Today is Day 100 of the second Trump administration (counting Inauguration Day as Day 1). We’ve learned a lot in the first 100 days, but if you’re a market person you’re aim is always to look ahead, not backwards.
Today I look specifically at what happened in Trump’s first 100 days that changed expectations. Trump and his administration have exhibited great energy in its first 100 days, but from an economic and market perspective, the outcome to date has been in the wrong direction so far. This is also a rare case where the responsibility lies almost entirely with the president. But keep in mind that there are 1,362 days to go and the Trump administration has framed this as current pain for future gain. But the level of uncertainty around getting anything like that remains high.
So here’s what we’ve learned from the first 100 days that may provide some hints about what the next 100 may bring.
Tariffs
Two things. First, Trump is deeply committed to his views on tariffs. Second, the near absence of establishment Republicans in Trump’s cabinet has given us a purer version of “Trumpism” this time around and when it comes to trade that’s been quite painful so far.
The takeaway? The status quo on tariffs is probably not good enough yet to support a sustained market recovery. Market participants expect continued improvement toward a more moderate tariff policy. Whether we get there remains uncertain. The president instead may oscillate between more and less aggressive policy depending on the level of pain tariffs are causing at any point in time, and that in itself is not good for business.
The Fed
How quickly we forget 2022 and 2023. Yes, inflation was generational, the highest we saw in 40 years, and far from where we are now. But after a slow start, the Fed showed a resolve in containing inflation that consistently surprised markets.
Unless we get a recession, Trump’s first 100 days tells us markets are probably not giving enough credence to the Fed’s resolve. The other side of that is when the Fed does cut rates it may be too late, but right now that’s a risk they are willing to take.
Businesses
Even if the president significantly moderates tariff policy, some of the damage we already are seeing in the economy cannot be undone, and these effects likely will build. Businesses are very good at adapting to different policy environments, but that doesn’t mean that some environments aren’t worse than others.
With tariffs still at historically high levels, expect to see more damage that begins to build on itself unless tariff policy moderates further. This may not break the economy, but the strain is rising.
Rest
US don’t have to fight a trade war with the whole world at once. it can help to have allies. While the US has the most powerful economy in the world, it’s not easy to make 100 trade deals, nor does it make sense to drive erstwhile allies closer to rivals. Similarly, DOGE’s aggressive culling of the federal workforce is likely to have downstream consequences, since in order to act quickly it also had a tendency to act indiscriminately.
The first 100 days highlighted the extent to which this approach will be part of Trump’s governing style. Expect the approach to expand rather than stabilize or contract.
The Fed Independence
I did not think this one would come quite so quickly. If Trump oversteps, I would expect the market response to be unmistakable… I would consider this a very small risk, but with the consequences of a misstep potentially large.” Well, we did see the president begin to make more aggressive overtures to interfering with Fed independence. Markets responded negatively, and Trump backed off. But the risk remains and I don’t think this one is over.
Final Takeaway
Going big is part of Donald Trump’s personal style. He may not be a great businessman but he is a master marketer (and also expert at bending the law to his favor, two skills that lend themselves well to real estate … and politics). If I had to summarize what we learned in Trump’s first 100 days it’s that he’s going big. Bigger than most expected. And I doubt that’s going to change. In my view it likely means policy risks will persist for the next 1,362 days.
Busy And Useful 