February 17, 2025

“If you set out to be liked, you would be prepared to compromise on anything at any time, and you would achieve nothing”.

 Margaret Thatcher

With the events of the past few weeks, I will attempt to lay out some thoughts on the impact to our country and the markets going forward. I chose this quote from Margaret Thatcher as remarkably telling of our current events.

But first the numbers, the markets did in fact show some love last Valentine week, the S&P 500 added 1.13%, the Dow Jones Industrial Average gained .34% the Nasdaq added 1,82%. Internationally, the FTSE 100 gained .37% and the MSCI-EAFE led up 3.0%. The 2-Year Treasury paid 4.261% and the 10-Year yield was 4.478%.

Forgive me as I offer these observations, President Trump withstood every conceivable peril and plot imaginable, against the world’s most powerful political, financial, legal, cultural and international forces. Regardless of opinion or prejudice, a fair-minded person can only be amazed at that accomplishment.  He returns to the White House and releases 4 years of carefully planned policies and carefully selected cabinet members to immediately overhaul the government and the social order. The most impactful was soliciting one of the most accomplished entrepreneurs (Elon Musk) to lead the effort through DOGE (Department of Government Efficiency). This combination has given the US taxpayers a real chance to rein in ridiculous government spending and corruption. Every politician in my 60 plus years on this planet has given lip service to that goal but failed to accomplish even a slow down of the government’s growth and attacks on personal freedoms we hold so dear. That said, it seems like one of those historical moments where God or fate put the right elements in place, not unlike Reagan, Thatcher, Pope John Paul II, and Gorbachev to bring an end to the Cold War benefiting all of mankind.

The real impact is the unmasking of all that has been going on to the American public and the World and people of all walks of life are paying attention. That alone, I believe, is the catalyst for success due to the remarkable flow of information and information sources now present in our world. But how does this impact on the market and money?

As the courts, politicians and “experts” pontificate on the impact of these actions and legalities from tariffs to policy changes, to limits of authority, one must admit these discussions and arguments have not been seen since the Civil War or the American Revolution. The impact will be profound for your bottom line. For example, tax cuts, removing tax on Social Security, no tax on tips, no tax on overtime, repeal of the estate tax and lower income tax rates, working to an eventual removal of the need for income taxes at all. Talk about a revolutionary concept (FYI the first income tax was imposed in 1913 at a maximum rate 6%.  Prior to that, it was tariffs and user fees that funded the government). The reality is if DOGE and this administration and the surprising stiff backs of the majority party get this done, the amount of money saved will more than cover the expenses and either result in further tax relief or a reasonable timeframe to pay down or off the federal deficit. Economically, the removal of burdensome regulations and fairer trade policies should further unleash the US Economy and more importantly the US Consumer providing an environment where the US economy does what it does best, innovate and grow.

That is not to say some bumps won’t occur along the road and be sure every vested interest will attempt to take advantage to derail this effort as it gores their ox. But ultimately, the cat is out of the bag, Genie out of the bottle, or pandoras box has now been opened and the people of this country regardless of political party are awakening and seem to be happy with the results.

As corporate earnings continue to come in supporting economic strength, inflation persistent pain still needs to be addressed with coming policy changes, and the effect of trade policies take hold either in actuality, or as a bargaining chip, all points to a huge departure from the status quo so loved, protected and hidden by the political and monied class. Common sense seems to be returning to the American populace, and rejection of radical social constructs are becoming a footnote in history. So, we are encouraged that for the first time in American history the change will truly happen.

One final though as one politically liberal hedge fund manager quoted Shakespeare’s Hamlet the other day asking that DOGE opponents “Doth thou protest to much!”

Mike