Newscasts - Market Talk: Financial experts assess Trump's first 100 days

Thomson Reuters

29/04/2025 13:21

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Description: A panel of established market and economic experts join Reuters’ Lisa Bernhard to evaluate the impact of U.S. President Donald Trump's frenetic first 100 days of his second term in office - from his controversial tariff policies and ensuing market turbulence, to corporate confusion and the heightened risk of recession.

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Video Transcript:

President Trump's first 100 days in office have been some of the most turbulent for markets, a record high for the S&P 500 in February, followed by the worst sell-off since the early days of the pandemic, sparked by fears over Trump's trade policies and escalating tensions with trading partners and even with his own Fed Chair nominee Jerome Powell. Here to discuss Trump's whirlwind 100 days are Eric Ditton, President and Managing Director of the Wealth Alliance, Melissa Brown, Managing Director of Investment Decision Research at SimCorp and Dan Burns, Reuters US Economics Editor, and I'm Lisa Bernhard for Reuters. Eric, I'm going to start with you and I'm going to start by pushing the fast forward button. Given what we've seen so far, what do President Trump's next 100 days look like?

I'm actually moderately bullish on these next 100 days, although the caveat is lots of volatility. What's giving me some solace is that I see Trump backing off from the hard line a number of times, right? He had these reciprocal tariffs, and they said, we're going to have a 90-day pause. Powell, major loser, get rid of that guy. No, I'm not firing Powell. What's going on? And I believe the two words are Bessent and Lutnick. These are two market players that have been around a long, long time. And they have been integral in the markets, and they understand the markets. And every time Trump does something that really messes with the markets, he backs off and I believe it's coming from these two. So, what I'm hoping for, what I'm expecting to see is progress on trade. I expect to see some wins for Trump, maybe some easy ones, Vietnam, India, etcetera, and he can say, look, this is working. We've also seen announcements from the likes of Novartis and Roche committing billions of dollars into the United States in manufacturing. So, I think China obviously is the elephant in the room. But if we're seeing wins and steps forward, I think that's going to get the market to a more comfortable place, and I do think that's going to happen.

Melissa, you study market trends. Tell me, what does the next 100 days look like to you?

Well, I'm maybe a little bit less optimistic than Eric because I think all of this back and forth is causing so much confusion on the part of investors, on the part of company managements. So, if you're a CEO or a CFO, you don't really know what to do, and it's likely that you're just going to wait it out and maybe not do anything, which means you're not going to be hiring, you're not going to be investing. You know, I think there are just so many issues in this confusion, and I want to make a distinction between confusion and uncertainty. Uncertainty is okay. We can work with uncertainty by assigning probabilities of something happening and then using that to guide your future decisions. But with confusion, when everything changes from one day to the next, I mean, I hope Eric is right and things do calm down and we do have a little bit more of a solid vision of what's going to happen. I'm just concerned that that's not going to happen.

Dan, I'm going to ask you, can you put Trump's first 100 days in historical context, particularly given all the tariff turmoil? Are there any other administrations or outcomes that you can compare this to?

It stands out and there have been tumultuous first 100 days. For instance, so Obama was still in the coming through the throes of the financial crisis and the market didn't ultimately find its bottom until about halfway through his first 100 days. But we've seen great not just market volatility, but the pace of announcements, of implementation is border is unprecedented really when you think about everything being attacked from an executive order point of view. And we haven't even gotten to the point where we're looking at the legislative agenda and progress on tax cuts yet. That's still to come. Your question about what the next 100 days hold, I think it's really what the next 70 days hold until July 8 when these reciprocal tariff pauses all come off and you're going to need to have action actually before that, I would expect. And I was last week at the IMF meetings in Washington, hundreds of foreign officials from around the world all scrambling trying to get their five minutes with Scott Bessant. Maybe a dozen, dozen and a half really got any time with him. And it's not clear really what progress was made in those one-on-ones, and those billaterals, but the level of anxiety among foreign officials in Washington last week was really comparable to what I'd seen back 15 years ago during the heights of the Greek debt crisis. And so, it was palpable, just how concerned people are. Everybody was talking about the same thing. Show us credible progress towards some deals that stand as a template for what others may be able to follow.

Wow, interesting. Okay. Melissa, let me go back to you. So far, Trump's trade policies have really unnerved investors as we discussed and prompted many economists to up their forecast for a recession. Is there an upside to Trump's policies that you think investors and economists are just not yet seeing?

