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GlossaryWould a Trump Win Move Markets?
January 26, 2024“I will try to express myself in my art as freely as I can and as wholly as I can, using for my defense the only arms I allow myself to use, silence, exile and cunning.”
James Joyce, as interviewed in 1922.
“Trump advisers are promising to staff federal agencies with loyalists who follow Trump’s orders.”
The Wall Street Journal, Jan. 24.
I spent a few days reflecting on both the last conversation I had in New Hampshire and the recent market action. It looks like we are getting a tech bubble and I am beginning to imagine how, if it occurs, a Trump Presidency might impact my investments. I’m most worried about US bonds.
Politics
After I published the Monday post on Haley and before driving home, I stopped at a New Hampshire gas station. The attendant looked like a character from the Bible—-full gray beard, missing teeth, cheeks drawn. I asked him a question.
“Who will win tomorrow?”
“Trump in a landslide,” he said. Then he glared at me. “The media,” he said and shook his head.
I walked back to my car, feeling the cold bite. Maybe it wasn’t a landslide, but it was a win and as we all know Haley is losing in the South Carolina polls.
In general, politics doesn’t matter too much for investing. Most politicians are constrained in their scope of action, taxes and spending don’t shift that much. The vast majority of US federal spending is hard-wired, meaning payments to defense, health care, and roads are almost fixed obligations. But at certain points in time, politics can matter a lot.
FDR’s 1933 decision to undermine the Fed’s independence during the Great Depression and abandon the gold standard is one example. That policy choice ended the Depression. In countries with weaker checks and balances, politics matters more. Russia should be rich, but it isn’t. Per capita GDP is just $12k; Norway, another oil-rich country with better governance, has per capita GDP of $88k. First, the Soviets and now Putin have asphyxiated Russian entrepreneurial energy.
Could Trump enact policies that upend things? My answer: if he is allowed to, yes. Most people around me seem to be sanguine that checks and balances will keep Trump in check, as they largely did during his first term. I’m not as confident.
My concern is based more on what Trump didn’t do than what he did. When the Jan. 6 mob interrupted voting at the Capital, a President’s job (regardless of party) was to declare unequivocally that voting is sacred. Not only did that not happen, Trump and his supporters, including many in Congress, endorsed and continue to endorse the Big Lie.

In New Hampshire, independents and college-educated Republicans voted overwhelmingly for Haley. But only 38% of Americans have a college degree. Trump’s appeal to his many supporters seems to be a belief that the system is truly rigged.
One implication of a Trump win is a hit to Treasuries. Trump would come to power amid a massive budget deficit. Narrowing it isn’t complicated. Congress needs to raise taxes and spend less.