The First 100 Days: Trump’s Fast and Furious Start
Episode 13821st January 2025 • Human-centric Investing Podcast • Hartford Funds
00:00:00 00:31:20

Share Episode

Shownotes

While 2024 was all about politics and the election, 2025 will be a year of substantive policy changes. JT Taylor breaks down how this could affect financial markets and financial advisors.

Transcripts

John [:

Hi, I’m John.

Julie [:

And I’m Julie.

John [:

We’re the hosts of the Hartford Fund’s Human Centric Investing podcast.

Julie [:

Every other week, we’re talking with inspiring thought leaders to hear their best ideas for how you can transform your relationships with your clients.

John [:

Let’s go.

Julie [:

Welcome to the Human Centric Investing podcast. We’re so excited to have you here with us again today.

JT [:

Julie. Thanks for having me, as always. Love it.

John [:

You know, JT, it seems like first of all, happy New Year. It seems like for the past two years, every time we’ve talked to you, Julian, I have asked you, so JT, what’s going to happen? What’s going to happen? And with the presidency. How about Congress? All this kind of thing. It’s now happened. It’s January. We know the results of the election. And so now our questions are not about the next election yet. That’ll come soon enough. But it’s what happens now. Right. So we know you’re kind of you’re in D.C. you’re kind of in the mix, kind of observing all this. How should financial professionals be thinking about what happens next? Let’s say, well, gosh, do we even have to wait until January 20th? That seems like things are already happening, but. So get out your crystal ball, JT. What happens next?

JT [:

Yeah, that’s it. I said this. I’m going to try to find a crystal ball that I had four years ago. Just started to dust that one off. And it’s just. Just for everyone. From an expectation standpoint, there’s this lot is going to happen. I mean, let’s just be prepared for that. It is going to be drinking from a fire hose once again. And I don’t think we’re used to that. It’s been a very while. A lot has happened in the past four years. And Donald Trump has not really left the scene. The Biden presidency has been what’s the best word? I don’t want to say lethargic, but it’s going to look lethargic compared to the next four years. So if you just go back to the first four years, there’s there are going to be tweets, there are going to be statements, proclamations. There are the taunts. There’s just a lot of stuff being thrown at us. And I just encourage everyone not to overreact when they see something. There is a method to the madness. And that’s not I’m not trying to be too critical here, but there is a method to Trump’s madness and he’ll get results at the end of the day. Some people will be happy with those results and some people won’t. But I think from a market standpoint, everybody tends to overreact and we’re seeing that already in some cases. But the markets and the pundits, if you will, tend to overreact. We just sort of need to keep our sanity here. And at the end of the day, the debate taking place on Capitol Hill right now, John and Julie is all about whether we have one legislative vehicle. And I know we’ll get to that in a second or two legislative vehicles. Trump said it himself in the past 24 hours. I don’t care what it takes. At the end of the day, it’s going to be about policy passing, and that’s what we’re going to be looking at.

Julie [:

So we talked about the first hundred days and and so much happening. And for those listeners taking notes, let’s start building that laundry list. Could you talk to us about some of those specific things that we’re probably going to see so that they can take notes and start setting their expectations accordingly?

JT [:

