Trump, Part II
Donald Trump is using his pen... Like no president before... 'People over fish'... Impacts on energy and government jobs... Nothing new on tariffs... Talking about 'animal spirits'...
We were off from work yesterday, but Donald Trump was not...
After his indoor inauguration in the U.S. Capitol, by last night – "Day 1" of his second term as president – Trump aides were saying that he'd signed or planned to sign 200 executive actions.
Some of Trump's orders were brand-new, like "restoring biological truth to the federal government." Others simply reversed orders that Joe Biden had signed previously (some of which had reversed ones that Trump signed in his first term).
Trump also pardoned all of the 1,500-plus "January 6" defendants, including those convicted of assaulting police officers at the very same Capitol building in which he was sworn in on Monday.
Later last night, a tuxedoed Trump danced with a military sword to "Y.M.C.A." and capped the night by firing people via social media... And so, four more years begin.
The promise is a 'golden age'...
That was the message during Trump's prepared inauguration speech, which carried a similar "America first" tone to his one eight years ago. However, he stayed away from the phrase "American carnage" that he used the last time to describe the climate he was inheriting.
"From this moment on, America's decline is over," he said yesterday. He also said he was "saved by God to make America great again," referring to the assassination attempt of him in July.
As he sits in the White House this time around, Trump appears to have even more conviction in doing things "his way."
By midmorning today, I (Corey McLaughlin) and anyone else was able to read the details of 46 executive actions published by the new White House administration. Forty-six!
You might find value in reading through the entire list of what are formally called "Presidential Actions" (which includes executive orders along with less binding proclamations) and see what interests you. Or you might just get all you need to know by learning that one of them, about providing water to Southern California, is called "Putting People Over Fish."
Here's a summary of the biggest news from the 46 first-day actions...
The Mexican border is now a "national emergency," and we can expect to see a greater military presence there. Drug cartels are also now considered terrorist organizations.
Drill, baby, drill. Several orders relate to energy policy. Trump has declared a "national energy emergency" as well to promote fossil-fuel development. He is pledging to increase drilling for oil and gas, open up lands (like in Alaska) for such purpose, and pause or reverse support for offshore wind farms and electric-vehicle initiatives. He also announced plans to pull the U.S. from the Paris climate agreement – for a second time.
A hiring freeze for government jobs and a "return to office" push. Outside of military, immigration enforcement, national security, and public-safety jobs, as of yesterday, no open federal government positions can be filled or new ones created.
Not only is there a freeze on new federal jobs, but existing jobs may disappear as well. That's because of a "return to office" mandate for hundreds of thousands of government workers.
One order reads that "as soon as practicable," heads of all departments and agencies in the executive branch should "take all necessary steps to terminate remote work arrangements and require employees to return to work in-person... on a full-time basis, provided that the department and agency heads shall make exemptions they deem necessary."
This sounds like it will be a fluid situation.
I have already heard about some people employed by Uncle Sam who intend to get a doctor's diagnosis for some malady – like nighttime blindness – that could justify remote work for health reasons.
Surely not every federal worker will try that route... But maybe a lot will. And we suspect even more will desire to remain remote if they have gotten used to it in the past several years.
Now, Trump says that if they don't go back to the office, they should be fired.
Federal hiring (or firing) will show up in the labor market...
Federal Reserve Chair Jerome Powell has cited government jobs as a big reason the labor market has remained strong over the past year. And they were the No. 2 top category for job additions in the fourth quarter of last year, as market commentator Charlie Bilello of Creative Planning shared yesterday in his "The Week in Charts"...
Where are the new jobs coming from? Here's a breakdown by industry over the past 3 months...
This decision to pause government hiring and bring people back in person falls into the "sounds great and might be great but might have significant consequences" category for the markets in the near term.
A hiring freeze, unpalatable return-to-office mandates, and job cuts could increase America's unemployment rate. Depending on the scope, the combination could take a decent slice out of GDP growth as well.
Perversely, though, this weakness in the jobs market could lead the Fed to cut interest rates... just as the market has been hoping for.
But it's tariffs – or lack thereof – that appear to be getting the most play in the market today...
As of this writing, Trump has imposed no new tariffs on any country – something that he has the power to do. He has made various threats against China, Mexico, and Canada, first as negotiating tactics, as we've said all along. That seems to still be the case.
As he was busy signing some executive orders yesterday, Trump told reporters that "we're thinking in terms of 25% on Mexico and Canada, because they're allowing a vast number of people" over the U.S. border. Trump's target date for tariffs would be "I think February 1."
Our suspicion is that Trump would rather first use tariffs as a threat than a weapon, but we'll see. All in all, it's unclear what will come from tariffs talk right now.
