How much of this can Trump take?

Politico

11-03-2025

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QUICK FIX
Wall Street kept up its Eeyore act on Monday as woes over President Donald Trump's trade war and a possible softening in U.S. growth accelerated the broad sell-off of stocks and risky crypto assets.
The tech-focused Nasdaq notched its biggest single-day loss since 2022, the S&P 500 fell by 2.7 percent and the Dow Jones Industrial Average sank by almost 900 points. In the three days since Trump welcomed crypto industry luminaries to the White House, Bitcoin prices have fallen by more than $11,500. Shares of Truth Social's parent company and Elon Musk-led Tesla are both down more than 40 percent since the president's inauguration.
The question now is whether Trump will be able to stomach further losses if investors continue to retch at incoming economic data. The Labor Department will provide an estimate on the number of job openings, hiring and layoffs in January later this morning (JOLTS). The Consumer Price Index for February is due on Wednesday, with an update on wholesale prices due later in the week. If inflation readings are worse than expected, or the JOLTS report reflects a softening labor market, bearish sentiments will persist.
Trump has historically been highly sensitive to market fluctuations, but his refusal to rule out the possibility of a recession suggest 'at least the possibility that he's not going to be deterred by market volatility, he's not going to be deterred by falling stock prices, and that he might not even be deterred by an economic downturn,' Michael Strain, director of economic policy studies at the American Enterprise Institute, told Megan Messerly in a story co-authored by your MM host and Victoria Guida. 'That is new for him.'
White House spokesman Kush Desai responded to Monday's sell-off in a statement: 'Since President Trump was elected, industry leaders have responded to President Trump's America First economic agenda of tariffs, deregulation, and the unleashing of American energy with trillions in investment commitments that will create thousands of new jobs. President Trump delivered historic job, wage, and investment growth in his first term, and is set to do so again in his second term.' (h/t White House pooler John Bennett of CQ Roll Call)
Consumers aren't as optimistic. The Federal Reserve Bank of New York on Monday reported that Americans are increasingly worried about the state of their finances in the near-term. The perceived probability of missing a minimum debt payment over the next three months climbed to its highest level since April 2020 — when the economy was in a Covid-19-related freefall.
Of course, there is no sense in comparing the current economic reality with that of April 2020. The economy's current fundamentals remain quite strong and the potential disruptions caused by Trump's policy agenda — or the current uncertainty around his policy agenda — pale in comparison to those of a deadly global pandemic.
But the risks of negative economic outcomes are definitely climbing.
An important nugget from Megan, Victoria and my story: 'Economists at Bank of America say that the odds of stagflation — which refers to the politically toxic combination of elevated inflation and more limited economic growth — have jumped. While that isn't their most likely scenario, the 'soft landing' many had hoped for 'seems unlikely in the near term.''
IT'S TUESDAY — Send econ policy thoughts, Wall Street tips, personnel moves and general thoughts to [e-mail].
Driving the day
The NFIB optimism index will be released at 6 a.m. … The JOLTS report for January will be released at 10 a.m. … The House Financial Services Committee holds a hearing on stablecoins at 10 a.m. … The House Small Business Oversight, Investigations, and Regulations Subcommittee holds a hearing on the Small Business Administration at 10 a.m. … New York Financial Services Department Superintendent Adrienne Harris speaks at a Brookings Institution event at 11 a.m. … House Speaker Mike Johnson speaks at The Psaros Center for Financial Markets and Policy at Georgetown University's McDonough School of Business at 7:30 p.m. …
DOGE at the CFPB — Consumer Financial Protection Bureau Chief Operations Officer Adam Martinez on Monday testified that Department of Government Efficiency operatives came into the agency with plans to cut 1,175 of the agency's 1,700 employees. Martinez's testimony in litigation brought by a federal employee union 'offered a glimpse into the chaos unleashed at the agency' as the Trump administration moved to halt work at the consumer watchdog, Katy O'Donnell reports.
— From Benjamin Guggenheim: 'Ways and Means Dems seek answers about DOGE access to Treasury, Social Security systems'
The Trump world's window to Wall Street — Donald Trump Jr. is aiming to use his new role as a partner at Omeed Malik and Christopher Buskirk's 1789 Capital to bolster a growing ecosystem of MAGA-friendly businesses, Bloomberg's Gillian Tan and Katherine Burton report. His due diligence process is unique. 'Trump Jr. says he can sniff out posers and opportunists and separate in-name-only supporters from the true MAGA faithful. He says America First bona fides — or, conversely, any sign of doubt — can make or break a deal.'
Move fast and break things — The Trump administration's Office of Personnel Management is reviewing whether the cuts undertaken by the Department of Government Efficiency created major cybersecurity vulnerabilities, Maggie Miller reports.
Do you think they'll be OK? — The market downturn has erased $209 billion from the combined wealth of Musk, Bernard Arnault, Jeff Bezos, Sergey Brin and Mark Zuckerberg, Bloomberg's Dylan Sloan reports. All five attended Trump's inauguration.
— 'For sure, this quarter, there are some blips in the data,' White House National Economic Council Director Kevin Hassett told CNBC on Monday morning. 'What's going to happen is the first quarter is going to squeak into the positive category, and then the second quarter is going to take off as everybody sees the reality of the tax cuts.'
Arched eyebrows — The WSJ's Caitlin McCabe reports that JPMorgan Chase economists raised their risk of a recession this year to 40 percent. 'We see a material risk that the U.S. falls into recession this year owing to extreme U.S. policies,' wrote a team led by Bruce Kasman.
Post-close — After-hours futures markets suggested little movement in the S&P 500, Dow Jones or Nasdaq after Monday's rout, CNBC's Sean Conlon reports.
— The FT: 'Delta warns on profit as economic 'uncertainty' dents US demand'
On the Hill
Watch this space — Sen. Bill Hagerty (R-Tenn.) reintroduced his stablecoin legislation on Monday night after making tweaks aimed at winning over Democrats, Jasper Goodman reports. The overhaul follows negotiations between crypto-friendly senators including Hagerty and Democrats on the Banking Committee, including Sens. Mark Warner (D-Va.) and Ruben Gallego (D-Ariz.). Sens. Kirsten Gillibrand of New York and Angela Alsobrooks of Maryland are already co-sponsors. A markup is scheduled for Thursday at 10 a.m.
Beneficial ownership — Jasper also reports that Sens. Chuck Grassley (R-Iowa) and Sheldon Whitehouse (D-R.I.) are pressing Treasury on the agency's move to significantly narrow an anti-money laundering law. It's the first sign of GOP pushback to the decision.
At the regulators
Uyeda eyes reforms for Treasury trading platforms — Acting SEC Chair Mark Uyeda on Monday said he has asked agency staff to work with the Treasury Department, the Federal Reserve and financial firms on whether the agency should continue to pursue new rules for alternative trading systems focused on Treasury securities, Declan Harty reports.
— Declan also reports that the Trump administration has abandoned plans to end the lease of the SEC's office in Chicago.
Hedge funds have some asks — In a new letter, MFA, the hedge fund group, laid out a series of recommendations for the SEC to pursue that included pulling back on how much information firms need to provide regulators with, Declan reports. Among the group's asks: That the SEC open up the private markets to more investors, scrap its 2023 custody proposal and take a more tailored approach to Form PF, a confidential filing that includes details about funds' investments and operations.
MFA President and CEO Bryan Corbett said in a statement that the recommendations will help boost economic growth and strengthen the markets, while noting that the SEC 'has a mandate to re-evaluate regulations that impose unjustified costs and burdens on market participants without corresponding benefits.'