   Trump's messaging appears to be wearing thin as the president's various 
pronouncements have done little to change the reality that a large chunk of the 
world's energy supplies is stranded by the conflict.

   WASHINGTON (AP) -- As the Iran war intensifies, President Donald Trump has 
prioritized efforts to calm the financial markets -- trying to keep oil prices 
from exploding upward, stocks from cratering and interest rates from surging.

   When the markets have flashed danger, Trump has been quick with a social 
media post or a remark to claim the war he launched last month could soon end. 
He's publicly declared that the markets are doing better than he expected, even 
with the S&P 500 stock index declining over the past five weeks and the global 
oil benchmark up roughly 60%.

   "I thought oil prices were going to go up higher than they are now," Trump 
said at a Friday investor summit. "And I thought that we would see a bigger 
drop in stock. It hasn't been that bad."

   With the Iran war, the White House has largely refrained from messaging more 
aggressively to voters about the economic consequences -- choosing instead to 
try to contain any damage in the financial markets, which have swung wildly on 
the prospects of ceasefire or escalation in what has become a high-stakes 
guessing game about Trump's next moves.

   The Republican president showed the extremes of his messaging Monday before 
the U.S. stock market opened, writing in a social media post that great 
progress had been achieved on peace talks with Iran while also threatening 
civilian infrastructure such as desalination plants if a deal wasn't reached 
"shortly."

   The White House sees the stock, energy and bond markets as a way to 
indirectly reach voters. Trump has staked his economic agenda on cheap prices 
at the pump, robust gains in 401(k) accounts and cheaper mortgage rates.

   But that messaging appears to be wearing thin as the president's various 
pronouncements have done little to change the reality that a large chunk of the 
world's energy supplies is stranded by the conflict. Just 38% of U.S. adults 
approve of how he's handling the economy and only 35% support him on Iran, 
according to a March survey by The Associated Press-NORC Center for Public 
Affairs Research.

   The president has tried to dictate to markets instead of talking directly to 
Americans

   Gene Sperling, a top economic adviser in the Democratic Clinton, Obama and 
Biden administrations, said voters can make a direct connection between prices 
at the pump and Trump's choice to attack Iran. He said "simplistic jawboning" 
to the markets is insufficient for a public that is stuck paying the price as 
gasoline soars past $4 a gallon nationwide.

   "Most advisers would say the president has to speak directly to the American 
people and fully acknowledge the economic pain that his policy has so directly 
caused in a short amount of time and make the case for why the national 
security concerns justify it," Sperling said. "Instead, you have a strategy of 
not recognizing or even dismissing people's economic pain."

   White House press secretary Karoline Leavitt on Monday called the oil price 
increases a "short-term fluctuation."

   Trump's strategy of giving mixed messages has started to work against him, 
said Jeffrey Sonnenfeld, a professor at the Yale University School of 
Management and co-author of the new book "Trump's Ten Commandments: Strategic 
Lessons from the Trump Leadership Toolbox."

   "The uncertainty is now soaring," Sonnenfeld said. "As the messaging to calm 
markets with false reassurances is having diminishing credibility in financial 
markets, so, too, has Trump diminished public confidence."

   Trump's desire for flexibility on the war limits his ability to offer clarity

   Trump has embraced having flexibility in how he chooses to conduct the war, 
even though this has muddled his stated objectives.

   During a Cabinet meeting Thursday, he said Iran was "begging" for a deal 
even as he threatened further military action -- all the while maintaining that 
any economic damage to the U.S. would reverse itself.

   On Friday after the markets closed, he extended his deadline for Iran to 
open the Strait of Hormuz, a key waterway for the flow of oil, saying he would 
hold off on bombing Iran's energy plants in the meantime.

   Treasury Secretary Scott Bessent said Monday on Fox News Channel's "Fox & 
Friends" that Iran was letting some tankers through the Strait of Hormuz and 
that the "market is well supplied" because countries are releasing their 
strategic petroleum reserves and sanctions have been removed for Russian and 
Iranian oil already on tankers.

   "We are seeing more and more ships go through on a daily basis as individual 
countries cut deals with the Iranian regime for the time being," Bessent said. 
"But over time, the U.S. is going to retake control of the straits, and there 
will be freedom of navigation, whether it is through U.S. escorts or a 
multinational escort."

   Graham Steele, a Biden-era Treasury official, said Trump's messaging 
techniques "can work temporarily, but they have diminishing returns, over 
time," if they're detached from actual policies and results.

   "We saw a lot of the volatile market reactions initially, when he kept 
announcing these things and then walking them back," Steele said. "The market 
reaction now is just a steady trend upward in prices," he noted, adding that 
markets are "not responding to it in the same way anymore."

   Confidence in the economy and Trump is fading without clear results

   The University of Michigan's Index of Consumer Sentiment on Friday fell to a 
reading of 53.3 in March, its lowest level since December. Joanne Hsu, director 
of the surveys of consumers, pointed to the financial market volatility "in the 
wake of the Iran conflict" as reducing confidence in the economy for households 
with middle and higher incomes.

   Hsu noted that the survey indicated that people do not expect the higher 
energy costs and stock market declines to persist, but that could change if the 
war "becomes protracted or if higher energy prices pass through to overall 
inflation."

   Gus Faucher, the chief economist at PNC Financial Services, stressed that 
low levels of consumer sentiment do not automatically signal a recession. But 
he said consumers would have to see lower gas prices, a steady stock market and 
decreased mortgage rates to feel better about the economy, which likely means a 
definitive resolution to the conflict rather than a series of pronouncements by 
Trump.

   "The proof is in the pudding," Faucher said. "People need to see some 
substantive improvements before they feel better about conditions."