Traditionally, the first 100 days of a new administration sets the tone of that presidency. In the past we have heard from new presidents about the progress and improvements they plan to implement at the beginning of their new term. It’s always best to hit the ground running and put your best foot forward while all your voters are still happy that they voted for you.
Welcome to 2025! You may have noticed President Trump may be taking a different direction. The first 100 days of this administration seem to be about subtraction, not addition. Reducing government jobs, eliminating departments, slashing expenses, and using tariffs to reset and re-negotiate trade. It appears to me that he and his administration are committed to using his first 100 days to break things and then hopefully using the rest of his term to put them back together.
So, how might all of this influence the economy, the markets and your net worth? First, we need to expect continued volatility as the headlines keep coming. But beyond the market getting “unsettled,” how do I see some of these actions affecting the future?
· In the near term, we will likely continue to see a moderate slowing of the overall economy. Chaos and uncertainty tend to slow down investment and risk taking.
· Many of our trade partners and allies are screaming about the new tariffs. If they are just aggressive, short-term negotiating tactics (your guess is as good as mine) then seeing them as long-term inflationary issues is probably wrong.
· Over the last 3 years we have seen a trend towards re-shoring. This is when factories and production come back to the US from foreign locations like China and Mexico. The discussion around new trade structures seems to be accelerating that process.
President Trump’s first 100 days will end on April 30, 2025. If what I’m proposing proves true, that means another 30 days of electric headlines before the dust begins to settle. At that point he will need to begin thinking about mid-terms and protecting his ability to get anything else done for the balance of his term.
At this point, it appears the markets are acting very rationally. Many of the main economic indicators like jobs, productivity and consumer spending are not pointing to a recession. The markets seem to be looking through the chaos and waiting for the second half of the year to bring some clarity.
The best path forward is to continue to diversify, avoid overconcentration into high-risk areas of the markets, and to make sure we are getting good income while we wait for the next chapter to come into focus. If you’re feeling unsettled in the meantime – let us help!