Is the financial market fucked under Trump?
Increased trade tensions and potential new tariffs could disrupt global supply chains and raise costs for U.S. businesses, impacting corporate profits and market valuations.
Market volatility could increase due to policy uncertainty around international trade agreements and diplomatic relationships with major trading partners.
Proposed immigration restrictions might tighten the labor market and increase wage pressures, potentially affecting corporate margins and profitability.
Large deficit spending combined with tax policies could lead to increased government borrowing, potentially pushing up interest rates.
Regulatory uncertainty in sectors like technology, energy, and healthcare could impact business investment and market confidence.
What are your thoughts and tips to investors?
I wouldn’t say these are major concerns for financial markets under Trump. Yes, we got away with a ‘soft landing’ back in 2022-2023 largely because of pretty much unrestricted immigration and tax cuts on the state and local level in addition to some external growth factors.
I wouldn’t say Trump’s tariff proposal will cause a financial market meltdown, though they aren’t a good idea at all making any type of imported goods a tax revenue base is stupid and it requires a lot of enforcement costs.
Trump may try to clawback some of the energy tax credits from the IRA since a lot of that bill was decided by the Treasury and IRS officials, but if you talk to any senior banker in project finance, they say how the tax credits did boost returns but didn’t really contribute significantly to overall growth since nonresidential private investment largely was just reallocated to renewables projects. And even renewables bankers have told me that the confusion regarding the qualifications for developers to obtain the tax credits pretty much made it difficult for them to factor them into their initial models, so many of the deals that occurred would have regardless of the new tax credits.
Regulatory environment is going to be probably the stronger tailwind along with Congress probably extending the TCJA tax provisions such a full expensing of depreciation and R&D. Scott Bessent is probably the best guy Wall Street could ask for when it comes to choosing who you want regulating you. Andrew Ferguson as FTC chair also provides us hope that antitrust enforcers will stop going after vertical mergers or just strategic mergers altogether (I.e. Biden admin had some notoriously bad calls on going after mergers like JetBlue + Spirit {won} and Microsoft + Activision {lost}).
Anyways, I know Trump is a concerning figure when it comes to a lot of what he says about regulating certain things or getting fixated on tiny things that can cause chaos, but I wouldn’t be too concerned or excited about anything he has said yet. I would keep an eye on immigration to see how his policies affect the labor market.
Not a chance. They were fucked with all the liberal economic policy that would've come through if he didn't win. They will likely be more volatile but we're going to see more record highs and growth under this presidency compared to his previous one.
I voted for Trump but honestly the OP / best answer have good points. I think we're overlooking how volatile he can make the economy for better or worst.
Use to be a centrist / lean left 5+ years ago. I'm concerned how MAGA / far right the country might go under Trump.
Why is volatility a bad thing? So long as the net direction is up and to the right, it being a bumpy ride to get there isn't really that important in the grand scheme of things. If anything it just indicates a higher rate of change (bound to be the case thanks to AI) and more opportunities to identify fundamental mispricings which is how most of us will actually make money throughout our careers. The world changing is a good thing for the world's leading & most innovative market, and Trump's policies are far and above superior to anything we were getting from Democrats. If the Democrats had their way we'd stagnate the same or worse to what's been happening in Europe for the past decade thanks to their apparent fetish for growth stifling regulatory bureaucracy.
There are bull cases too. Another corporate tax cut to 15% would prop up stocks. A more permissive approach to development of natural resources could keep prices under control and boost American energy exports. Trump is a coin toss on immigration, he’s just as likely to expand the H1B visa program for talented professionals as he is to do a mass deportation. Trump will have enough of a loose monetary regime that it will be difficult for the momentum to come apart.
What will likely cause a recession/depression under Trump has nothing to do with his views on tarrifs, immigration, or any hot button topic. What will cause a recession/depression, and quite frankly the country really needs to have happen, is a massive reduction in government spending. I am talking 35 - 50% reduction of ALL government spending, from local to federal. Will this cause some issues? Sure, but it is unsustainable when 40%+ of every dollar spent in the US economy comes directly from a government source. Some even estimate that number is over 50%. If you look at the job creation over the past 4 years the number of government jobs created vs private sector jobs the number is around 4-5:1. This is fundamentally unsustainable, even if we didn't have a massive existing debt load. There seems to be no pathway to extract the government expenditures from the economy. In addition to this there is an even bigger issue. All of these new government employees need things to do so they create rules that make it even more difficult for the private sector to compete for resources with the government. This is a major crowding out issue. We need to cut the government fast and we need to remove regulations. Thank god the SCOTUS axed the Cheveron Ruling.
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