The Trump agenda, already reeling from political infighting in Washington, D.C., scandal and turmoil in his administration and missteps by the tweet-driven president himself, has a new roadblock to confront: CEOs that are distancing themselves from him after the deadly violence this weekend in Virginia during a white supremacist protest.
The president has come under fire for not quickly and forcibly denouncing the racist groups involved in the chaos in Charlottesville, Va.
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"The business community peeling back support doesn't make (Trump's challenge) any easier," says Brian Nick, chief investment strategist at TIAA Investments.
Trump's diminished stature in the eyes of some CEOs -- including Kenneth Frazier at drugmaker Merck, Brian Krzanich at tech giant Intel and Kevin Plank of athletic-apparel maker Under Armour, all who have resigned from the president's manufacturing advisory council -- is the latest challenge to the president's ability to push his agenda of tax cuts and infrastructure through Congress.
The obstacle around the corner
The public rebuke of Trump from even a small handful of top U.S. executives could have negative repercussions for the economy and financial markets if it causes business and investor confidence to take a hit. And if it leads more Republicans to break ranks with the president.
The most immediate worry, however, is how Trump's latest setback will impact his ability this fall to get a new budget passed and negotiate with Congress to raise the nation's debt ceiling — the amount of money the country can borrow to help pay its bills.
"The Trump agenda will hit an enormous obstacle in September because of budget issues, and he doesn't seem to have the political capital to prevail," says Greg Valliere, chief global strategist at Horizon Investments. "Charlottesville was the last straw for some Republicans, who are sick of defending Trump. So they will essentially ignore the White House."
The biggest risk is a fresh bout of uncertainty that will result in businesses turning more cautious, which could slow down the economy and the hiring of workers.
"When businesses are dealing with a chaotic government and a series of unknowns, the natural instinct of decision makers like CEOs is to defer decisions and wait for clarity," says David Kotok, chief investment officer at Cumberland Advisors, a money-management firm based in Sarasota, Fla.
Other Wall Street pros say the latest Trump controversy is "political noise" and not likely to derail financial markets. "What is the feedback loop into the real economy? Unless it does work its way into the economy (in a negative way) it is unlikely to have a long-lasting impact on the market," says Katie Nixon, chief investment officer at Northern Trust Wealth Management.
The risk of staying and the risk of going
Sydney Finkelstein, author of Why Smart Executives Fail and director of the Center for Leadership at the Tuck School of Business at Dartmouth College, says it is too early to say whether this is the "tipping point" for lawmakers when deciding whether to stick with Trump or risk political backlash from constituents.