Yeah. The first hundred days is going to start on day one on January 20th, and I kind of pegged that January 20th. And these are markers again, these are sort of it feels to me as if they’re these artificial media markers, but we have to abide by them because the Congress and the president and the incoming president will also look at that first hundred days as a as a gauge as his his his success and his team’s success. But it roughly goes from January 20th, Inauguration Day, all the way through about April 30th, give or take a few days. So a lot is going to happen, I think, on day one of the Trump presidency, they’re already talking about shock and awe is the word that keeps being used here in Washington. And I think you’re going to see a lot of that for the first couple of days being focused on immigration, immigration and border policy, sort of defined with the exception of inflation in the economy defying this election. I mean, Trump has been running I mean, ever since he came down the escalator in 2015, 2016. Right. It’s been about immigration. It’s still about immigration. And so I think you’re going to see a lot of border related executive orders. In fact, I hear they’re preparing about 100 executive orders. I don’t know if that’s on day one, but you’re going to see that in the first days of the Trump presidency. A lot of border activity, too. I think you’re going to start to see and I know we’ll get to this in a second. A lot of activity around tariffs. The definition of what they’re going to do is to be determined. I think you do see some conflicting reports coming out of the Trump transition right now, but tariffs are coming. But also in that 100 day period, in addition to the executive orders, in addition to potential moves on tariffs, Capitol Hill has to start to move through their process or process various processes. And we still have to finish the f y 25 budget. We’re in the first month of 25, and that process hasn’t been completed. We’re operating under a C.R.. And so that process has to be completed by March 15th. They have to come up with an F y 26 budget, and they know that like 26 budget will be hints on the legislative vehicles. They’ll be using the past major pieces of the Trump agenda. So of course, we have the debt ceiling expiring and that happens also in the first quarter. So all of this has to be sort of digested by Congress, the incoming Congress. And then they’re going to have to figure out how they’re going to pass these measures And. And in what time frame? Remember and I know J.D. and I talked about this in July and briefly throughout the election, the Republican majority in the House is shrunk. I believe for the first time in history, the majority in the House is slimmer than the majority in the Senate. Well, and currently we’re talking about three Republican members. One is resigned already. Two are about to resign to take positions in the Trump administration. And all of sudden, the truth, the current status of this Congress is to 22 to 15 overnight. By January 20th, it will be to 17 to to 15 until early April when these special elections take place, mainly the couple in Florida. And at that point, the Republican seats are likely to say Republican Johnson will have is 220 to 215 seat majority. That’s two seats, right? He can’t afford there’s no margin for error for him. And so I think they’re going to be laying the groundwork in February. In March. I think April is going to be the hotbed of activity. Not to say that other things don’t happen in the meantime, but April is when everything really will come down and come to fruition.

John [:

So, JT, how significant do you think it was that the Republicans, maybe after a little bit of a kerfuffle, were able to elect Mike Johnson as the as the House leader with what we went through? I don’t know when it was a year or two ago where it seemed like almost a boxing match, where round two, round three, round nine, round, you know. How significant in your mind is the fact that they were able to pretty quickly come together on that?

JT [:

Yeah, pretty significant. And also, that was Johnson’s a lot of Johnson’s doing, but also Trump’s doing as well. Trump talked to a couple of the members of the Freedom Caucus who are outliers. Initial vote, they kept that vote open for over an hour, which is not unheard of. And Casey was supposed to be 15 minute votes. But this is this is sort of the way it works on both sides of the aisle. But Trump twisted a couple of arms. I think you’ll see it’s an early sign of some of the arm twisting that both Trump Johnson and incoming majority leader of the Senate, John Thune, will need to deploy in order to get people over the finish line. This is I mean, this is herding cats. Times 535, if you will. And and that’s precisely what it’s going to take to get I mean, think about what I just said a minute ago. Debt ceiling. That’s why 25, 26 and I know we’re going to get to this this my favorite term. And I say that sarcastically, budget reconciliation. And now it’s it is going to take a massive effort on Capitol Hill, but not insignificant that he did it in an hour or two hours. But at the end of the day, that Freedom Caucus is still going to be a fly in the ointment going forward after the next four years.

Julie [:

Let’s talk about budget reconciliation, because it seems like we can’t go a minute without seeing that word somewhere in some article or headline. Could you break that down and talk about the importance of it? Maybe explain that a little bit to our listeners. And from your perspective, why is it so important and what you see as the next steps in that process, JT?

JT [:

Yeah, Julie, I think that was in my last missive. I talked about get used to the words budget reconciliation.

Julie [:

Yes, you did mention that.

JT [:

