Rabo: Let Them Eat Flatscreens

Neo-Keynesian Doom

Let Them Eat Flatscreens

Market comments

By Benjamin Picton

Speaking to NBC’s ‘Meet the Press’ on Sunday, US Treasury Secretary Scott Bessent said that US stocks experiencing a correction is “healthy.” Naturally, this statement caused some alarm for many Wall Street types who had been counting on Bessent to be the second Trump administration’s ‘voice of reason’ on economic policy, tempering some of the President’s more hawkish instincts on trade and throwing fresh liquidity bones to financial markets whenever they showed signs of wobbling.

Markets might have been hoping that the first Trump administration’s fixation on the stock market as a barometer of administrative success would carry over into a second term, but it now appears that that is not the case. Trump himself has suggested in euphemistic fashion that the economy will be in for a “little bit of an adjustment” in the months ahead, and Bessent says that the economy needs to “detox” itself from government spending. Unfortunately, detox programs are usually characterised by nasty withdrawal symptoms for the patient.

As we warned in late November, the view that Bessent would be a source of internal dissent for the Trump economic agenda always carried a whiff of wishful thinking. Bessent’s CV (heavy on economic history and big-picture thinking) and his statement that he wanted to be involved in the “grand global economic reordering” were clear signs that he did not intend to be a do-nothing pick for Treasury Secretary. Indeed, despite (or perhaps because of?) his background as a macro hedge fund manager, he appears to be much more interested in strategic questions of ‘who makes what? where? and for what purpose?’ than the day-to-day movements of market indices.