I doubt anyone on this forum is more disdainful of president Trump than I am. I try very hard not to let my bias in that regard to influence my opinions about the markets.
My view of Trump's influence on the economy and the markets are as follows: Long term, very bearish. Intermediate term, moderately to very bullish.
Trump is not the only factor to consider. AI is potentially an explosive influence on productivity (long term). Deficits (1.8 trillion estimated for 2025) is another long term problem (bearish). But in this post I am looking at the Trump influence.
The Fed is already leaning towards rate cuts. Now it appears that Trump is going to replace Chairmen Powell with a loyalist who will push for severely lower rates which is bullish the stock market. Of the 7 board governors who are political appointees, 4 are from Trump (so far). The balance of voting members come from regional bank presidents and serve on a rotating basis and are not political appointees. So with 12 voting members there is still some independence, but less and less.
Another move which I've read about is Trump's desire to lower the liquidity requirements for bank lending. Also bullish in the short to intermediate time frame.
Yet another short term juicing of the markets is Trump wanting to send out checks to voters which he describes as windfall money from the tariffs. Of course Trump's signature will be on every check just like during the pandemic, which caused inflation that helped sink Biden.
The Supreme Court will soon rule on the legality of the tariffs. Some people suggest if they rule against him it will be like a tax cut with money going back to companies (bullish). I'm not so sure
Think of Trump as the guy pouring more vodka in the punch bowl. He doesn't care about the resulting hangover. He'll be long gone when the disaster he causes will be upon us. But in the meantime, party on!
Comparisons to president Andrew Jackson, who was also a populist president who assaulted the National bank. I asked my friend ChatGPT if Jackson helped cause an economic contraction and how long did it take to unfold: Interesting comparison in my opinion.
joj,
Your contemplative/analytical posts are some of my favorites here! They always make great points, most of which I agree with and some that make me think more.
On the interest rates coming up. Not only do I agree, it's also something that we've not been posting the impacts of enough here.
President Trump only appoints people that he rigorously vets as those that will follow his agenda. Competence is an after thought in the process and we can see the results everywhere. So the market knows that the new head of the Fed(with his previous appointees, will likely aggressively cut interest rates for him. Like you said, this will stimulate the economy, which is bullish the stock market for several reasons.
One of them is the fact that alternative investments will earn LOWER interest rates and this makes stocks more appealing. Another is, if memory serves me right, historically, the stock market is weak/bearish when interest rates are RISING, bullish when interest rates are falling which probably is related to this same principle but also related to the economic conditions at the time, which might be different this time because Trump wants lower interest rates............PERIOD. Never mind justification using the big picture or inflation considerations.
With regards to Trumps tariffs rebate checks. This is another quintessential example of why Trumponomics lacks even a basic grasp of economic principles as his tariffs blatantly violate them in profound ways and now, his impulsive, brand new idea to stimulate support from Americans for a ruinous tariffs policy(doubling down, like he often does) makes it even MORE ruinous.
Let's explain. He has falsely claimed that our trading partners pay the tariffs. No, they pay ZERO. It's all American companies that pay the tariffs. It's a big price hike on them. The cost of goods for AMERICAN companies goes higher. They have 3 choices after that:
1. Pass on the higher costs to consumers(inflation) or
2. Purchase less product, which causes less supply in the US(inflationary)
3. Eat the tariffs and make less money
Trump likes this because he gets to collect that money for the government and his lack of comprehension makes him oblivious to the rest, which includes LOSING massive business(longer term in some cases), going both ways with many of our key trading partners.
Trump has insisted the tariffs money would pay down the debt. That might be great if his Big Ugly Bill did not do the opposite. Now, he wants to give the tariffs money back to Americans. Hugh? Not only would this blow up the National Debt even more, as you mentioned this would be inflationary by itself but think about this.
It's a triple whammy for the following reason.
1. The tariffs cause prices to go up because US companies need to hike prices when they pass on their increased cost.
2. Or because they don't buy as many foreign goods which causes supply shortages(inflationary)
3. On top of that, putting more money in the hands of consumers would stimulate the economy. This last factor would impose a NEW inflationary pressure thats independent of the inflation caused from collecting the tariffs!
So Trump would be increasing inflation by collecting the tariffs, then increasing inflation even more when he gives the money back to consumers.
In the end, the government has nothing left to pay down the debt. Consumers get back some of the money they have to pay for higher prices but higher prices, because of the indisputable laws of economics will EXCEED the rebates.
It's the recipe for less buying power for consumers, less money left in the end for them and nothing for the government, while destroying the long lived, beneficial 2 way trading relationships with all of our trading partners.
Dial in lower interest rates and thats another inflationary factor which reduces consumer buying power even more.
In the end, this is really, REALLY bad news and a reckoning is inevitable. It's impossible to have a time table but the reality of basic economic principles which Trump doesn't care about(or can't comprehend) is impossible to avoid.
https://www.fool.com/investing/2025/12/06/3-catalysts-can-spark-a-stock-market-crash-in-2026/
When back-tested to January 1871, the average multiple of the Shiller P/E is about 17.3. In late October, when the broad-based S&P 500 hit its all-time high, the Shiller P/E peaked at 41.2. The only time the market has been pricier is in the months leading up to the bursting of the dot-com bubble.
History shows that every time the Shiller P/E has surpassed 30 over the last 155 years, a decline of at least 20% has eventually followed for one or more of Wall Street's major indexes. While this valuation indicator isn't a timing tool, it does have a flawless track record of foreshadowing downside for the stock market.
The U.S. inflation rate has been modestly climbing since President Trump implemented global tariffs. US Inflation Rate data by YCharts.
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Stock Market 11-10-25
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Started by metmike - Nov. 10, 2025, 3:24 p.m.