Yes, it’s arcane and it’s boring. But simply put, in any budget that’s passed. You can write instructions for a process called budget reconciliation. Budget reconciliation is used when you have slim majorities, frankly. And in the House, as we all know from Civics 101, it takes a simple majority to pass a piece of legislation. So 435 members of Congress, 218 gets you over the finish line. That time does not, by the way. But you have to have plus 1 to 2 to pass legislation in the House. In the Senate, not so simple. You’ve got the filibuster. Once again, go back to your civics 1.1 handbooks, guys, and it’s 60 votes to get past that filibuster procedural threshold. Budget reconciliation is a budgetary maneuver that’s used where you only need 51 votes, frankly. So you just need a simple majority in the Senate to get a piece of legislation passed. So when the Republicans are writing the budget for f y 26 in that budget will be in budget reconciliation instructions. So there’s going to either be one budget reconciliation package or two budget reconciliation package. There could be three for that matter, but it has to be written in the f y 26 budget has to be specific. So first at the pass, the f y 26 budget, which will probably happen in February or March, and then in that budget will be instructions for reconciliation. The reason that’s important is the bulk of the Trump agenda, the big stuff. I mean, plenty of stuff will be happening for the next four years. But tax cuts, energy policy and of course, border policy, some border policy and border measures will be put in those packages, potentially defensive as well, but they’ll have to move them in. This current debate in early January was all about this one package versus two, and it will be resolved once the Republicans kind of figure out how they can make all this happen sooner than later. But remember what I said about five minutes ago about this. The House majority, now that Trump has been inaugurated in Congress, is up and running. Speaker Johnson only has a one seat majority up until early April. So it’s going to be really tough to pass anything, even with two seats or three seats. When it gets to that in April, it’s going to be tough. But that’s why I’m saying February and March are really, really important months to lay the groundwork for the for these packages. And again, I think throughout the first quarter. Congress and the Republicans will determine the easiest and quickest pathway to get these measures passed. I actually think my prediction is I mean, some people are saying it’s going to be this one big beautiful package because that’s where you put all the horse trading in. You rip all the bandaids off at once. I actually think it’s going to end up being too I could be wrong here. I think just in the. Just to get things done quicker and a couple of measures done quicker. They may opt to put a number of things in the first reconciliation package and then save tax cuts for the second reconciliation package. I hope that was clear.

John [:

It is. And since you brought up tax cuts, JT, That’s kind of where my next question would be. As we all know in our industry that we’re facing the expiration of the Trump tax cuts and on December 31st of this year, 2025. Again, shine up that crystal ball. Where do you think we’ll wind up with tax legit tax policy.

JT [:

But this this is going to be another tall order, because I do believe at the end of the day that Trump and the Republicans gets most of the of the revenue of the 2017 tax cuts. They’re going to have to tweak it at the end of the day. But right now, the price tag is somewhere between 4 to 4.6 trillion. That’s not guys, It’s not including no tax on tips. The Social Security proposals. There are dozens of dozens. But there are a number of proposals that trump that promise throughout the campaign that push the $10 trillion price tag, ten joining with a T. So I don’t know that they’re going to get all of those in the tax bill, but I do believe the bulk of 2017 will be in there. It is a really ambitious to get to a corporate rate of 15%. Frankly, that’s going to drive the price tag up. So I think at best they end up at 20, maybe maybe 19. Again, they’re going to this is just going to have to turn the dials on every single piece of of this of this legislation. And you’ve got 2017 tax cuts here. And then you have all these other proposals here. So there’s got to be a way to, quote, pay for it all. And looming. Around this debate is that, again, the Freedom Caucus, who is going to want some pay for is not just for the tax cuts, but for other measures that are being looked at in D.C., including the debt ceiling, which is going to be somewhat problematic for the for the Republicans and getting that passed without Democratic support. So I do believe the bulk of 27 to 2017 tax cuts will get passed. They’re going to be I know a lot of clients are out there are looking at the salt debate, especially in the northeast, especially in California, state, local taxes. That’s actually was a topic of discussion in Florida with House Republicans and from last week. So all of these discussions are ongoing, as I may have said in the previous appearance. The Republicans have spent part of 2020, part of 2024 in these little working groups on Capitol Hill in the tax writing committee. So they’re prepared for this coming down the pike here in 2025. It’s not as if they’re going to wake up new Congress. We’re here. What do we do? They’ve laid a lot of groundwork for what they want to do. The the dial turning is going to involve, again, some of the rates from 2017, especially the corporate rate. Salt and then a lot of the newer tax proposals that Trump threw out there in throughout campaign 2024.

Julie [:

JT, I know we were talking earlier before this recording, you were talking a little bit about a distinction between policy and procedure. Could you share that with our listeners? Because I thought your perspective on that was really interesting and I think I know I learned a lot from that and I’m confident that our listeners would as well.

JT [:

Yeah. And the first half of January and maybe even the first two thirds of January was focused on the one one reconciliation bill to reconciliation, though one vehicle to whatever the case, it’s all insider baseball. At the end of the day, the Republicans will get these measures passed in one way, shape or form. It might not be the 2017 tax cuts in 2025 might not look precisely as in 25. They might not look precisely as they did in 2017, but the bulk of them, as I said, will be passed, as will energy measures, as will border measures. It’s not going to be pretty. It’s not going to be clean, and you’re going to get really messy. And I think even within Republicans, it’s going to get a little ugly at times, but it will get done at the end of the day. So don’t focus a week. We. JD Julie. JT The three J’s here have to focus on procedure, right? We have to understand procedure and we have to talk about procedure because in that we talk about whether or not tax cuts are going to come in the first half of the year or the second half, or whether or not the debt ceiling is going to get passed and package one package, do whatever the case procedure is important, but everyone out there shouldn’t get lost. Some procedure you should follow procedure. There are there are guidelines there. There are markers there to watch. But at the end of the day, the policy will come out. It’s the sausage making factory, again, times 535 here in Washington. It’s it’s going to be pretty ugly. But policy at the end of the day is going to be result. And Trump said as much a couple of weeks ago, I don’t care about how it gets done. It’s going to get done.

