That Big Picture
Stocks in the US advanced on Thursday as updates on US tariff plans helped alleviate concerns over inflation and global trade tensions, brushing off hotter-than-expected inflation data.
The S&P 500 climbed 1%, the Nasdaq 100 gained 1.3%, and the Dow Jones Industrial Average surged over 350 points, or 0.7%.
The producer price index (PPI) rose 0.4% in January, surpassing forecasts, but key components feeding into the Federal Reserve’s preferred inflation measure, the personal consumption expenditures (PCE) price index, indicated easing price pressures.
Big tech led the rally, with Tesla soaring more than 4%, Nvidia rising 3%, and Apple advancing 2.1% after CEO Tim Cook teased an upcoming product launch.
Stocks have shaken off trade barriers, disruptions in the public sector, geopolitical ultimatums, a threat to U.S. AI supremacy, and a reduction in market expectations for rate cuts.
The bond market has shaken off hotter inflation data, and growing evidence that significant amounts of the massive deficit spending of the past several years may have been economically unproductive because of waste, fraud and/or corruption (very publicly detailed by DOGE).
So, why has there been little-to-no pain in markets? Is the market uncharacteristically seeing the big picture, and pricing it in?
That big picture: Bringing the wrecking ball to DC, unshackling the private sector, embracing the asset side of the American balance sheet, rebalancing global trade, realigning the world to democratic values, and promoting American AI leadership.
It's all a formula for a much faster growing, fiscally sound, and more prosperous economy. Very good for markets.
All of that said, if Trump 2.0 did nothing more than stabilise what has been a very unstable world (which, importantly, includes restoring American global leadership), it would clear the way for the new industrial revolution to deliver a much faster growing, fiscally sound, and more prosperous economy.
