Can the stock market save America from Donald Trump’s worst impulses? Yes, says high-profile finance professor Jeremy Siegel, who describes him as the “most pro-stock-market president” in American history.
“No one has defined himself and his success as much as Trump has with the performance of the stock market”, says Siegel, a reference to Trump’s routine boasts about market gains during his first presidency. Siegel notes more than half of Americans now own stocks, whether directly or indirectly, so continued gains represent a political asset for Trump.
Siegel suggests Trump’s regard for market movements will act as a check against policy overreach. The spike in US bond yields speaks to market concerns over unaffordable tax cuts. Widening the already sizeable deficit could drive up interest rates, which could be a “major headwind” for stocks. Mass deportations could devastate certain industries.
In all these cases, markets “are going to be the watchdogs”, suggests Siegel, and Trump’s keen awareness of market movements will rein in his wilder policy instincts.
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Tensions between Trump and Federal Reserve chairman Jerome Powell are also “overblown”, he adds.
We will see if Siegel is right, but some of Trump’s early nominations for key positions are alarming. He wants Fox News host Pete Hegseth to be defence secretary. Hard-right Maga loyalist Matt Gaetz, who has been investigated over allegations of sex trafficking, is his pick for attorney-general. Tulsi Gabbard, widely regarded as an apologist for Vladimir Putin and Bashar al-Assad, has been nominated as the director of national intelligence.
One wonders if Trump is serious, or whether he is just trolling his enemies. Either way, similar choices for his economic team would surely cause markets to think twice as to what’s ahead.
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