Donald Trump's Bold Bet Is One of the Biggest Political Risks in History
If it does not succeed, his legacy will be heavily damaged, and Republicans will suffer large electoral losses.
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On Tuesday morning, the market dipped on comments from Treasury Secretary Bissent about tariffs and trades. He has expressed optimism about progress, but he refuses to set forth a firm timeline, which isn’t good enough for the market. Market participants hate uncertainty, and they have it in spades when it comes to the time frame for trade deals.
Investors will be shifting their focus to earnings and economic growth, but the only issue that will matter is the progress made on trade and tariffs. The success or failure of Trump’s tariff plans will drive both the economy and the stock market.
Trump is taking one of the biggest political risks in history with his program to restructure the U.S. economy. If it does not succeed as hoped, his legacy will likely be bleak, and the Republicans will suffer large electoral losses.
In recent history, there have been few other examples of a president willing to make such a bold bet. There have been various attempts at tax reform, but no administration has done as much on spending or restructuring the economy to the extent that Trump is attempting. Most of the major economic decisions in recent years were responses to a crisis such as Covid-19 or the Great Recession. No one has attempted an economic restructuring when there wasn’t an immediate crisis.
Most politicians are unwilling to suffer the short-term pain that is inevitable when trying to make massive structural changes. Elections come too quickly, and the media will feast on the problems that are inevitable during an economic transition.
In the current environment, it is nearly impossible to find any economist or pundit willing to state publicly that restructuring tariffs and trade will produce great economic benefits. No one has ever been willing to bet their political capital like Trump is doing in this case. Meanwhile, those who oppose him will continue to send the message that he is doomed to failure.
I don’t know what the outcome will be, but when a trade deal is finally announced, it is going to create a major market move and elevated volatility. Even then, there will be critics who will attack these efforts to restructure the economy as counterproductive.
I’m doing little trading Tuesday morning as a pullback is taking place. There are plenty of stocks I’d like to add, but so no reason to do so right now without the likelihood of any trade announcement soon.
A couple of names on my shopping list include ADMA Biologics ADMA, Schrodinger SDGR, and Sportrader Group SRAD.
At the time of publication, Rev Shark was long ADMA, SDGR and SRAD.