I'm not sure that there is an upside here. I think, particularly with the back and forth, if you're going to impose them, impose them. I don't think imposing them is a great idea, but if you're going to do it, just do it. I think this back and forth is really an issue and it just makes, as I said, very hard to plan for anything. There may be in certain industries that if the policies stick, that there is some benefit, at least in the short term. But in general, I'm not a big believer in tariffs overall, so I don't see a huge upside.

Eric, let me ask you, what does a successful trade policy look like to you? Can you see that? Is there something that others are missing that are predicting recession? What do you think?

Like I said, I think we're going to make progress and there are going to be some wins. But let's be clear, Trump loves to be loved. He's got an ego the size of China. And so, this is very difficult for him. His popularity is plummeting. So, let's remember he said the Ukraine war was going to be over in a day. Okay. He said that if the hostages aren't released, there's going to be Armageddon. This could be gone with a tweet. You have to remember, this is not COVID, this is not the financial crisis of 2008, 2009. I lived through those. Those are brutal with no end in sight. He could very easily just start backing off and he'll hold his head up high and say, "I had a win here, I had a win here. I accomplished a lot of what I wanted to do." That deadline could come up for the tariffs and we'll say, you know what? We're making good progress. I'm going to extend it another 30 days or another 60 days and that's why it's so hard to invest here. But I just will tell you there's a bunch of reverse indicators that are interesting. For example, first quarter 2025, seventh time the NASDAQ was down over 10% after being up 3% or more. The other six times that happened, the NASDAQ was higher next quarter and next year every time average gains 19.7 and 42.6. I've got about four of these different data points and we could look at this rationally and say, there is no reason for the market to go up. But I said that in March of 2020 when COVID was full steam, and we were looking at a global depression and sometimes markets just go up. And so, we've had tremendous negativity. I'm not saying it's over. We're far from over. We got four years of Trump volatility all the way. But we did have some extreme panic selling and you might actually see the next few months the market might do pretty well.

Melissa, do you think though, I mean, Eric said that it could be over with a tweet. Do you think that there's some damage though, that's already done, even if there is a tweet that sort of makes things over?

I think there's a lot of damage that's been done. One thing that's been a bit surprising is that normally when we have this kind of turmoil, US Treasuries are the recipient of a flight to safety, and we have not seen that. We've seen investors fleeing the US market. The US stock and bond markets, as well as consumer markets. So, reading stories about, you know, ports are empty. There's no ships there. Or you see that, you know, the European markets are doing relatively better. I think that's going to- I could be wrong on this. It could be if we start to see some sparks of the US market going up, the money will flood back in. But I'm not sure that that's going to happen right now. I think with the money out and doing well elsewhere or certainly doing better elsewhere than it would have been in the US, I think it's going to be hard to get the underlying enthusiasm for the US market back. So, it's not to say it'll never come back, but I think perhaps until some of these trade issues are resolved, I'm not sure we're going to see the flow of funds that we would really need to propel the market.

Dan, let me come to you and we've touched on some of this, but let me just ask you directly. I mean, as we look back, what's been the most surprising to you as a journalist who covers this and has covered other Presidents’ first 100 days. But in terms of economics and markets, I mean, what's been the most surprising thing to you?

I would think potentially the lack of so far of all of this activity, this frenzy of announcements, the imposition of tariffs in different stages, some have now been in place for a couple of months and we're probably on the cusp of beginning to see some of that reflected in some of the official data. But the fact that despite the really lousy showings of sentiment across not just household and consumer surveys, but business surveys all turn radically south beginning about 60 days ago, we haven't yet seen it show up in official data. Retail sales seem to be hold up, but that may just have been front running. We're going to start seeing some of those numbers reflect some of the after that wave effect, potentially in the months ahead. We had crazy auto sales in the month before last at a run rate that was really not sustainable. I think everybody on this call probably knew somebody who bought a car in the last six weeks trying to get, trying to get ahead of it. I know I did. And so, that is just not behavior that is replicable going forward. That's stealing from future consumption. And we could begin to see that. Reuters is out with a global economic poll just this week that shows globally, economists see a risk of a global slowdown, potentially outright recession higher than any time since COVID. So, there's a real concern out here that things could turn south. How demonstrably so, also surprising, we haven't seen a lot of job cuts. Yes, you look at weekly new claims for unemployment benefits, they've been flatlined at about 225,000 for weeks. So, there's just no evidence yet that companies, despite the anxiety, are really turning that into dramatic cost cuts. We think that some of that may be that there are attrition waves that may be making up for some of that. Something like 4.2 million Americans will reach retirement age this year and next year, and I can say that for ten more years, right? That's just a real, that's a demographic force that's making companies rethink what they might otherwise do and what they anticipate to be a downturn.

