Hello 2025. Hello (and welcome back) President Trump. Hello disruption. BTW, remember back a few years ago when disruption was a really cool thing. Upset the status quo? Change the world? Well, here we are.
Going into just the third week of the new administration, it’s really difficult to keep up with all the changes, not to mention the potential ramifications. Obviously those potential ramifications are beginning to take their toll on the financial markets. Making investment decisions with a daily (if not hourly) changing landscape is at best…….challenging.
Tariffs? Well, it’s not like nobody knew they were coming. No matter what your political bias may be, the President telegraphs what is coming (and follows through on) as part of a negotiation style. Of course, as in any negotiation, compromises and adjustments can be made at any time. Hence some confusion. That’s what we have with the tariffs. So far, the fear of tariffs on Mexico has been greatly mitigated and tariffs “postponed.” Canada next. Then the EU. Can you stand it?
The current thinking is that tariffs will cause a spike in inflation. That, of course, would cause interest rates to rise, or not go down. But is that “a lock?” Certainly not. What if it all works? No doubt there has not been a strong and forceful U.S. president imposing an American will on countries around the world. Bully? Maybe. Forceful persuasion? Yeah, probably. All this is certainly a shock to the system.
So today it’s tariffs. Tomorrow (or even later today) it might be a sovereign wealth fund. OMG. How will it be funded? Will the U.S sell gold? How will that affect financial markets? Ah, don’t worry your fast thinking head. The SWF could be formed, funded and profitable in just a few days and then on to the next thing. Financial markets will only have a short time to a) panic or b) celebrate.
Confused yet? Hard to see how you couldn’t be. But wait, there’s more. USAID, DOGE, buying Greenland, beating inflation, lower interest rates (or fight with the Fed Chairman). All that could be coming over the next few weeks. What will financial markets do?
Confused? Frankly, yes.
