Good morning! Markets re-open this morning and it’s the first full day of Trump. We’re covering takeaways for investors from the inauguration, Stanley Druckenmiller’s view on 2025, and more. First time reading? Join 190,000 self-directed investors gaining an edge every morning. Sign up here. 

Here comes Trump (again)

President Donald Trump’s second White House stint is officially underway, and as evident in his inauguration’s guest list, it’s no longer contrarian for business leaders to support his administration. 

More than $1.3 trillion in combined net worth sat behind the Trump family at the Monday ceremony, according to Bloomberg calculations. Elon Musk, Jeff Bezos and Mark Zuckerberg headlined the group, and the billionaire CEOs of Apple, Alphabet and LVMH sat nearby.

“The golden age of America begins right now,” Trump said after being sworn in, adding he would reverse the “American decline” catalyzed by the Biden administration. 

Some takeaways from his speech: 

• Alluded to expanding US territories with the phrase “manifest destiny”

• Declared a national emergency at the southern border

• Declared a “national energy emergency” and export more US oil

• He wants to make the US a “manufacturing nation once again”

• Aims to establish an “External Revenue Service” to collect tariffs from foreign sources

• Declared the government will only recognize two genders, male and female

• Declared the Gulf of Mexico will be renamed as Gulf of America

Notably, the 47th president inherits a country with annual inflation at 2.9%, unemployment at 4.1% and stock and cryptocurrency markets hovering near record highs.

That, and GDP is currently trending at 3.1%.

Broadly, the economic landscape remains more robust than anyone predicted one year ago. 

Still, some economists — like the chief data-cruncher at the IMF — have warned that Trump’s policy mix of potential tariffs, tax cuts, and curtailed immigration could spur an inflation rebound.

Others, though, point to his deregulatory bent as reason to believe inflation will slow.

During Trump’s first term, he implemented tariffs on roughly $380 billion worth of products from US trade partners and the impact was relatively muted.

This time around, the president has floated higher across-the-board tariffs, though part of that is likely gamesmanship and negotiation. 

Among his proposals so far: 

• A 25% tariff on Mexico and Canada

• Gradually raising tariffs between 2-5% a month

• Blanket 10-20% tariffs on all US imports

• A 60% tariff on goods coming from Chinese 

“The cost of higher tariffs include potentially higher prices for American consumers,” wrote strategists at Yardeni Research in a note Monday. “If tariffs lead to expanded capacity in the US, that could be disinflationary.”

It’s hard to know which, if any, of these will materialize. That said, while some academics have voiced their concerns, Wall Street and business owners remain upbeat. 

Equity strategists across big banks expect another strong year for the stock market, despite the mixed Fed outlook. The big banks themselves, too, expect business to boom as the White House eliminates red tape. 

Meanwhile, the NFIB Small Business Optimism Index climbed in December to its highest reading since October 2018, with respondents reporting more hopefulness for the new administration versus the prior.

Plus, the share of business owners expecting the economy to improve surged 16 points from November to its highest since 1983.

“I stand before you now as proof that you should never believe that something is impossible to do,” Trump said. “In America, the impossible is what we do best.”

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Elsewhere:

💰️Stan Druckenmiller says animal spirits are back. The investing legend said Trump’s re-election has renewed optimism for markets, but noted that with it has come increased speculative enthusiasm: “I’ve been doing this for 49 years, and we’re probably going from the most anti-business administration to the opposite.” (CNBC)

📊 Some investors fear a repeat of 2022. The S&P 500 and Dow are coming off their best week since November, though industry analysts still harbor fears of tariffs and mass deportations. Those together threaten to push inflation higher all over again. (WSJ)

Rapid-fire:

• Biden issued last-minute pardons of his family members and Dr. Fauci just before Trump’s inauguration (WSJ)

• Bitcoin hit a record high of $109,000 before paring its gains as Trump’s inauguration began (CNBC)

• Trump surprised crypto markets late Friday night with his own memecoin, and it surged above a $30 billion market cap (Opening Bell Daily)

• Melania Trump followed Donald Trump’s lead in launching her own meme coin ahead of the inauguration and it saw more than $6 billion in trading volume (CNBC)

• Elon Musk’s DOGE was hit with three lawsuits the same day Trump became president (Business Insider)

• Netflix is set to report fiscal fourth quarter earnings after markets close Tuesday, and analysts expect strong results (Yahoo Finance)

• Here’s a full transcript of Trump’s inaugural address (Barron’s)

Traders see 62% odds that Trump launches a strategic bitcoin reserve in 2025, according to Kalshi, the biggest US prediction market:

Last thing:

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