US President-elect Donald Trump has expressed four priorities for his time in the White House:
- Strong GDP growth
- Lower fiscal deficits
- Improved trade deficits
- A higher stock market
The problem is that you can’t have all those things. One way that Scott Bessant might be mulling is via a weaker dollar but that doesn’t look like it’s coming any time soon.
So you have to decide which one Trump prioritizes.
Since election night, that’s been an easy call for nearly everyone: The stock market. The sense was that Trump couldn’t stomach the pain of a real fiscal or trade fight because of what it would do to stocks.
So the sense was that deficits would stay high or maybe go even higher with a corporate tax cut and stocks would continue to rise.
That might not be the case. All the blame for Wednesday’s market meltdown is being directed at the Federal Reserve but I think that’s a mistake. The other big event on the day was that the Congressional stop-gap funding bill fell apart.
Leading the charge to kill it was Elon Musk, who has been Trump’s right-hand man since election night.
So while Trump’s priority might be the stock market, Musk appears to really believe he can slay government spending and is directing the whole weight of his $44 billion Twitter buy-out towards it.
If Musk continues to dominate Congress, then it might put the fiscal hawks in control.
Now ultimately, I think Trump tires of falling stocks and dumps Musk but it will be important to watch what happens in the spending package next and see how Republicans handle their narrow Congressional majority. If the stock market isn’t Trump’s top priority then there will be major pain to come.
