Journalist: December was definitely not a good month. Even taking into account this rebound on the last day of the year. Is the uncertainty that Trump represents beginning to take its toll? 2024 was excellent. Can 2025 repeat, or at least keep up?
Q.: Contrary to the feeling. Fear prevails among investors today. At what point did fear displace the boiling of animal spirits, which was awakened by Trump’s victory?
GG: The euphoria cooled in early December. And the last two weeks the Stock Market went on the defensive.
Q: It’s not just the actions. Bitcoin, which is an emblem of Trump 2.0, was also punctured. Was it because of something Trump said?
GG: Trump has behaved well so far. The most aggressive thing he said was highly surreal, and therefore did not have a full impact.
Q: Are you referring to regaining control of the Panama Canal? Or the desire to acquire Greenland, as if they were for sale?
GG: I am referring to that line of thought, which is not exhausted in a couple of examples. But in this thematic vein, more is less. The more Trump expands – for example, adding his intention to add Canada as the 51st state – the less harmful it is.
Q: Are you sure?
GG.: Surely there is nothing. With Trump, uncertainty is not a design flaw, it is the operating method. But the more it covers, the less it tightens. Your desires seem less feasible. If Trump only objected to the handling of the Panama Canal, it would be taken seriously.
Q: You say, however, that these comments are not the cause of the change in mood in the markets.
GG: No not at all. It’s not all Trump either. The FED lowered the blind on continuing to lower rates after a string of three cuts. It influenced. Forces to recalculate next year.
Q: The process was not finished, but…
GG: But the autopilot was disconnected.
Q: Whether we like it or not, and the FED is not going to recognize it, it is obvious that the main reason for interspersing a pause is also Trump.
GG: Not what Trump says, but what his Administration does.
Q: The FED, some time ago, took the liberty of not being as data-dependent as it claims. Now will it be policy-dependent? He will sit back and wait for the incoming government to show its cards and deploy its policies. Or are you going to look at the day-to-day figures again?
GG: Powell’s FED does not ignore the data. He is confident that inflation is going down beyond the sinuosities (and the PCE consumption deflator data proved him right in November) and he is in no hurry to return to the 2% corral. That said, the timing and magnitude of the three rate cuts – a full point, starting in the final stretch of the election campaign – was a decision that Powell personally imposed on his peers.
Q: A political decision, one would say.
GG: That can’t be proven, but it’s hard to disprove. Powell is a consensus builder. And he faced two explicit dissents in the last three meetings. This tells us that he must have forced his hand.
Q: If that is why, the fact that the FED cut the fed funds rate by a full point, and that long rates have risen exactly the same, confirms it.
GG: And over three months simultaneously, pari passu. Powell wanted it that way, it’s evident. And now, goodbye, take the ladder. He leaves Trump with the brush. And depending on what you paint, he comes back and gives you a hand. Or you leave it to fend for itself in an eggplant.
Q: As long as inflation doesn’t mess it up. Their platform is dynamite.
GG: OK. But, the FED leaves the scene. If Trump is explosive, he will have the hostility of long rates. And if you cross the line, the Stock Exchange will acknowledge receipt. In his first term, that was the limit.
Q: Do you believe that the absence of Santa Claus is because the markets are already digging the trenches? Did you get the idea of what awaits you?
GG: No. Nothing to see. Nothing very relevant happens here. You can’t go up every day. There are doubts, yes. There is, or rather there was, profit taking, too. It was very tempting. Above all, with long rates, and Powell, placing the beacons so visibly.
Q: You look at investor sentiment, and we’re not far from extreme fear.
GG: And not about records either. Will 2025 be better than 2024 and 2023? Or will the third time be the charm? I would say it depends on Trump (and Elon Musk). The Stock Market believes yes, that the saga continues. With a pasteurized Trump, who simply rides on the inertia of the economy, surely yes. With a more “realistic” Trump, who starts with the top plugs and then negotiates reasonably, and does not break anything serious, too. Although, obviously, they are two very different intermediate routes.
Source: Ambito
I am an author and journalist who has worked in the entertainment industry for over a decade. I currently work as a news editor at a major news website, and my focus is on covering the latest trends in entertainment. I also write occasional pieces for other outlets, and have authored two books about the entertainment industry.
