December is historically the second-best month for the stock market. Since 1950, this month has seen the S&P 500 climb an average of 1.5%, according to LPL Financial.

Stocks tend to do particularly well later in the month as the holidays get closer, a cycle known as the “Santa Claus rally.”

But President Trump has a habit of upsetting historic norms, and he might be doing it with this one too…

Last December, the markets plunged after President Trump declared himself “Tariff Man.”

The risks are rising for a repeat performance this month.

After rolling through the year and starting December at all-time high levels, the stock market hit some turbulence, falling 1.5%.

The selling really started on the eve of Thanksgiving, when President Trump signed legislation backing protesters in Hong Kong. Predictably, Chinese officials accused the president of meddling in affairs that shouldn’t concern him.

That Monday, China announced U.S. military ships and aircraft would no longer be allowed to visit Hong Kong.

Beijing also announced sanctions against several U.S. nongovernment organizations for encouraging protesters to “engage in extremist, violent and criminal acts.”

The next day, President Trump upped the ante. “I have no deadline,” he said at the NATO summit in London. “If it’s not going to be a good deal, I’m not signing a deal… In some ways, I like the idea of waiting until after the election for the China deal.”

The market sold off in reaction. While stocks rebounded nicely the next day, there’s currently growing fear that the trade war will escalate further before December 15.

That’s when the United States is scheduled to impose 15% tariffs on $160 billion of additional Chinese products, including electronics, shoes and other retail goods.

Let’s assume President Trump is following the playbook laid out in Trump:The Art of the Deal. If so, that means he’ll keep adding to the pressure on China until the last possible minute.

That means another 10 days of potentially market-moving headlines before the December 15 deadline.

But wait, there’s more…

In addition to battling China, Trump reopened fronts in the global tariff wars this week.

First, he restored tariffs on steel and aluminum from Brazil and Argentina.

Next, he threatened tariffs of up to 100% on $2.4 billion of French imports, including champagne, handbags and cheese.

This is in response to a new French digital services tax the White House called “unusually burdensome” for U.S. tech giants such as Apple (Nasdaq: AAPL), Amazon (Nasdaq: AMZN), Facebook (Nasdaq: FB) and Alphabet’s (Nasdaq: GOOGL) Google.

Finally, he threatened tariffs against other NATO countries – Canada, most notably – if their governments don’t increase military spending to 2% of GDP.

Maybe it’s the weather, or maybe it’s just a coincidence. But it appears there’s something about December that brings out Trump’s inner Tariff Man.

To be clear, I’m not abandoning the bullish views I’ve expressed before. The declines we’ve seen so far in December are minimal in relation to the market’s overall strength in 2019.

But as I’ve written before…

Historically, bull markets end because of some combination of…

• Overaggressive tightening or other policy errors, which can tip the economy into recession
• War or another geopolitical shock
• Runaway inflation, which can erode the value of corporations’ future cash flow
• Rampant speculation, such as occurred in the Roaring ’20s and late 1990s.

“Other policy errors” top the list right now in terms of the potential to scuttle the bull market. That’s because of President Trump’s unpredictable nature.

This is not about politics or whether you believe the president is doing the right thing – or in the right way. No matter their political views, investors must keep a close eye on Trump’s latest statements and understand their ability to rattle Wall Street.

Speaking of which… In the middle of all the circumstances listed above, the president took another swing at the Federal Reserve.

While announcing the new tariffs on Twitter, he called out the governments of Brazil and Argentina for “presiding over a massive devaluation of their currencies.”

He tweeted, “The Federal Reserve should likewise act so that countries… no longer take advantage of our strong dollar by further devaluing their currencies. This makes it very hard for our manufacturers & farmers to fairly export their goods. Lower Rates & Loosen…”

The Federal Reserve meets next on December 10 and 11. It’s highly unlikely it will cut rates given the overall strength of the economy and relatively low inflation.

But Trump’s pressure adds another layer of uncertainty to a meeting that otherwise was shaping up to be a nonevent – for a Fed meeting, at least.

The same can be said about Friday’s jobs report for November. Trump also said this week, “I don’t watch the stock market, I watch jobs.”

A weaker-than-expected jobs report will give Trump more ammunition to target the Fed. Most presidents have been careful about dealing with the Fed, whose credibility rests, in part, on its independence from politics.

But, again, this president makes a habit of upsetting historic norms.

Another week like this, and rather than embracing the holidays, investors will be saying beware the ides of December.

(With apologies to Julius Caesar and Shakespeare.)

Good investing,

Aaron