In today’s Issue:
- Stocks are soaring, despite Trump
- From the senile to the absurd
- What’s behind the president’s antics?
The US stock market has delivered its verdict: Trump is a genius. Boom times are back. Hold onto your passive ETFs and buy the dips!
But is it true?
So far, things are going suspiciously well…
Inflation is down while GDP is up.
Tariffs are bringing in enough tax revenue to deliver the first monthly fiscal surplus since 2017.
Corporate reporting season is going well. Even gold miners are making serious money!
Energy prices remain low.
Trade deals are coming in. And they include promises to buy more American goods.
And even new tariff announcements can’t knock the stuffing out of stocks anymore.
All this despite tight monetary policy from the Federal Reserve, a trade war with Russia and an immigration crackdown that should be undermining economic output.
Worst of all, Trump continues to behave like he’s on a TV show. He goes around threatening to fire everyone. And sometimes, he even does so.
The latest victim is the head of the US statistics agency. If you ask me, Trump made a big mistake. He should’ve fired the whole department, not just its leader!
That’s what the architect of Hong Kong’s economic success recommended. J.J. Cowperthwaite pointed out that without a statistics agency, government officials would be less likely to interfere in the economy. And so, we’d all be better off.
It might seem a bit radical. But it works. Just ask our Home Office. They followed Cowperthwaite’s advice when it came to immigration statistics. And we all know that’s booming…
But let’s focus on the US instead of the UK for the moment. After all, the UK companies worth investing in, and the British entrepreneurs worth investing with, seem to be moving there anyway.
Can’t imagine why given Trump’s increasingly erratic behaviour…
Even Nigel wouldn’t put it quite like this
This week, Trump took on the de-banking shenanigans that Nigel Farage exposed years ago. Apparently, Trump himself experienced a debanking episode.
Nothing shocking there. But it’s how Trump began talking about it that could be important for investors. He called in to CNBC’s financial TV channel Squawk Box. My dad used to watch it while exercising, so I know it well.
Trump told the Squawk Box audience that he got debanked by JP Morgan Chase. And so he called up the CEO of Bank of America to try and open an account there instead. Things didn’t go well, Trump told the TV host:
Brian was kissing my ass when I was President, and when I called him after I was President to deposit a billion dollars plus […] he said, “we can’t do it. No, we can’t do it.”
They had to pull the TV host off the screen during Trump’s diatribe. I suspect because he was laughing so hard.
It’s all good fun.
But a president who calls into a financial TV show to tell how the CEO of Bank of America went from “kissing his ass” to denying a bank account is also an entirely new policy paradigm.
Can you imagine Tony Blair saying it?
More importantly, you should ponder what it signals about Trump’s reaction to challenges he might face…
What would happen if banks need a bailout under Trump, like in 2008?
What would happen if the Fed’s tight monetary policy causes a financial crisis under Trump?
What if the US bond market wobbles like ours did in 2022?
Under President Trump, I think policy responses would be radically different to what we’re used to. What we presume the government will do…
And that’s something financial markets don’t seem to be pricing in…yet.
From the senile to the absurd
Anyone working at the White House over the last decade must think they’re in an asylum. Trump and Biden have introduced entirely new definitions of “political risk”.
How should the stock market trade under a president that is senile?
How should it trade under a president who makes national policy by way of diatribes of personal insults posted on his social media account?
My point is that nobody knows. We’ve never been here before.
It could even be good news!
Trump’s bizarre and erratic behaviour seems to have kept his geopolitical adversaries in check in his first term. During Trump’s first innings in the White House, the world’s diplomats were in a panic over his erratic behaviour towards North Korea and other troublemakers. But things worked out.
Maybe it’ll be the same with financial markets and the economy? They’ll learn to ignore Washington’s bizarre antics and get back to doing what they’re supposed to – pricing in cashflows.
Trump’s tariffs on China didn’t cause much chaos in his first administration. And the stock market panic of April 2025 seems to be the only casualty of the second round of tariffs.
Trump’s decision to fire the head of the US statistics agency appears to be designed to get as much derogatory media attention as possible.
You might think financial markets would react badly to it. But they haven’t…
Perhaps the market is relieved that the kabuki theatre of dodgy statistical releases has finally been openly discredited, not just unofficially. Nobody believed the jobs data anyway. But now that Trump will pick the new statistics boss, we can all admit they’re dodgy.
You can spin a yarn that Trump is using the art of the deal. Perhaps he’s trying to reshuffle incentives in the public sector. Can you imagine what our government would look like if politicians held civil servants accountable for their job performance?
Of course, Liz Truss briefly tried to do this. But the Bank of England got to her before she could get rid of its leader. That was a good reminder of who controls the bond market that all overindebted governments serve.
But my point is that any analysis of Trump, good or bad, seems to presume some sort of logic or purpose.
What if he’s as aimless as Biden?
For four years we ignored signs that Biden was not a suitable president, to put it mildly. Stocks didn’t crash, despite nobody knowing who was running the country to what end.
In four years’ time, we might wonder how on earth anyone allowed Trump to be president for so long when he was so obviously deranged.
If my kids were posting his content on social media, I’d pull them out of school pretty darn quick.
Those of us assuming that Trump knows what he’s doing are making one hell of a bet. And the stock market is amongst those who are punting on it.
Until next time,
Nick Hubble
Editor, Investor’s Daily
