Trump's Goals Are Laudable, but the Policies Aren't Getting Us There

I think the goals of the presidential administration are laudable – with rebuilding a larger, more robust, middle class being paramount among them.

But I’m increasingly concerned that the policies we are pursuing so far are not going to get us there.

On the DOGE cuts:

It is a bit unclear (at least to me) how much has been cut and how much of the cuts were purely wasteful and didn’t provide benefits to the U.S. economy.
The erratic nature of DOGE (that is how I see it so far, and I was incredibly excited about DOGE early on) may be hurting the economy just by causing confusion. There is so much confusion that it may be stalling economic activity.

This is occurring within an economy that I believe is weaker than the published data suggests and was already weakening.

Then, I’m examining tariffs, and our approach to them:

It is unclear that there is much excess capacity in the U.S. I spent some time on the steel industry and while we might be able to ramp up production a bit, we will still need imports (which we have just made more costly). Also, it seems as though there are certain types of steel the U.S. doesn’t make at all, so we’ve made those types more expensive. According to Grok, it could take as little as two years to get a new mini-mill online, but that was very optimistic and the reality is at least a year longer for that. For large plans, or anything relying on iron ore as opposed to scrap metal, it is probably four to seven years away.
To build out manufacturing facilities, of all types, the demand for raw resources would spike, causing more imports at these higher prices.

Then, adding some geopolitical posturing to our current almost-haphazard approach to tariffs:

Will capital inflows to the U.S. continue? Capital inflows helped our asset prices and economy. With our valuations high relative to the rest of the world, why would capital inflows continue? With erratic, sometimes bold, or even controversial statements, do you want to keep as much capital here as a foreigner as you used to? With global bond yields rising, there are alternatives, even in the fixed income space. If you believe for a second the Mar-a-Lago accord stuff where the U.S. will force other countries to convert their treasury bonds to zero coupon bonds to pay for defense, you are further disincentivized to hold U.S. assets.
I think U.S. brands have benefitted from the global perception of the U.S. — that our brands embodied an aspirational element, that our brands sell more than they might otherwise because people across the globe want to be associated with the U.S. There are some specific cases already arising where brands are doing less well globally. Will it expand beyond a few specific cases and be a problem faced by all U.S. brands? I think that is a risk.

Maybe something will change on foreign policy. Maybe something will change on tariffs ahead of the April 2 deadline. Maybe I’m just plain and simple wrong in my assessment and concern.

Despite those “maybes,” I am remaining bearish on most U.S. stocks. Not quite as bearish as in prior weeks, as the Fed might allow Friday’s bounce to continue, but bearish nonetheless with plans to increase short positions (sell long positions) once I sense that the current bounce has run its course (which might not be until after the Fed announcement).

I continue to like foreign markets better and domestically am focused on stocks that benefit from the construct that national security will translate into national production, though I’d like to see a lot more regulatory rules changed and some subsidies delivered, then what I’ve seen so far.

Not the note I want to write, but the one I need to write.