As our Ten Stock Trader editor Greg Diamond reminded us today, this will be something to watch moving ahead when it comes to Fed policy as well. He wrote to subscribers...
This is very similar to the 2018 timeframe when Trump was implementing tariffs, and the Federal Reserve was stuck in the middle.
The Fed meets next week, which will clearly be an important catalyst. It's only a matter of time before Trump starts discussing interest rate policy as well.
Until then... 'animal spirits' appear to be back...
Today, the market took the nonaction on tariffs as a positive sign of a softening tone. That implies a better environment for U.S. companies – which practically write tariff checks to the government – and perhaps a lower inflation outlook.
The major U.S. stock indexes were all higher, with the Russell 2000 Index leading, up 1.9%, and the benchmark S&P 500 Index and Dow Jones Industrial Average closing about 1% higher. The tech-heavy Nasdaq Composite Index finished up 0.6%.
It was another "almost everything is up" day. All the major S&P 500 sectors were higher, except for energy, which was down just slightly as oil prices were a little lower.
As stocks rose, longer-term bond yields continued a downward trend that began a week ago. The 10-year Treasury dipped back below 4.6% today.
And excitement abounds in the cryptocurrency space amid a supportive White House administration. This afternoon came word that the Securities and Exchange Commission will launch a "crypto task force" to work on regulatory clarity for the industry.
Bitcoin, the world's most popular cryptocurrency, traded as high as $107,000. (And, if you missed their launch over the weekend, various "meme coins" with no inherent value – including a pair named for Trump and his wife Melania – are finding eager takers.)
Overall, lots of folks see "animal spirits" in the market again.
As our Stansberry's Investment Advisory lead editor Whitney Tilson wrote in his free daily newsletter today, that's precisely what famed investor Stanley Druckenmiller is saying. Of note, Druckenmiller is a former colleague of incoming Treasury Secretary Scott Bessent.
Such is also the talk over in Davos, Switzerland, where the World Economic Forum is being held this week.
Nicolai Tangen, the head of Norway's sovereign wealth fund, the largest in the world, shared this in an interview on CNBC. According to Tangen, "purely financially," Trump's arrival was going to be "very positive" for a lot of U.S. companies...
When we talk to American CEOs, and we talk to a lot of them, we really see this animal spirit coming back.
That's before we get to the parts that Congress needs to be involved in... like a likely extension of the Trump tax cuts, or any other legislation that comes down the pike.
About that: today, amid the giddy tone, the Treasury Department began "extraordinary measures" – really, accounting maneuvers – to keep Uncle Sam from hitting its "debt limit" again.
Oh, that not-so-little matter, huh?
We'll have more on that story tomorrow.
New 52-week highs (as of 1/17/25): Altius Minerals (ALS.TO), American Express (AXP), Alpha Architect 1-3 Month Box Fund (BOXX), Constellation Energy (CEG), Coca-Cola Consolidated (COKE), Cisco Systems (CSCO), GEO Group (GEO), Intuitive Surgical (ISRG), JPMorgan Chase (JPM), Kellanova (K), Kinder Morgan (KMI), and PayPal (PYPL).
In today's mailbag, feedback on Dan Ferris' Friday essay, "You Don't Really Want This." Do you have a question or comment? As always, e-mail us at feedback@stansberryresearch.com.
"I enjoyed Dan's article, and it made me think of something someone told me or read (maybe a Tony Robbins thing) that [says] money just magnifies who you already are. If you're generous, you'll be more generous with more money. If you fear losing money, you'll be more fearful with more money. If you're wasteful with money, you'll be more wasteful with more money!" – Subscriber Jim H.
"Hi Dan, I could not agree more with the examples offered in the article about 'easy money'. I began working in the investment world in the early 80's and currently I've taken on the role as president of a nonprofit that [works] with community members working to overcome the factors that lead to poverty.
"Most of these individuals have been given financial assistance many times with little, if any, accountability. I've never seen someone overcome poverty this way. Working with 31 other nonprofits in the county, we operate as a hub for needs assessment, case management, referrals and appointments for everything from mental and physical health needs, employment, education, food, counseling, and even some emergency financial assistance. This only happens after we set goals, set timelines, and the community member contracts with [us] to make the commitment and meet their goals.
"We have seen failures, but we have also seen improvement and growth as individuals take responsibility for their future, reset goals, and work to achieve them. The lottery winner or victim story is right on target, both for those with wealth and those without." – Subscriber William O.
"Excellent article. The Charlie Munger quote summed it up. Thank you." – Subscriber Jim W.
All the best,
Corey McLaughlin with Nick Koziol
Baltimore, Maryland
January 21, 2025