John [:

But I’m guessing, JT, that that our listeners, our financial professionals who are listening ought to keep in mind that the media is probably going to cover every single one of those little disputes along the way. So if we don’t keep our mind above the fray saying, look, this is just part of the process, at the end of the day, something is going to get done. I think we are probably more importantly, our clients are going to drive themselves crazy with every little nuance, given the volume of things that you say is going to be coming our way.

JT [:

I mean, you have two things working against you and against why you have to stay calm here. You’ve got the media in a sense, just highlighting this. So think about this. For the past two years, we thought we were talking about a recession. They were trying to dump it. The media was talking us into recession. Recession never happened. Same thing here. They’re going to get too focused on a procedure and these multiple vehicles, multiple packages and lose sight of the end result, which again, I believe will happen and will be we will get tax cuts, we will get a new energy policy, a more robust energy policy, more deregulatory energy policy. And the same for for border policy. Trump will be tweeting one, two, three, ten times a day can just be calm throughout all of this and and sort of all our markers as as we’re laying them out. But just remember, the end game is going to get done. The timing is going to be interesting because of what I said, the makeup of Congress, the Johnson majority. But again, they they are front loaded. They do want to get everything done sooner than later, mind you. And and you’ve got an experienced team in Trump one versus Trump two. And that’s something everyone forgets is that he’s bringing back some some of the players from Trump one into the Trump administration and the second Trump administration, particularly at an agency called the Office of Management and Budget, another insider baseball agency at the White House. But the gentleman who ran it and won is going to run into these are experienced hands. The the assistant secretary for tax policy, who is just been nominated two weeks ago by Trump, is probably one of the longest, oldest veterans of tax policy in Washington, DC, worked on the Ways and Means Committee. So he’s got a foot on Capitol Hill. He’s going to have a foot in the administration. That’s why I’m confident that they’ll get a tax package done. So there’s the little insider things that you need to watch along the way. You need to look at the timelines that we’re that we’re trying to lay out for you. But don’t get lost in all the hype.

Julie [:

That makes sense. I think that that’s very helpful. Should we shift gears and talk tariffs a bit and Chip? Yes. I think our listeners probably would appreciate your perspective on that. And and what again, the crystal ball moment here. But what are your thoughts on this and where do you think we’re we’re headed in this area?

John [:

And J.T., before you start, let me just. We haven’t even talked about this, but recently we held a national webinar. It was kind of our market outlook for the first quarter kind of thing. And one of the survey questions that we asked, all the financial advisors who were attending was What do you think is the single biggest risk to economic prosperity? Right. Is it a Fed mistake? Is it inflation? Is it the number one answer? And by a long shot was tariffs and trade war. That was top thing on the mind of the financial professionals who were surveyed in our webinar. So that’s just a little preface of how important it is to our listeners. So what are your thoughts? I mean, we’ve heard everything from Trump just may use them as a threat, but he won’t actually do anything. Use it as a negotiation tactic to know he’s serious and he’s going to do it. So where do you where do you think we stand in the balance there?

JT [:

