I want to suggest today that what we are seeing on Wall Street and in markets around the world is the sudden realization that the president is mentally unstable – that he has dementia, probably – and as a result of that realization, investors no longer have any faith in Donald Trump.

Yes, I know.

The conventional explanation for why markets have been tanking is the realization that Trump really meant what he said on the campaign trail, and that his position on tariffs wasn’t just rhetorical but firmer, stronger and more ideological than investors were willing to believe.

But if Trump’s position were a matter of conviction, markets might be able to adjust, as conviction would beget a clear explanation and a coherent plan of action, which in time would beget some kind of stable order that investors might not like in the end, but could come to trust.

That’s not what’s happening. Trust is long gone. On Monday, the S&P 500 fell 2.4 percent “in another wipeout,” according to the AP. The Dow Jones fell 2.5 percent, the Nasdaq 2.6 percent. More worryingly, the AP said, is that US government bonds and the value of the dollar also fell.

“Treasurys and the dollar have historically strengthened during episodes of nervousness. This time around, though, it’s policies directly from Washington that are causing the fear and potentially weakening their reputations as some of the world’s safest investments.”

Then there’s the matter of Fed Chairman Jerome Powell. Trump keeps threatening to fire him if he does not lower interest rates. The AP:

“A move by Trump to fire Powell would likely send a bolt of fear through financial markets. While Wall Street loves lower rates, largely because they boost stock prices, the bigger worry would be that a less independent Fed would be less effective at keeping inflation under control. Such a move could further weaken, if not kill, the United States’ reputation as the world’s safest place to keep cash.”

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The Wall Street Journal summed things up in this hed and dek from Monday night: “Dow Headed for Worst April Since 1932 as Investors Send ‘No Confidence’ Signal: Few think administration’s negotiations with trade partners will yield results soon enough to ease the strain.”

It’s like investors have given up trying to understand what Trump wants to do, in part because none of it makes sense to them, but also in part because even he doesn’t seem to know what he wants to do.

Here’s what Fox Business reporter Charles Gasparino reported Monday: “Japanese negotiators are complaining that the problem with the trade negotiations with the White House, what's delaying concrete progress and a real deal, is that US keeps changing its ask in terms of exactly what it wants, said one financial CEO who speaks regularly to country officials. Maybe it's a negotiating tactic. But the lack of publicly announced deal progress is depressing the dollar, spiking bond yields and leading to a flight to quality to gold and now Bitcoin.”

That he doesn’t know what he wants would explain why he could be so easily moved away from the “reciprocal tariffs” that threatened to create a “nightmare scenario,” according to economist Paul Krugman, in which “falling asset prices cause a scramble for cash, which leads to fire sales that drive prices even lower, and the whole system implodes.”

The Wall Street Journalreported last Friday that Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick didn’t have to do much to convince Trump to pause them for 90 days. All they had to do was get him alone and away from that tariff zealot, Peter Navarro.

Markets rallied Tuesday on word that the White House believes that the trade war with China is “unsustainable.” Investors will also cheer the president’s remarks yesterday, saying that he has “no intention of firing” Jerome Powell. These, however, aren’t that reassuring. As Post columnist Catherine Rampell noted, “even Trump's cabinet members do not appear to know what their boss will do from minute to minute.”

Which brings me back to Trump’s mental decline.

Like tariffs, it was staring Wall Street in the face the whole time.

Last June, CNBC anchor Andrew Ross Sorkin reported what he heard after some of America’s corporate leaders met with Trump. They were already predisposed to him, Sorkin said, but left “a bit disheartened, a bit questioning … I don’t want to say of his mental fitness, but questioning of just how meandering, how, in some cases, one said to me, ‘he could not keep a thought straight. He would go in one direction, then he go in another direction, and there wasn’t necessarily a through-line to the way he spoke or what he was talking about.’”

He discussed his plans to bring the corporate tax rate down from 21 percent to 20 percent, and … was asked why he had chosen 20 percent, and he said, “well, it’s a round number.” I think that itself had a number of CEOs shaking their heads … I think there was a concern about whether we were going to see a similar movie to the last presidency where there were so many different issues that came up and made their jobs not easier but ultimately harder.

Sorkin was referring to the covid pandemic, and how Trump had botched the government’s response so badly that it promised to bring down the whole country and every corporation with it. These CEOs were clearly alarmed to see Trump’s fractured mental condition – his meandering and inability to think straight. And they were clearly concerned that it might open the door to another preventable disaster.

They shouldn’t have been alarmed. Former Republican candidate Nikki Haley warned them. During her brief campaign, she made a point of saying that the presidency is a hard job and it requires mental fitness.

“Trump is at a rally,” she said in late January. “And he’s going on and on, mentioning me multiple times, as to why I didn’t handle January 6 better. I wasn’t in office then. They’re saying he got confused. That he was talking about something else. That he was talking about Nancy Pelosi. He mentioned me multiples times in that scenario.” She added:

“The concern I have is – I’m not saying anything derogatory, but when you’re dealing with the pressures of a presidency, we can’t have someone else that we question whether they’re mentally fit to do it.”

But like the tariff threat, Trump’s obviously deranged and damaged state wasn’t enough for corporate leaders to second-guess their support of a GOP candidate who would, as president, deregulate their businesses, protect their monopolies or overlook their lawlessness.

Now they face a reckoning. What they have done cannot be undone, and as a consequence, there is no hope of reasoning with a president who is clearly struggling with some kind of cognitive deterioration.

What’s happening on Wall Street and in markets around the world is that there’s no going back – that America under Trump has become like Russia under Vladimir Putin. In both, the rule of law has been replaced with the rule of one man. According to Bloomberg’s Michael Regan, investors are adjusting to a “high volatility regime market.”

Yes, the regime is highly volatile.

Because Trump is.