Wall Street's youth revolt
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Quick Fix
Setting aside the tumult from President Donald Trump's trade policies and the prospect of potentially catastrophic fiscal deficits, the stock market has held up reasonably well in 2025.
Why? One school of thought among more seasoned Wall Street investors is that a new generation of traders simply doesn't care.
'The marginal buyer or seller is a 32-year-old, and they literally don't give a fuck,' said Josh Brown, the co-founder and CEO of Ritholtz Wealth Management. 'They are reacting to market sell-offs by adding more money to ETFs and their investment accounts. They're buying individual stocks. They're buying the most speculative options contracts that trade.'
The booming popularity of retail investment platforms like Robinhood — now home to 27 million investment accounts— and Chicken Little forecasts about downturns that never materialized gave rise to a class of investors who haven't adhered to conventional logic during market-moving events. The mindset is: ''Moody's downgraded the Treasury? Fuck it. I'm buying Palantir,'' Brown said.
It has echoes of the post-pandemic investment crazes that propped up shares of underperforming businesses and sent the valuation of memeified crypto tokens into the stratosphere.
That has material consequences for anyone — daily newsletter writers included — who uses the stock market as a barometer for political sentiment. And it's indicative of why equity markets haven't always reflected the gloomy economic outlook visible in consumer or business surveys.
The S&P 500 and Dow Jones Industrial Average are down by less than 2 percent since the start of the year. The sell-off that followed Trump's 'Liberation Day' tariff announcement was followed by a fairly rapid recovery due to strong earnings from blue chip companies and a bevy of favorable data showing that the economy has remained fairly resilient in the face of tariff-related turmoil.
As economists spotlight policies that could lead to stagflation, and bond investors home in on the risks of the U.S.'s ballooning debt, the cloudy economic outlook hasn't had the same effect on equities. Investors plowed money into exchange-traded funds at a record pace this year, the Wall Street Journal reports. Bloomberg Intelligence estimates that individual investors accounted for 20.5 percent of shares traded in the first quarter, up from 19.5 percent in the previous three months.
'We're in a very different world where stock market reactions are not at all aligned with what more experienced people would think should happen,' said Brown. 'It's baffling, and it's actually one of the most interesting things I've ever seen in my time in the investment markets.'
IT'S TUESDAY — I hope you had a relaxing weekend filled with barbecues, ballgames and beverages. Tip o' the hat to Declan Harty for the assist on today's newsletter top. And as always, send your tips, suggestions and personnel moves to Sam at ssutton@politico.com.
Driving the Week
TUESDAY … Bitcoin 2025 kicks off in Las Vegas. Speakers include David Sacks, Bo Hines, Donald Trump Jr., Sens. Jim Justice (R-W.Va.), Marsha Blackburn (R-Tenn.), Cynthia Lummis (R-Wyo.), Bill Hagerty (R-Tenn.) and Reps. Byron Donalds (R-Fla.), Brian Jack (R-Ga.) and Bryan Steil (R-Wis.) … The Conference Board's consumer confidence index is out at 10 a.m. … Commodity Futures Trading Commissioner Christy Goldsmith Romero speaks at a Brookings Institution event on a discussion on 'The Future of Financial Services Regulation' at 2 p.m. … New York Federal Reserve Bank President John Williams speaks at the Bank of Japan Institute for Monetary and Economic Studies Conference at 8 p.m. …
WEDNESDAY … Vice President JD Vance speaks at Bitcoin 2025 at noon … The minutes for the Federal Reserve's May meeting are out at 2 p.m. …
THURSDAY … The second estimate for first-quarter gross domestic product is out at 8:30 a.m. … Richmond Fed President Thomas Barkin participates in a fireside chat before the Housing Partnership Network at 8:30 a.m. … Chicago Fed President Austan Goolsbee speaks at the 2025 Mackinac Policy Conference hosted by the Detroit Regional Chamber at 10:40 a.m. … Fed Gov. Adriana Kugler speaks at the central bank's Macro-Finance Workshop at 2 p.m. … San Francisco Fed President Mary Daly speaks at the Oakland Rotary Club at 4 p.m. … Dallas Fed President Lorie Logan speaks at the Greater Waco Member Appreciation event at 8:25 p.m …
FRIDAY … The Reagan National Economic Forum kicks off. Speakers include House Financial Services Chair French Hill (R-Ark.), House Ways and Means Chair Jason Smith (R-Mo.), Senate Health Chair Bill Cassidy, (R-La.), Sen. Mike Rounds (R-S.D.), Deputy Treasury Secretary Michael Faulkender and former Fed Gov. Kevin Warsh … The personal consumption expenditures index for April is out at 8:30 a.m. … The University of Michigan consumer sentiment survey is out at 10 a.m. … Atlanta Fed President Raphael Bostic speaks at the Council for Economic Education's 2025 National Economics Challenge at 12:20 p.m. …
Flipping a switch — After threatening the European Union with 50 percent tariffs on Friday, Trump announced on Memorial Day that he would push back the deadline for a new deal with the bloc to July 9, Ali Bianco and Ari Hawkins report. European stocks climbed on news of the pause, per Bloomberg.
