Trump Inauguration
Donald Trump delivered his second inaugural address after being sworn in as the 47th President of the United States in a ceremony held inside the Capitol Rotunda due to cold weather.
In his inauguration speech, President Trump promised the beginning of a golden era for America. He is set to initiate a series of executive actions, as per incoming White House officials.
These potentially include the commencement of a process to terminate birthright citizenship and the declaration of a national emergency on the US-Mexico border. It is also anticipated that Trump will grant pardons to some individuals involved in the January 6 riots on his first day in office.
“We will tariff and tax foreign countries to enrich our citizens,” Trump said during his address. “For this purpose, we are establishing the External Revenue Service to collect all tariffs, duties and revenues.”
In his 30-minute speech, Trump painted a stark picture of the country’s challenges while promising a “golden age of America”. He emphasized an “America First” agenda, vowing to restore national pride, revive the economy, implement strict immigration policies, achieve energy independence, and address cultural issues.
Trump’s speech, nearly double the length of his 2017 address, was described as confident and optimistic despite characterizing the nation as facing numerous challenges. His return to power marks a significant political comeback, making him only the second president in U.S. history to regain office after losing re-election.
Key themes and promises in Trump’s address included:
- America First: Trump emphasized prioritizing American interests in all decisions
- Restoring national pride: He promised to reclaim sovereignty, restore safety, and rebalance justice
- Economic revival: Trump pledged to rebuild American manufacturing, bring back jobs, and implement protectionist trade policies
- Immigration: He declared a state of emergency at the southern border and promised swift action on deportations
- Energy independence: Trump vowed to increase domestic oil production, using the phrase “drill, baby, drill”
- Cultural issues: He announced plans to end diversity, equity, and inclusion programs and reinforce policies based on biological sex
Despite the uncertainty surrounding Trump’s ambitious agenda, many experts anticipate a relatively muted initial market response to his comments and actions.
As we saw with Trump 1.0, The Trump bark might be worse than the Trump bite in the early stages as we expect the most significant policy changes to unfold over a longer period.
However, there are concerns that Trump’s tariff plans could exacerbate inflation fears, potentially impacting bond and stock prices, while efforts to tighten immigration controls may also reverberate through the markets.
Most importantly, no mention of a plan for the spiralling US debt
What the Analysts say:
Donald Trump’s inauguration as the 47th President of the United States elicited diverse reactions from Wall Street analysts, primarily centered on trade policies, potential tariffs, and overall economic direction. While the inaugural address did not introduce immediate, sweeping changes, it set the stage for potential future actions that could significantly impact the economy.
Trade and Tariffs
The absence of immediate, broad tariff announcements was a key point noted by several analysts. Morgan Stanley highlighted that while trade and immigration were emphasized, there were no major shifts in fiscal policy announced during the inauguration. Goldman Sachs characterized the policy announcements on tariffs as “more benign than expected,” with less hawkish comments on China than anticipated.
However, the possibility of future tariffs remains a concern:
- Morgan Stanley warned of potential tariffs on Mexico and Canada by February 1.
- Goldman Sachs maintains a cautious outlook, estimating a 55% probability for EU auto tariffs and a 25% chance of a universal tariff.
- Raymond James expects market focus on the aggressive trade approach, including potential new tariffs by February 1.
Policy Implementation Timeline
Analysts generally agree that significant economic impacts from policy changes may take longer to materialize than initially expected. Wolfe Research noted that Trump’s inaugural address directed agencies to reevaluate trade policies rather than announcing concrete tariff actions. This suggests that planning and implementation of new trade policies will likely extend beyond current consensus expectations.
Economic Implications
The broader economic implications of Trump’s agenda were also a focus for analysts:
- UBS highlighted the potential impacts on energy production and inflation.
- Raymond James emphasized the broad scope of executive orders signed on Day One, covering trade, energy, and immigration.
Market Uncertainty
Despite the lack of immediate, drastic changes, analysts caution that uncertainty remains a significant factor. UBS noted that Trump’s later comments on Canada and Mexico tariffs “served to remind markets of the two-way volatility,” indicating ongoing uncertainty and potential for significant macroeconomic impacts.In conclusion, while Wall Street analysts found Trump’s inaugural address less aggressive on trade than expected, they maintain a cautious outlook. The potential for future tariffs, particularly with key trading partners, remains a concern, and the market is likely to experience continued uncertainty as the new administration’s policies unfold.