Rising bond yields and tariff concerns are clashing with market optimism. Let’s break down the Trump Put and what it means for your portfolio.
No, it’s still a thing, and it’s still real. 2024 was 2024; this is 2025. In 2024 we noodled our way through the AI wave, got a new President and digested all possible outcomes of the President-elect’s proposed policy, even testing the extremes which he is known for. That’s all in the books, and they are sealed. So, what in the world would be pushing markets around these days? As far as I can tell, not-technically-yet President Trump’s famous executive-action-signing Sharpie pens are still neatly packed in crates on some loading dock at Mar-a-Lago, ready to be shipped to Pennsylvania Avenue. Congress is sitting but not yet bill-ing, though it appears that the winning party is cooking up a doozy of strategy once all the players are in place. But still, nothing tangible yet.
Didn’t we already have the debate about tariffs and tax breaks? Tariffs are not good by any measure of reality. Though their exact impact is a fertile subject for debate, only fully indoctrinated zealots would attempt to argue that there would be no effects of a meaningful tariff campaign. Similarly, a deficit is a deficit, and despite the bold bluster of the mysterious DOGE, which has the makings of a modern-day Illuminati Society influencing world powers, its ability to materially cut costs with mere recommendations without seriously tanking the US economy, driving massive Government agency layoffs, is questionable. Some efficiencies can be expected for sure, but not enough to curb the expected swelling of the deficit and the debt needed to finance it. But alas, despite which side any of us landed on that debate, we can all agree that there is going to be a Trump Put.
I am on the record in many prominent media outlets, going back prior to Trump’s election win, suggesting that his strong predilection for using the stock market as his scorecard, will serve as a check and balance against any of his longer lasting policy moves. It’s simple, why would Trump sign on to strategies that would tank the stock market? Not only would he have to explain his actions to the public, but he himself, a man with a reported net worth of $6.3 billion, is surely exposed to the stock markets, even if they are in a blind trust (though his are not). Surely a man with that level of net worth with vast real estate holdings would be exposed to interest rates. In other words, stocks going down and interest rates going up would almost certainly have a negative impact on his net worth figure, which we know is another very important scorecard for the President-elect. Now, I am not saying any of these things are bad, I am only suggesting that one would be kidding oneself if one believes that those factors would not impact Trump’s policy moves. That, my friends, is your Trump Put.
All good right. Buy stocks and bonds, head to some exotic location, and watch your portfolio explode over the next four years. 👈 That was joke, please don’t do that. Yesterday, the Washington Post suggested that the Trump team was preparing a pared-down tariff package. If you are the kind of person that likes to interpret things in a way that fits your investment thesis, you might have thought, “ah, so this is the Trump Put.” But, unfortunately my friends, Mr. soon-to-be Mr. President Trump is not that basic. No, he quickly refuted those claims, doubling down and calling the WaPo report “fake news.” Ru Ro, now what?
Well, how about this for starters? Yeah, that’s a chart of the 10-year Treasury Note yield right below a 1-year high set last spring, despite 100 basis points of Fed cutting in the interim. What do you suppose is causing that? You know what is causing that. It is the bond vigilantes calling 🐂💩 on the Trump Put. Not that he helped with his doubling down post on Truth Social. Now we know that Wall Street is fickle, switching from “loves me” to “loves me not” in the pluck of a flower petal. Main Street, on the other hand, can’t afford to be so fleeting with its affection of disapproval; small, emotionally driven slip-ups today can lead to disastrous outcomes later on down the road. Check out this chart and follow me to the close.
This chart shows the rates for shipping containers from China to the US. Notice how shipping rates have climbed steadily since late November. Do I have to explain to you what may be causing that rise? Sure, I do, that is the result of increased demand caused by US companies rushing shipments in to the US in order to beat any tariffs that will be imposed by the incoming administration. So, Main Street, like the bond vigilantes on Wall Street, is not so sure that the Trump will somehow temper his proclivity for taxing imports. Main Street is assuming the worst and Wall Street is counting on tariff-induced inflation. The equity markets are still on the fence, but they are having an increasingly harder time ignoring the bond markets, as played out in yesterday’s round-trip, up and down day for the broader equity indexes. So, is the Trump Put still a thing? Of course, it is, but don’t expect President Trump to make it easy for you.
YESTERDAY’S MARKETS
Stocks kicked off the session with refreshing gains giving the impression that happy days were here again, but early gains melted away as the session wore on leaving a mixed close. The earlier broad rally ended in a narrow tech-led gain for the day. Many are left wondering if the late session swoon is a sign that the bulls have lost their superpowers.
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