Capital markets are declining big time after an initial uptick following Trump's election. Market indices are in or heading to correction territories. The cause is based on the narrative that we are heading towards recession due to tariffs leading to higher prices and reduced consumption. A loss of mostly government related jobs due to overhiring in the Biden administration, raising unemployment. Less government spending, due to DOGE, which was pumping up the economy up by recklessly spending and borrowing.
These Trump initiatives are necessary steps to put the economy on a better footing and create long term stability and healthy growth. They are short term hits to the economy in the anticipation of long term benefits. A responsible government is finally in place to reverse the irresponsible actions of previous administrations (including Trump 1.0) and sometimes it comes with some bitter medicine. But, there are other factors which can mitigate the negatives which are being overlooked.
If it appears that the economy is slowing, interest rates will fall and this will be very bullish for America and what Trump is attempting to engineer. As a real estate guy, he knows the power of lower interest rates. Lower interest rates will allow homeowners, businesses, and government to initiate and refinance their debt allowing for spending, expansion and reducing debt payments. All boosting economic activity.
Lowering of oil prices and gasoline reverberates throughout the economy and improves balance sheets of families and businesses. Manufacturers benefit from a reduction in their input prices. Oil has fallen from over $80 per barrel to under $70 per barrel under Trump and is expected to go under $60 per barrel as supply increases.
The reduction of regulations is likely proceeding under the radar screen as government cuts by Elon Musk and DOGE are taking up most of the oxygen in the room. The regulatory bureaucracy puts a major weight on the shoulders of businesses and by reducing and eliminating them, businesses are empowered, boosting the overall economy.
Yes, there will be some negative policies intentionally placed on the economy but these are much needed corrections of previous irresponsibility. They will be sufficiently offset by other actions and trends. This market downturn is a great buying opportunity and I hope it goes down further to enable the purchase of additional assets on sale.
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