MacroResearchBoard

Trump 2.0: Some Good Things, Some (Potentially) Not So Good – November 25, 2024

A just-published report updated our MRB TradeBook positions, which remain mildly pro-growth in order to benefit from the ongoing global economic expansion, led by the robust U.S. economy. Looking beyond the near term, however, investors should not be dogmatic in their positioning since the policies proposed by President-Elect Trump are a conflicting mix of pro-growth fiscal stimulus and actions that could lead to stagflation. While much of Trump’s talk last time was more bark than bite, his policies did have a sizable impact on the economy and asset markets.

It is too early to know the sequencing of his policy objectives, and which will ultimately be watered down. Wednesday’s report analyzed the four major policy pillars upon which Trump campaigned, and we concluded that the election outcome has significantly fattened the tails for the U.S. (and global) economy.

The macro environment is now very different than when Trump last entered the White House, particularly with regards to inflation and the trend in government debt and deficits. Most of Trump’s policy proposals are bearish for U.S. Treasurys, and higher yields could again eventually have adverse knock-on effects for equities. Stay tuned.