Stocks fell nearly 1,200 points on Wednesday as investors digested Federal Reserve Chairman Jerome Powell's suspension of explanation for persistent inflation.
But that wasn't their only concern.
The Wall Street traders I talk to are also a little concerned that Donald Trump's economic plans, including his intentions to cut taxes, have not been clearly articulated or seriously discussed.
The same goes for deregulation.
Both appear to be putting off President Trump's attacks and lawsuits against the Des Moines Register over erroneous presidential polls.
Enter Elon Musk, the famously smart but temperamental billionaire and current top advisor to President Trump.
He used the social media platform “X” about 150 times that week to stoke criticism of the spending plan, emerging as a budget deal killer, some of it understandably, but some of it was aimed at Trump. It is also possible that he would have waited until he was officially appointed.
There's good reason to be worried, but if you've been in this market for the past week or so, it's not much fun.
So it's time to remember that the alternative to Trumpian insanity is worse. A gleeful Kamala Harris touts warmed-up socialism and market statism as hope and joy.
There's a good chance that by the time President Trump's disproportionate economic stew finally comes to a boil, the markets and economy may be in perfect shape.
Trump's second term as president will always be eventful.
His closest aides include traditional supply-siders like Treasury Secretary nominee Scott Bessent (a former hedge fund trader), born-again protectionists like incoming Vice President J.D. Vance, and anti-Wall Street populists. It's a collection of things.
Steve Bannon, the political mastermind of Trump I, is not in the second administration, but the famously ardent populist runs an influential podcast.
He still has the president's ear.
And the mastermind behind the madness is Trump himself.
The pugnacious billionaire businessman who survived legal battles and assassination attempts to emerge victorious in the 2024 elections has earned him the nickname “The Scoundrel” and a little patience to get his house in order. .
Yes, I know Trump seems to be touting contradictions about the economy in general.
He talks about a balanced budget strategy and the need to rein in inflation, but says he won't cut spending if that means cutting big-ticket items like Social Security.
He argues that tariffs are beautiful, even if they are inherently inflationary.
Because tariffs are taxes on foreign goods and can lead to retaliatory taxation, rising prices will cause bond traders to sell bonds and cause interest rates to soar, as they are now.
Rally Killer Danger
President Trump likes the stock market to rise as if it were a scorecard of his success as president.
But widening deficits and inflation from tariffs are left over from rallies that gained momentum after he vowed to reverse the economic downturn of disproportionate growth and inflation we experienced during the Biden-Harris era. It can be ruined.
The above are all market zigzag recipes that we have seen.
And you know what?
The country would still be in better shape than the alternative.
It's very likely that the “DOGE boys”, Mr. Musk and Vivek Ramaswamy, will cut enough of the bloated government to appease the bond vigilantes, with tariffs or no tariffs.
President Trump may simply be threatening tariffs to get a better trade deal.
President Trump's tax cuts and deregulation would spur economic growth, which markets favor, and would also help pay down debt.
Added benefit: You don't have to listen to Kamala Harris' word salad.
So, take a deep breath.
Let's play out Trump's madness.
Significant calm is promised after the storm.