Wow, interesting. Okay. Let me ask you quickly. You guys have both touched on it as well. But Eric, most surprising to you, and then let's go to Melissa.

I think this has been a whirlwind of sound and fury this first 100 days. We had 139 executive orders and there's 80 lawsuits. This has never happened. This is 100 more executive orders than Trump had in his first term. So, I think this incredible executive decisions and orders that are affecting not just the markets, but I mean, everything, climate change and diversity, and the complete inconsistency of he tariffed, he untariffed, he retariffed, he partially untariffed. As Melissa said, as a CEO, how do you possibly formulate a strategy when there's no strategy at the top right now? And so, to me, that he sounded like he had an incredible amount of conviction when he was running for office, and now there's just no clarity. And I think that is the biggest surprise to me.

Melissa, what do you think?

Yes, I definitely agree with Eric that this number of executive orders and who they're targeting. You're right, it's not just things that investors need to think about. It's universities, it's law firms. It's everything. I don't know how anybody could keep all of this straight in their head, what's going on. So, I think that has been extremely in one way, surprising, although we did know going in what his priorities were. I think maybe we didn't expect that he would try to attack them all at once. And then, as I mentioned, the flight of money out of the US, I think, has also been surprising because the US is often seen as a safe haven, certainly the US bond market and to see investors and countries selling US bonds is surprising and concerning as well.

World had been pretty overexposed to the US coming into this episode, that's a big factor here. What we've seen in the last several weeks has certainly stoked the debate about whether we're seeing what many people have expected for a long time, which is a de-dollarization trend, the end of exorbitant privilege for the United States. The question that always stops that conversation at its track though is, what's the alternative? You can see some tactical portfolio rebalancing, which a lot of people, I talked with Jan Hatzius at Goldman Sachs on Friday. That's his view. He expects the Dollar to continue to weaken from here, but he doesn't think that it's a global strike against the Dollar. It's portfolio rebalancing against a global overweight for more than half a decade to the United States that's reversing some of that course right now. Bear's watching. We haven't seen the feared buyers strike at a treasury auction yet, but who knows? Maybe it will.

Interesting. I'm going to have each of you give you a last word here and we've already propelled it forward. But specifically, where's the S&P? Where's maybe gold? Where's the Dollar? Where's Bitcoin, if you want to throw that in, the 10-year Treasury? Eric, what do you think? By year's end.

I think I'm mildly bullish on the S&P. I think we could be 5% higher. I'm much more bullish on international and emerging markets, which have really been just sleepy. Gold, I just halfed out just a couple of days ago simply because I'm starting to see CNBC tracking gold, Barron's cover story this weekend tracking gold. Once I start seeing that, let's take some profits and the profits have been great. Bitcoin actually just started acting like a hedge last week. At first, it was just dropping with the market, but then it diverged, and I think that's positive. So that could very well have its next leg up.

Dan, I don't know if this is something you want to weigh in as a journalist, but I'm going to give you a final word anyway, to say whatever you'd like to say.

I'm certainly not going to make a market prediction, but I'll tell you some things that I am watching in the market. I'm certainly going to keep an eye on Treasury yields. I'm going to keep an eye on the dynamic around how soon we get an indication of the Fed resuming rate cuts. Right now, they're clearly in wait-and-see mode. The market has them coming off of that probably soon. I think there's going to be some confusing inflation data over the next month or two. And then we'll see whether tariffs are really going to pile into sending inflation higher after that. And if employment is steady, the Fed is probably going to stay on hold. But if we start seeing that UE rate rise, we could see a more aggressive Fed by the end of the year.

Melissa, you have the final, final word. What do you think? Interest rates, the Dollar, S&P.

I also do not want to be in a position of forecasting levels of any of those. I'm a little bit less bullish about the equity market just because of this uncertainty turning into confusion and whether we'll actually be able to get anything done on a legislative basis for the rest of the year. So, I think we may have seen the highs for the year already in the equity market. I agree that the Fed is really just kind of on a knife's edge. And because things could go either way so easily, I think they are kind of stuck perhaps not being able to do anything because if they do, what if they lower rates, they make inflation worse. If they raise rates, they, you know, we could, you know, tumble into a recession. So, I think the Fed has a very a precarious position that they're in, and I think that's probably what I would be watching the most for the rest of the year.