Talk of trade wars isn’t spooking US investors right now, with the S&P 500 hitting fresh all-time highs not long after Donald Trump threatened Mexico and Canada with 25 per cent tariffs.
Sentiment is elevated, and markets seemingly see this as typical Trumpian bluster. Is this complacent? Maybe.
The market view, quipped Bloomberg columnist Conor Sen on Bluesky, is that the “pro-growth stuff” that will be difficult to pass with a razor-thin House Republican majority is “definitely going to happen”, while the “anti-growth stuff he’s been saying forever that he’ll do and which he can do unilaterally on day 1 is a bluff for negotiating purposes”.
In truth, no one knows what’s ahead. Financial writer and Collab Fund partner Morgan Housel recently cautioned that it’s “hard to think of the last time the popular narrative of ‘Here’s what the new president means for the stock market’ ended up being right”.
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The mood was “universally bullish” when George W Bush won in 2000, but his eight-year reign was a torrid one for investors. “All other presidents were supposed to bring doom and the market ended up just fine,” added Housel.
For now, the question isn’t whether Trump will spark more drama – he will – but whether markets continue to keep their cool.
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