In hindsight, we didn’t go too far out on a limb predicting Trump’s victory in our last blog, “Delaware Statutory Trusts and Market Anxiety.” 10/29/2024.
County by county, Trump has better coverage than Verizon! Other than a western coastal strip, part of the Northeast and sundry pockets elsewhere, he’s everywhere.
Unfortunately, progressives still won’t get the message. In a WSJ article dated (11/12/2024) entitled “The Democrats Religion,” William McGurn tells readers what we have been saying for years, that progressivism is “quasi-religious.” As such, it holds “orthodoxies, pieties and heresies every bit as dogmatic and unyielding as traditional religion.”
Therefore, its major tenets such as climate change, gender identity separate from biology, economics as a struggle between good and evil, light and darkness cannot be questioned. Even in the wake of their biggest electoral defeat since 1984 and Ronald Reagan, those who challenge these assumptions are deemed apostate and cast out.
Fortunately, our capital markets choose not to wear these same ideological blinders. They have reacted enthusiastically to events.
This is exactly what we meant in our last blog talking about the return of “animal spirits” in the wake of a Trump victory. His government efficiency Czar, Elon Musk, said in October that “a bonfire of nonsense regulations would be epic.”
They will certainly have a target rich environment. The regulatory burden imposed on the private sector by Biden exceeds that of Obama’s eight years fivefold.
So, let the Trump deregulation begin. On the campaign trail, Trump promised the “most aggressive regulatory reduction” in U.S. history.
Businesses and markets may have every reason to be bullish about the coming rollback. Deregulation under the first Trump administration led to what JP Morgan CEO Jamie Dimon lauded as a reawakening of our economy’s “animal spirits.”
You can already sense a new economic dawn, a potential way forward that uses capital markets and the private sector to create much yearned for growth, not the interventionist policies that brought inflation and historic deficits.
We believe lower interest rates and the emancipation of CRE will be one of President Trump’s priorities. Why else the article in Tuesdays WSJ about Fed Chairman Powell being ready to fight firing?
Having lobbied everyone possible on Capitol Hill post covid to “keep the pedal to the metal” in terms of spending, Powell then assured his listeners there was no possibility of inflation.
When inflation spiked to over 9%, he assured everyone it was “transitory.”
The jury is still out on his “economic soft landing” prediction. Does President elect Trump really want to take this chance? After all, the guy is 0 for 2.
Even if Powell serves out his term, the handwriting is already on the wall. Inflation is a “country buster” and high borrowing costs must come down.
We believe the inflationary fears surrounding Trumps proposed tariffs and tax relief are greatly overdone.
Trump believes in “the art of the deal.” To negotiate successfully with anyone about anything, you must have leverage. We believe the threat of tariffs are simply negotiating tools to get a better ‘deal’ for America.
As for extending his tax cuts, myriad left leaning economic Nobel laureates were wrong in 2017. We doubt they are any smarter now.
Get ready CRE investors, the economic awakening is about to begin. This may prove salutary to all kinds of real property.
