Q: For now, investors seem to have decided to fade the chaos of Trumpenomics. However, one has to wonder how long the massive contradictions will be ignored.
Scott Bessent (Treasury), the man who wrote the report that identified the contradictions in the UK economy that made George Soros $billions, certainly must see the dangers, and yet, he is the source of one of the major contradictions, when he says the Fed shouldn’t lower rates while Trump demands the opposite.
Is Fed independence under attack and how will investors read this?
Are tariffs, as claimed, for revenue or to reduce imports? They can’t be both.
But if the tax cuts are to be permanent, $3 trillion in revenue has to be found somewhere.
Will Trump let a gnat like the Parliamentarian, or the Chairman of the Federal Reserve, stand in his way?
If, at some point, investors focus on the issues around tariffs-as-revenue, or threats to Fed independence they may begin to worry, and decide to sell equities.
The cost to hedge against such an event would be prohibitively expense given one wouldn’t know whether or when it would occur.
I’m sure 5i is considering these issues, but here is what I am pondering. How does an investor with a large equity portfolio manage this kind of risk? Would growth stocks be hardest hit? Are etfs better than individual stocks? What defensive stocks are likely least affected? Are there equities that would do well in such a scenario? How would bonds perform?
Scott Bessent (Treasury), the man who wrote the report that identified the contradictions in the UK economy that made George Soros $billions, certainly must see the dangers, and yet, he is the source of one of the major contradictions, when he says the Fed shouldn’t lower rates while Trump demands the opposite.
Is Fed independence under attack and how will investors read this?
Are tariffs, as claimed, for revenue or to reduce imports? They can’t be both.
But if the tax cuts are to be permanent, $3 trillion in revenue has to be found somewhere.
Will Trump let a gnat like the Parliamentarian, or the Chairman of the Federal Reserve, stand in his way?
If, at some point, investors focus on the issues around tariffs-as-revenue, or threats to Fed independence they may begin to worry, and decide to sell equities.
The cost to hedge against such an event would be prohibitively expense given one wouldn’t know whether or when it would occur.
I’m sure 5i is considering these issues, but here is what I am pondering. How does an investor with a large equity portfolio manage this kind of risk? Would growth stocks be hardest hit? Are etfs better than individual stocks? What defensive stocks are likely least affected? Are there equities that would do well in such a scenario? How would bonds perform?