I think they’re coming. I think they’re coming. You think that the debate raging with the Trump transition right now is whether or not if you’re looking at the universal tariffs. Right. For example, somewhere between 10 and 20%. I think initially they really have an impact on on prices. And I don’t think that’s something they want to do at the onset. So one one approach the administration, the new administration is thinking about is looking at universal tariffs, but singling out particular sectors. So you’ve got the defense industrial supplies, one sector as one, whether it’s steel, copper, etc.. Anything in that defense industrial sector. Two, you have the medical supply sector, critical medical supply, the critical medical supplies sector, syringes, vials. So potential pharmaceuticals. And then you also have the energy sector. So in the energy sector, you have batteries. You’ve got potential solar implications as well. So I think they might look at countries where we’ve got in these three sectors defense, energy and some health care and look at whether there’s an imbalance or whether we want to restore them back to the US. And I think there will be more targeted there. I think I talked earlier about layered or targeted. I think that’s what a lot of the advisors are pushing right now. So there’s not this massive jolt to the economy on day one or whenever they’re imposed. But be not mistaken, the tariffs are coming, whether it’s universal without this sector approach, as I laid out, or whether it’s tariffs on China, Mexico and Canada. Now, I think I’m from Mexico and Canada. I do think they’re strategic right now. I think their bargaining tool to get them. If you remember the last time around, there was the potential for a 25% tariff on all Mexican products. And somehow they negotiated and that never ended up happening. And that was along the border. And remember, this is going to be border policy both with our southern border and our northern border. The idea is to get them to the table and get them to move in the direction we want to take them. China is a different animal of itself. And I think that that’s coming regardless. And I think that likely will be across the board. But to the extent that they can mitigate some of the early price jolts to the economy, I mean, this is the last thing this administration wants. And I think Trump realizes this. The last thing they want is justice. We still have questions about inflation right now is to invite some tariff policy or trade policy that is going to send prices upward. And that’s why the incoming administration you’ve got the Treasury secretary, Scott Besser, Howard Lutnick, at the Department of Commerce and then the US trade rep. Once these gentlemen are installed in their in their positions, I think you’ll see faster action. I believe they’re the 3 or 4 right now that are trying to move them into a more sector based approach. There might be countries that have the universal tariff period, end of story. If there’s a massive imbalance, universal tariff hits other countries, it might be that sector approach. Again, they’re still figuring it out. And I do think that you’re going to see probably in February, which is now about a week away. I think you’re going to see some action on tariffs. Again, a lot of this can be done by executive order. Some can be done by Congress. There is another move here in DC that to let Trump do some of this unilaterally and then work, you have some air cover. If you work with Congress to impose other tariffs. So they’re working on it. This is not going to take months. In my opinion, this is going to take weeks and maybe a month or two before they start unleashing these.

John [:

Well, J.T., thanks again for joining us on the Human Centric Investing podcast. I think, you know, obviously the future is always kind of hard to read in the face of uncertainty, but I’ll take your words to heart and I think our listeners should as well, especially when it comes to interacting with our clients. We should almost expect that as these things kind of wrangle their way through DC, that our clients are going to become pretty anxious about what they’re hearing and what’s going to happen or what potentially could happen. And I know it’s difficult to have those conversations, but to keep the big picture in mind, I think your words about it will get done. Not to get not to get too involved in the play by play, but almost step back and observe the process. And then once it does get done, now we can talk about longer term ramifications. I think that’s really, really wise advice.

JT [:

JD Well, all this takes place and while we’re talking tariffs and immigration and tax policy. The deregulatory environment that the administration wants to pursue is going to be unlike anything we’ve seen. So that is only going to make it a better climate for financials, for energy, for a number of other sectors, sectors to have this regulatory burden lessened, diminished, if you will. And that’s not even taking into account what the DOGE’s committee wants to do in the coming months, in the coming years.

John [:

So there’s almost too many things to watch.

JT [:

There are some saying this is that this is the fire hose, guys, this deregulatory effort that they’re about to undertake. Some of this some of these 100 initial executive orders will have a lot of deregulation. They want to do a lot of Biden administration regulation and then not invite more and just create a better environment for certain industries. And that helps everything from, obviously the bigger companies onshoring and also small cap companies who are part of the supply chain. So a lot of time, a lot of time we could spend a lot of time on on deregulation. But that is going to be a huge boon to the economy and to the business climate.

John [:

Well, J.T., on behalf of all of our listeners, and I just want to thank you again for taking your time really to kind of give us a little bit of a guide as to what to watch for, especially in these first hundred days that can really help to guide us for the rest of the year and on through the Trump presidency. So thanks again for taking the time to be with us. And thanks to all of our listeners for joining in for another episode of the Human Centric Investing Podcast.

Julie [:

And for our listeners, if you’re interested in learning more, please visit Hartford funds.com and seek out our Politics Resource Center. There you’ll find many white papers written by J.T. himself.

JT [:

Thanks for having me.

Julie [:

Thanks, JT.

VO [:

The views and opinions expressed herein are those of the guest who is not affiliated with Hartford Funds. Investing involves risk, including the possible loss of principal. • Small-cap securities can have greater risks, including liquidity risk, and volatility than large-cap securities.

Chapters

Video

More from YouTube