'The EU and the U.S. share the world's most consequential and close trade relationship,' Ursula von der Leyen, the president of the European Commission, wrote on X. 'Europe is ready to advance talks swiftly and decisively.'
— The rapid escalation and de-escalation of EU trade tensions come as the White House stares at a deadline to hatch dozens of new bilateral trade deals within weeks. As Daniel Desrochers and Phelim Kine report, 'disagreements are mounting in many of those talks and foreign governments are digging in, even those eager to cut deals, like some in Asia — a reminder of just how slow and complex traditional trade negotiations can be.'
— With the Association of Southeast Asian Nations summit convening this week, leaders in the region are 'seeking to deepen ties with China and Gulf nations, and mitigate the fallout from US President Donald Trump's tariff hikes,' write Anisah Shukry, Philip Heijmans and Netty Idayu Ismail for Bloomberg.
Rest in Peace — Charles Rangel, the former House Ways and Means Committee chair and a powerful force in New York politics, died on Monday. He was 94 years old.
On The Hill
Big, beautiful opposition — Republican senators are beginning to raise their objections to Trump's 'big, beautiful bill.' Sen. Rand Paul of Kentucky said he would not support the measure, contending that it will add trillions in new borrowing with minimal offsets, Amanda Friedman reports.
— Sen. Ron Johnson of Wisconsin said on CNN's 'State of the Union' that he thinks 'we have enough to stop the process until the president gets serious about spending reduction and reducing the deficit.'
State of play — Lawmakers are skeptical of Trump's push to release Fannie Mae and Freddie Mac from government control, Katy O'Donnell, Katherine Hapgood and Victoria Guida report.
'You do this the wrong way, you're going to screw up a housing market that's already teetering because of lack of supply,' said Sen. Mark Warner (D-Va.). 'And what I'm afraid of is that this is just done to try to do a money grab, you know, for their crazy tax bill. And if that's the case, I've got no interest.'
At the regulators
Big news for bank policy — The bank industry's lawsuit against the Federal Reserve over its annual stress testing regime is on hold through August. The temporary agreement comes after the Fed announced plans to overhaul key parts of the stress tests last month.
In a statement, the Bank Policy Institute, American Bankers Association, U.S. Chamber of Commerce and other plaintiffs said the central bank is 'undertaking a good-faith effort to align the stress testing regime with the law and establish transparency and accountability for that process. A stay of the litigation will allow the Federal Reserve to focus on implementing its commitments through the rulemaking process and delivering a more accurate and reliable framework for the next stress testing cycle.'
The Fed declined comment.
More good news for banks — Katy O'Donnell reports that the Trump administration on Friday f iled a notice in federal court seeking to vacate the Consumer Financial Protection Bureau's Biden-era open banking rule, in a case brought by banks.
Nippon Steel — Trump on Friday also signed off on a deal that will allow Japan-based Nippon Steel to acquire U.S. Steel. It's a reversal of his opposition to the deal during the 2024 presidential campaign,Doug Palmer reports.
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