The stock market dropped nearly 1,200 points Wednesday as investors digested Fed Chair Jerome Powell’s halting explanation of persistent inflation.
But that wasn’t their only worry.
Wall Street traders I speak to are also getting a little shaky that Donald Trump’s economic plans, including his tax-cutting intentions, aren’t being clearly articulated and seriously discussed.
Ditto for deregulation.
Both seem to be taking a back seat to Trump attacking and suing the Des Moines Register for some errant presidential poll.
Throw in some Elon Musk, the smart but famously erratic mega-billionaire and now top adviser to Trump.
He emerged during the week as a budget-deal killer using his X social media platform some 150 times to foment vitriol over the spending measure, some of it warranted, though some of it could have waited until Trump officially takes office.
You have some just cause for the jitters, which isn’t a lot of fun if you have skin in this market the last week or so.
That’s why it’s time to remember that the alternative to the Trumpian craziness would be worse: cackling Kamala Harris selling warmed-over socialism and market statism as hope and joy.
There’s even a good chance that when Trump’s incongruous economic stew finally cooks, the markets and the economy will be just fine.
A second Trump presidency was always going to be a wild ride.
His closest advisers are a mishmash of traditional supply-siders, like Treasury Secretary nominee Scott Bessent, a former hedge fund trader, reborn protectionists like VP-elect J.D. Vance, and anti-Wall Street populists.
Steve Bannon, the political mastermind of Trump I, isn’t in the second administration, but the famously ardent populist runs an influential podcast.
He still has the president’s ear.
Then there’s the mastermind of the madness — Trump himself.
The combative billionaire businessman, survivor of lawfare and assassination attempts, the winner of the 2024 election against great odds, deserves the moniker “badass” and a little patience to get his house in order.
Yes, I know Trump seems to tout contradictions on all things economic.
He talks about a good balanced budget game and the need to quell inflation, but says he won’t cut spending if that means cutting big-ticket items like Social Security.
He calls tariffs a beautiful thing, even if they are inherently inflationary.
Higher prices cause bond traders to sell debt, spiking interest rates as they are doing now because tariffs are a tax on overseas goods and could lead to retaliatory levies.
Peril of a rally killer
Trump likes the stock market going up, as if it’s a scorecard for the success of his presidency.
But higher deficits and inflation from tariffs could kill what’s left of the rally that picked up steam after he vowed to reverse the economic malaise — uneven growth and inflation — we lived through during the Biden-Harris years.
All of the above is a recipe for the market zigzags we have been seeing.
And you know what?
The country is still going to be better off than the alternative.
There’s a really good chance the “DOGE Boys” — Musk and Vivek Ramaswamy — might just cut enough of our bloated government to assuage bond vigilantes, tariffs or no tariffs.
Trump might just threaten tariffs simply to get better trade deals.
The Trump tax cuts and deregulation when they come will spur economic growth, which markets love — plus, they help pay down debt.
An added benefit: You won’t have to listen to Kamala Harris’ word salad.
So take a deep breath.
Let the Trump madness play out.
There’s a promise of significant calm after the storm.