The Rest Is Money 176. Trump’s Tax Cuts: America’s Liz Truss Moment
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May 28, 2025 In this discussion with Karen Ward, Chief Market Strategist for EMEA at J.P. Morgan Asset Management, the consequences of Trump's unfunded tax cuts are scrutinized, likening it to Liz Truss's economic misadventures. The conversation dives into how these fiscal policies have contributed to market volatility, inflation, and shifting investor sentiments. Karen offers insights on Europe's transition toward growth, intertwined with thoughts on fiscal accountability in political strategies, and wraps up with a light-hearted nod to sports achievements.
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Trump’s Shock-and-Negotiate Strategy
- Trump's strategy starts with big, shocking announcements as opening gambits followed by negotiation and de-escalation.
- This creates emotional cycles among investors requiring careful management of reactions.
US Fiscal Package Trumps Tariffs
- The US fiscal package is more critical for markets than tariffs despite historically high tariff levels.
- Market focus is on how much the US government will borrow and the impact on debt.
US Dollar’s Exorbitant Privilege
- The US dollar's 'exorbitant privilege' means global demand for US safe assets allows the US to borrow more easily.
- This status derives from strong economy and institutional trust in the dollar.