By Eric Peters, CIO of One River Asset Management
Hope all goes well… “Builders make the most money,” I said at the luncheon, high in some tower, looking out over Dallas. “That’s why I’m sitting here today,” said the entrepreneur to my left, confident, smiling. “If you’re not building a company, the next best thing is to own equity,” I said to the oil, gas, tech execs, family offices.
We discussed the new administration, geopolitics, markets, risks, opportunities, my worldview. Then I asked them all about Trump’s drill-baby-drill policy, America’s energy supply dynamics, demand. “Biden was bad for business but good for prices,” one said, many nodded. “And Trump will be good for business but bad for prices.”
“The golden age of America begins right now,” said President Trump, vowing to annihilate the nation’s many challenges, sending a shiver through our country’s allies and adversaries.
Economists were quick to spread skepticism. You see, American growth is already quite robust, with GDPNow estimating Q4 real GDP of 3.0%. Unemployment is low at 4.1%. CPI inflation at 2.9% is higher than target but well off the 9.1% high in mid-2022. Nationwide gasoline prices are $3.14 a gallon, not far from levels in Trump’s first term, miles below the $5.03 mid-2022 highs. And the stock market is at all-time highs, with the Shiller P/E ratio at a level exceeded only in the 1999 bubble.
So, economists argue that with a 6.3% federal budget deficit, the prospect of massive tariffs, slowing international trade, government layoffs, reduced immigration, and rising inflation, the US economy simply lacks the capacity to power ahead, even with Trump’s pledge to slash red tape. Perhaps they’re right, but economists (and central bankers) have been horribly wrong for so many years that it’s hard to do anything but take the other side of their consensus.
Our geopolitical allies and adversaries are another matter altogether. They’re simply praying Trump’s economic experiment fails. With the American economy already outpacing every country that matters, and with those nation’s electorates growing increasingly agitated, restless, riotous, the possibility of the US widening the chasm terrifies their leaders.
The prospect of being held to account for their economic mismanagement, like the negligent mayor of Los Angeles, is too much to bear for the globe’s presidents, prime ministers, chancellors, paranoid dictators. And this, in an ironic twist, holds promise for a brighter global future, if the America First agenda forces panicked foreign leaders to adopt more pro-growth policies for their people.
Tyler Durden
Mon, 01/27/2025 – 08:30
