'Trump Put' Is Back as President Renews Focus on Stock Market

At its simplest, we know one thing: the Trump put is back! 

When the president says to buy stocks, just buy stocks (he said this during the question-and-answer portion of a U.K. trade deal announcement).

We will get more nuanced on policies, but since early April, we have seen that the Trump put is back.

I think it is commendable that he is able to pivot and realize when his policies have potentially gone too far. It might be better if they didn’t get too far in the first place, but that is secondary to realizing the put is back and, just like during Trump 1.0, he seems to have become fixated on the stock markets as a measuring stick.

When I look at tariffs now:

• 90-day pauses seem the norm and seem highly likely to be extended barring unforeseen circumstances
• 10% seems to be the low end of tariffs (based on the U.K. agreement) and 30% seems to be the high end (based on the China agreement)

Tariffs will apparently be a mix of revenue and some incentive to shift production out of China and into other countries (which was already occurring), and I expect that to continue to be the norm.

I’m not sure the U.S. has “won” anything, or whether the cost of “winning” (to the extent we have won) was worth it (instead, the corporate and country behavior seen after the past month of tariffs will be).

The depression risk is off the table, though there is some risk of a recession, but even with that, we almost have to assume the president will pivot to avoid it if the stock market starts pricing in negatives on the direction of policies.

We should expect more announcements to start the week and a stream of “deals” as this framework seems reasonable.

Build, Baby, Build

I think we need to get back to focusing on "build, baby, build" (or "national production for national security"). It does seem to be the direction in which the administration is pivoting.

We need to:

• Revisit regulations that were put in place when we were the sole global superpower on the economic front. What may have made sense when China was less of a threat should be revisited now, in light of the obvious competition (it should have been revived years ago, instead of being added to).
• Make government spending commitments where necessary to get these projects into launch mode. Many facilities, from oil refineries, steel and aluminum plants, to rare earth and critical mineral processing, require years to get up and running. It will be difficult for private enterprises to start these processes without having a deep-pocketed, committed buyer. In some cases, this might need to be the government. The CHIPS act (minus most of the regulatory burden) might be a useful template.

While focusing on this would be implicitly competing with China and the rest of the world, it is far less abrasive than the zero sum game of tariffs and has a clearer path to victory (making more things in the U.S.).

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Bottom Line

It will take time for markets to digest what is going on. 

How much better can we do? Is the news already good enough to break through some resistance?

It is encouraging that bonds and commodities seem to be taking out some recessionary pricing as we shift to growth.

Hopefully, the April tariff policy was just a nightmare that is settling down and we can move on to things that should provide the positives with less uncertainty!

I am cautiously optimistic:

• The good news on tariffs might be overly-priced in now, as we all try and figure out what impact even these new tariff levels will have on the economy (one that had some cracks and was overly dependent on rampant government spending).
• Will countries act like the past two months didn’t happen, or will they work behind the scenes to do business in a way that turns out worse for the U.S.? (I am concerned about this).
• Build, baby, build (deregulation and spending) and the 2026 budget will be important drivers from here on out! Which is good.

It is a comfort to know the Trump put is real, and that intraday volatility should be reduced (80% tariff on China posted on social media wasn’t at all helpful or reflective of reality), but the market has priced in so much, I don’t need to be an aggressive buyer, until we get more clarity on other policies.

We could get that clarity, but I will be patient. I remain content to give up some upside for comfort. While the president seems less committed to shaking up the world order than previously thought, I would still rather benefit from my job, my home value, etc., and be a bit cautious on my investment side.