Markets in Free Fall, As the Trump Presidency Shatters Apart Government-Corporate Council

Trump had said he ended the economic council, chaired by the the CEO of Blackstone, Steve Schwarzman. Apparently, that was a lie, at least according to the NY Times report out now, regarding the dissolution of the council.

Post Charlottesville remarks, the President’s economic council was in full rebellion mode and it was agreed upon to disband it. After the President learned about this, he preempted their statement and tweeted out he has ended it.

On Wednesday morning, a dozen of the country’s most influential C.E.O.s joined a conference call, and, after some debate, a consensus emerged: The policy forum would be disbanded, delivering a blow to a president who came into office boasting of his close ties with business leaders.

With the collapse of the councils, the president has all but lost his most natural constituency — the corporate leaders who stood to benefit from his agenda of lower taxes and lighter regulation.

Before they could make a statement announcing their decision, however, Mr. Trump spoke. He had caught wind of their planned defection and wanted to have the last word. Taking to Twitter, he wrote: “Rather than putting pressure on the businesspeople of the Manufacturing Council & Strategy & Policy Forum, I am ending both. Thank you all!”

This account is based on interviews with more than a dozen people at the companies represented on the council or advising them.

There is an important point to make in all of this noise. If business leaders, right or wrong, are afraid to be associated with the President, due to his perceived unpopularity, then all of his economic plans that helped the market roar to record highs are doomed.

“There is continuing pressure on C.E.O.s from customers, employees, shareholders and board members to take a position against what’s going on and separate themselves from president Trump’s councils,” said Bill George, the former chief executive of the medical device maker Medtronic and a board member of Goldman Sachs. “These executives cannot live with customers thinking they are in cahoots with someone who supports white supremacists or neo-Nazis.”

Important distinction.

“In American history, we’ve never had business leaders decline national service when requested by the president,” said Jeffrey Sonnenfeld, a professor of organizational behavior at the Yale School of Management. “They’ve now turned their backs on him.”

According to the NY Times, here’s what really happened.

As the group disintegrated, Stephen A. Schwarzman, the chief executive of the Blackstone Group, was kept in the loop. Mr. Schwarzman was one of Mr. Trump’s closest business confidants and the chairman of the policy forum, but he was also outraged by the president’s remarks.

On Tuesday evening, he called Jared Kushner, the president’s son-in-law and a White House adviser, to inform him that the policy forum was falling apart. At the same time, Mr. Schwarzman began drafting a statement about disbanding the group. A White House spokesman declined to comment.

Efforts to schedule a conference call for the chief executives on Tuesday night were unsuccessful, so a call was set for 11:30 a.m. on Wednesday.

On Wednesday morning, Laurence D. Fink, chief executive of BlackRock, the world’s largest asset manager, called Ms. Nooyi, Ms. Rometty, Ms. Barra and Douglas McMillon, the chief executive of Walmart.

Mr. Fink decided to step down after seeing the president’s remarks on Tuesday, and now encouraged other executives to join him. Mr. McMillon, who earlier in the week made public a stinging critique of the president, but had not stepped down from the advisory group, had changed his stance after Mr. Trump’s news conference on Tuesday, deciding to step down.

As the call began, more than a dozen of the nation’s top business leaders dialed in from around the country — Mr. Fink was in Aspen, Colo., while Jamie Dimon, the chief executive of JPMorgan, was home in New York.

Leading the discussion, Mr. Schwarzman, gave each participant time to speak.

Two in the group — Jim McNerney, the former chief executive of Boeing and Jack Welch, the former leader of General Electric — proposed issuing a statement condemning the president, but keeping the group together.

Mr. McNerney and Mr. Welch did not respond to requests for comment.

But most others, including Mr. Fink of BlackRock and Ms. Nooyi of Pepsi, leaned toward disbanding.

Mr. Dimon was also furious and wanted off the council, but felt conflicted because of his role as chairman of the Business Roundtable, an industry group.

Ms. Rometty of IBM, who had faced criticism from employees for her role in the group, advocated that the executives “condemn and disband.” That phrase soon drew broad backing.

During the 40-minute phone call, Mr. Schwarzman did not press for continued allegiance to the president. He said that although he had had high hopes for the forum, something had to change in light of the president’s reaction to the violence in Charlottesville. The question, he added, was how to reach a consensus.

As the policy forum was holding its call, other members of the manufacturing council, including Denise Morrison of Campbell Soup and Inge Thulin of 3M, announced they would step down.

By the time the call was over, the group had agreed to disband. After the decision was final, Mr. Schwarzman called the White House to let Mr. Trump know. He was asked to include language that the president had agreed to disband it.

Shortly thereafter, the president claimed on Twitter that he was disbanding the advisory groups.

Companies swiftly disputed that notion. Johnson & Johnson said its chief executive, Alex Gorsky, was leaving the panel before the president’s tweet.

The perception for Trump is that of a President isolated, without any real power. He is all but a ceremonial figure now, rejected by people inside his administration, business community, intelligence community, and in Congress. The fact that the Nasdaq is only down 50 is a testament to how well controlled the markets are. As the executive branch of government faces a daily barrage of controversy, coupled with a very active investigation into Trump’s dealings with Russians, I’d be amazed if the market could make it past Labor Day in one piece.

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