Wall Street has traditionally viewed Donald Trump’s presidency as good for the economy and the stock market. Although Trump campaigned on both tariffs and austerity measures, many investors didn’t expect both to materialize so rapidly through executive orders. Trump continues to esclate a tariffs-driven trade war and support federal spending cuts that have eroded market sentiment.
Fears of a “Trumpcession” have now rattled markets, and investors have started scrambling to find equities to hedge against growing U.S. instability. The Republican administration has signaled they are okay with taking on some pain to change how the U.S. government gets its revenue. Cutting up to a trillion dollars in spending and levying tariffs on trading partners to balance the budget is unlikely to be a smooth ride. GDP is expected to contract by 2.4% in the first quarter, according to the Atlanta Fed, and UMich expects inflation to be nearly 5% a year from now, mainly due to tariffs.
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