I have to admit that the first thing I thought about when the news broke that Trump had been re-elected was to wonder how I might be affected. That could sound selfish, but I was basically following the kind of advice you hear on airplanes about securing your mask before attempting to help others.
As with many Americans, the place I am most vulnerable is economics. But specifically, I am retired and depend on Social Security plus a small retirement fund as my sources of income.
When it comes to the former, I would predict that, if Republicans are successful in doing anything about Social Security, it would affect future - not current - recipients. It is my retirement account that could take a hit since it is currently invested with the goal of producing growth and income. Given the fact that I'm in my "twilight years," I don't have a time horizon to make up for losses if the stock market crashes.
Today I received an email from my financial advisors passing on what their company views as the outlook for 2025. Here's a summary (emphasis mine):
As we look to 2025, we remain cautiously optimistic. We’re cautious because no market environment is ever permanent, yet optimistic since constructive long-term technology trends are in place. Plus, potential tax policy and deregulation efforts in 2025 could provide some tailwinds — particularly from an economic perspective. While growth asset returns are not expected to be as robust in 2025, the investment environment should prove to be favorable for investors.
So they are "cautiously optimistic" that Trump's tax cuts and deregulation will contribute to a favorable investment environment. And yet they failed to mention two of Trump's most prominent campaign promises: tariffs and mass deportations. That's the kind of financial analysis that some folks are calling "delusional."
Julia Coronado, founder of the research firm MacroPolicy Perspectives, told the New York Times that many Wall Street players have convinced themselves that Trump will only carry out the policies they support and not those they oppose, such as hefty foreign tariffs or mass deportations.
"A lot of people are using deductive reasoning and concluding that he’ll only do things that are good for the market... They can ride this wave of hope-ium through the end of January," said Coronado, who added that Wall Street's current view of Trump "feels delusional."
Even when these Wall Streeters acknowledge the way that tariffs would hurt the market, they tend to downplay whether Trump will actually implement his promises.
Barclays strategists estimated that proposed tariffs on Canada, Mexico and China - and any retaliatory actions - could drag S&P 500 earnings down 2.8%...
BofA Global Research expects a 1% hit to S&P 500 earnings if tariffs on China double to 40% while they rise to around 8% for the rest of the world, excluding Mexico and Canada. But with retaliatory tariffs, which hurt foreign sales, the earnings hit would rise to 5%, the bank's strategists wrote...
"They are trying to boost U.S. growth," Lefkowitz [UBS Global Wealth Management]said. "Tariffs would end up reducing it and Trump tends to focus on how the market is performing. For that reason, the market has been downplaying so far what we have heard on tariffs."
None of them ever mention the impact mass deportations will have on the economy.
But it gets even worse. Not only are these Wall Streeters delusional, they appear to have amnesia when it comes to deregulation - as Chris Hayes explained.
Yes! Batten down the hatches! Trump has said he favors getting rid of the FDIC and combining their role into the Treasury Department. We're all going to be living in Pottersville sooner than later!
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