The stock market took a serious hit on Wednesday, dropping nearly 1,200 points. Investors weren’t thrilled with Fed Chair Jerome Powell’s less-than-reassuring explanation about persistent inflation. But that’s just part of the story.
Wall Street isn’t just worried about inflation. Traders I’ve spoken to are also uneasy about Donald Trump’s economic plans—or lack thereof. His big ideas, like tax cuts and deregulation, seem to be getting overshadowed by his other pursuits, like suing the Des Moines Register over some questionable poll numbers.
And then there’s Elon Musk, the brilliant but unpredictable billionaire who’s now one of Trump’s top advisers. This week, Musk decided to light up his social media platform, X, to stir the pot on the government spending debate. Some of his points were valid, sure, but the timing? Not great. It added to the chaos instead of calming things down.
For those of us with investments, it’s been a nerve-wracking week. But before you throw in the towel, remember this: the alternative to Trump’s rollercoaster ride might be even bumpier. Think Kamala Harris selling ideas that lean heavily on government control and less on free markets. Not exactly comforting for Wall Street.
Why the Market May Bounce Back
Trump’s approach to the economy might seem messy now, but there’s hope it could all come together. A second Trump presidency was always going to be unpredictable. His team is a mix of supply-side economists, populists, and protectionists. You’ve got people like Treasury Secretary nominee Scott Bessent, a former hedge fund trader, and Vice President-elect J.D. Vance, who’s more about protecting American jobs than Wall Street’s interests.
Even Steve Bannon, Trump’s former right-hand man, isn’t far from the action. While he’s not officially part of the administration, his podcast still influences Trump’s decisions. And let’s not forget Trump himself—the larger-than-life businessman who defied the odds to win the 2024 election. Love him or hate him, he’s earned his reputation as a fighter.
Yes, Trump’s economic plans can feel contradictory. He talks about balancing the budget and reducing inflation but insists on keeping major programs like Social Security intact. His love for tariffs—despite their inflationary risks—makes bond traders nervous, and rising interest rates aren’t helping. Yet, there’s a method to the madness.
A Glimmer of Hope
Trump might use tariffs as leverage to secure better trade deals, not as a permanent solution. His tax cuts and deregulation, once implemented, could boost economic growth and help pay down debt. And while the road to those benefits might be rocky, the payoff could be worth it.
The market zigzags we’re seeing now? They’re part of the journey. And compared to the alternative, where government control takes center stage, this path might be the lesser evil.
The Bottom Line
Sure, Trump’s presidency comes with its fair share of drama. But give it time. The chaos could settle into something productive. The Musk-Ramaswamy duo might slash government spending just enough to calm bond markets. Trump’s tax cuts and trade deals might bring back the economic growth investors are craving. And if nothing else, at least you won’t have to endure another word salad from Kamala Harris.
So take a deep breath. Let the dust settle. There’s a good chance we’ll find some calm after this storm.
