Trump sows confusion in the markets
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Your guide to what the second period of Trump means to Washington, business and the world
There are many reasons for the feeling of confusion from the current American policy. US President Donald Trump It continues to issue “final” tariff threats – Then back down.
The White House wants to create industrial jobs – But it disturbs the law to reduce the inflation that was doing it, mostly in red cases. Scott Bessin, the treasury minister, wants to dominate the dollar, however He headed a 10 % decrease In its value. and so on.
However, if you want to feel more confused, look at the markets. In this month, a year -long barter market priced modest discounts from the federal reserve, which usually means low growth and inflation.
However, stock prices indicate an improvement in the economy: American stock markets at the highest standard levels of Wall Street Analysts expect Continuous gains amid strong profit expectations. Moreover, the so -called periodic stocks (which benefit from growth) greatly outperform defensive performance, Torrestin notes slow, Apollo’s chief economist, private capital group.
“This is not consistent,” he added. “Either the bond market is wrong, and the prices must move above due to the acceleration of growth. Or, the stock markets are wrong, and the shares must decrease because the growth slows down.” Och.
Why? There are at least three possible explanations. One may be a “double Taku” trade (I refer here to the idea of ​​my colleague Robert Armstrong “Trump always comes out.”). More specifically, stock prices may be the assumption that the tariff threats will be mitigated, and that the bond markets of belief will not actually implement the debt expansion measures and the investors have the interpretation of the treasury.
This is not crazy. Trump has repeatedly and repeatedly definitions this year, as well as threats to shoot Jay Powell as head of the Federal Reserve, and the condition of the so -called Article 899 that may have caused the escape of non -Americans from the treasury from the “great and wonderful bills”, which passed in the law last week. Hence the taku brand.
But there is an alternative explanation that may be called “double genius”: investors believe that Trump will actually implement his plans, but they will be so great that they achieve higher growth, low prices and debt decline – every time.
More specifically, numbers such as Kevin Haysit, Trump’s economic advisor, insist that the BBB law will highlight growth, while Inflation is reduced by canceling organizational restrictions And low energy prices. When the Moody’s classification agency reduced the American credit rating due to its 37 TriTa (and height) debt, Bessent This was rejected as a late indicator.On the pretext that revenues will rise due to definitions and growth.
Meanwhile, he is offered tricks to reduce the auctions of the Master Treasury in the amount of 9 Americans in the next 12 months, Like repairs to encourage banks To buy more bonds and release weighting towards short -term, not long -term bonds. (This is ridiculous since then Bessent criticized its predecessor Janet Yellen to do so.)
Some investors accept this rotation – or so it looks. No wonder: Atlanta The actual time at the Federal Reserve for the current GDP is 2.6 percentAnd there is little evidence that the customs tariff has caused a significant increase in prices – so far. And while institutions such as the World Bank She reduced her global growth expectationsDue to definitions, Oxford Economic Group – which is cited by one private sector entity – believes “new tariff rates … and 50 percent of copper tax” create “only modest negative risks.”
In fact, it is believed that these measures will add 0.08 percentage points to the basic inflation next year, and reduce the real GDP by only 0.1 percent – and the latter will be compensated by financial support for BBB. Thus, while “a mixture of trade agreements and threatened definitions will push the effective tariff rate in the United States to approximately 20 percent on August 1”, which is “less than our recession threshold.” Hence the calm of the market.
However, another more ridiculous method, to explain the separation is that it is simply impossible to make reliable expectations or consistent-now because there is no modern historical precedents of Trump and malicious time. One of the problems is that American companies have collected huge stocks to avoid definitions. Another is that companies “rearrange” the supply chains associated with China, as a McKinsey report says – And I have This is easy in some sectors (such as shirts), it is difficult in others (such as laptops and fireworks).
Likewise, although Dallas only feed to caution These immigration restrictions can reduce growth by 0.75-1 percent this year, and this timing is unclear. Likewise, the effect of Trump’s proposed spending discounts (which was mostly struck after the mid -term elections in 2026), and whether his wild policy pushes companies to delay investment or adapt only with this uncertainty (as they did in the end during the epidemic).
Perhaps more clarity will appear when American companies make profit reports next week. Or perhaps either amend the bond or stock markets. Until then, however, it symbolizes confusion. Think about this when you look at your next wallet.
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