Trump's Treasury Secretary is on the job, as of Tuesday. And his Commerce Secretary should be confirmed early next week.
With these two in place, the execution of the Trump economic agenda will begin, and so will the clean up of what was left by the last administration. And that should present some headwinds for stocks.
The clean-up?
1) Funding the debt: Remember, as Bessent predicted in an investor letter around this time last year, Janet Yellen did indeed spend the past year financing the record peacetime deficit spending with short-term maturities —trading short-term gain (in attempt at political gain) for medium and long-term economic pain — leaving the pain for Bessent to work through.
That leaves Bessent with a third of the outstanding U.S. government debt to be rolled over this year. And the bond market has already anticipated this supply coming, which has translated into the rising bond yields we've seen in recent months, which means higher cost of debt, larger deficit (and greater risk for a market event).
2) Ending the war: In his Senate hearing, Bessent said the Biden administration's sanctions on Russian oil were too soft, and only ramped them (to "mid-level") as they were heading out the door (which spiked oil prices 9%). He said he would be "100 percent on board for taking sanctions UP" on Russia, to bring them to the negotiating table.
3) The Chips Act: Lutnick said yesterday in his Senate hearing, that he needs to review it, to make sure we're getting the benefit.
Among the areas to review: Given that government grants have been awarded to foreign manufacturers, does it serve the goal of domestic manufacturing? And "review it" likely means extracting all of the hoops in the agreements, that have made compliance and execution very difficult for the recipients (like voluminous DEI requirements).
That's part of the clean-up.
And as we know, core to executing on the economic agenda is tariffs, to incentivize the rebalancing of global trade.
And the tariff roll out is coming.
With that, there is a misperception that Trump is overly concerned with measuring himself by the stock market. Trump showed us in his first term that he will execute on the plan, even if it means swings in stocks.
Had he not waded into the global imbalances issue in his first term, by taking on China in effort to rebalance global trade, Trump would have had a booming market and economy and probably a glide path to a second term.
Instead, he took up the decades overdue fight against China in his second year that spanned through December of 2019, when both sides finally got to a "Phase 1" of a trade deal.