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Opinion: An astonishing fall from grace | CNN

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Opinion: An astonishing fall from grace | CNN

Editor’s Notice: Signal as much as get this weekly column as a e-newsletter. We’re trying again on the strongest, smartest opinion takes of the week from CNN and different retailers.



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In 1970, a protester in London, angered by the cancellation of a cricket tour, threw an egg at UK Prime Minister Harold Wilson, the chief of the Labour Get together. His Conservative Get together rival, Edward Heath responded, “This was a secret assembly on a secret tour which no person is meant to learn about. It implies that there are males, and maybe ladies, on this nation strolling round with eggs of their pockets, simply on the off-chance of seeing the Prime Minister.”

The present UK Prime Minister Liz Truss didn’t get egged final week, however she was not handled gently. Truss confronted the indignity of getting her tenure in comparison with the shelf lifetime of a head of lettuce after her financial insurance policies tanked the British pound. On Thursday, she introduced her resignation after simply 45 days in workplace.

“What a six weeks it was,” Rosa Prince famous, “marked by the demise of a monarch and set up of a brand new king, a fiscal plan that crashed the markets and triggered a run on the pound, the abandonment of her whole coverage program, sacking of a chancellor and residential secretary, lack of confidence of just about all her MPs, stories of violent bullying in Parliament and opinion polls suggesting an existential wipe-out for her celebration on the subsequent election…”

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“Somewhat than construct bridges by searching for to unite the celebration and produce rival factions into her authorities, she created additional resentments, triggering rapid plotting. Putting in allies into key Cupboard posts left her open to the cost that her staff was each inexperienced and maverick,” Prince noticed.

The ministerial place as soon as held by fabled figures like William Gladstone, Benjamin Disraeli, David Lloyd-George, Winston Churchill, Clement Attlee and Margaret Thatcher had already been whittled down in public esteem by the shambolic management of Boris Johnson. However Truss’ ballot scores had been the worst ever recorded, even decrease than Johnson’s. And now Johnson is alleged to be a possible candidate to interchange Truss.

“The UK is popping itself right into a third-rank energy following its disastrous resolution in 2016 to vote for Brexit and pull out of the free commerce zone of the European Union,” wrote Peter Bergen.

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Brexit “has confirmed to be an financial debacle. Many roles within the UK that might have been crammed by Europeans who had been previously free to maneuver to Britain for work are going unfilled in sectors similar to building, farming, nursing houses, and eating places. For the reason that Brexit vote six years in the past, the UK’s per capita revenue has grown by solely 3.8% in actual phrases, whereas the EU’s has grown by 8.5%, in line with the Group for Financial Cooperation and Growth.”

Bergen argued that America’s severe troubles pale by comparability to these of the UK, Iran and Venezuela and that “Russia and China – the 2 nations with which the US strives most commonly for world affect – have suffered current dramatic declines of their standing.

“By invading Ukraine and failing to attain its battle goals, Russia is demonstrating that it’s not an incredible energy.”

The Liz Truss story additionally has implications for US politics. “Failing to organize public opinion for her proposals meant there was no widespread help for them in any section of British society,” wrote Henry Olsen within the Washington Put up. “Republicans are prone to making the identical mistake in the event that they retake management of Congress. The GOP’s midterm messaging focuses on inflation, crime and immigration, however the celebration is just not telling the general public a lot about what it might do to fight these ills. That is likely to be good politics, however it additionally means they might don’t have any mandate for vital departures from the established order. Utilizing the nationwide debt restrict subsequent 12 months as leverage to power vital spending cuts, together with to Social Safety and Medicare, as has lately been rumored, can be as politically disastrous for the GOP as Truss’s supply-side tax cuts had been for the Tories.”

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With somewhat greater than two weeks until Election Day within the US, it’s anybody’s guess how celebration management of Congress will wind up. After Democrats loved a summertime surge within the polls following the overturning of Roe v. Wade and the passage of President Joe Biden’s local weather and well being measures, the outlook now’s broadly seen as favoring the Republicans. However the margins in lots of key races are shut.

“Excessive ranges of concern about inflation and diminished consideration on the electoral affect of the Dobbs resolution seem to have harm the Democrats,” wrote Julian Zelizer. “Although Individuals are involved about the way forward for our democracy, the problem is just not registering on the high of the checklist – and many citizens assume the principle downside is corruption, relatively than threats from the GOP to overturn future outcomes.”

“The implications of a robust exhibiting by the GOP can be monumental. Not solely might Republican success probably shift management of the Home and Senate, leaving President Joe Biden to take care of two years of attempting to lift debt limits and keep away from draconian price range cuts, however the midterms might entrench Trumpism and solidify the path of the celebration.”

In Georgia, the state that gave Democrats management of the Senate in 2020, individuals are turning out for early voting at file ranges for a midterm election. On the poll is a contest between Sen. Raphael Warnock, a Democrat, and his Republican opponent, former soccer star Herschel Walker.

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“Why are so many Republicans nonetheless supporting Herschel Walker?” requested Jill Filipovic. “That is as we speak’s Republican celebration of ‘household values’: A person who desires to outlaw abortion, however whose ex says he paid for hers (and tried to get her to have a second). CNN has not independently verified the allegations from the lady, who has remained nameless.”

“Outstanding Republicans have made clear by campaigning for Walker that the allegations merely don’t matter to them. That is odd: Within the phrases of the anti-abortion motion, abortion is homicide. Most Individuals, in fact, don’t agree, however the said coverage of the Republican Get together is that abortion is equal to killing a baby. And here’s a US Senate candidate, accused of facilitating simply that. And Republicans have largely shrugged – or steered that, regardless of not admitting wrongdoing, Walker must be given grace and redeemed,” Filipovic identified.

“Crime is a crucial difficulty,” Paul Begala wrote. “There, I stated it. The issue is, not sufficient Democratic candidates are saying it. Some don’t appear to know what to do about this difficulty…”

“In my a few years in politics, I’ve by no means seen a extra damaging slogan than ‘defund the police.’ … The overwhelming majority of Individuals – together with most Black Individuals and most Democrats – oppose defunding police. Nonetheless, the political injury from that slogan has been actual.”

“Some Democrats don’t need to discuss crime. They hope most voters’ righteous outrage concerning the Supreme Court docket overturning Roe v. Wade will overshadow crime as a problem. I feel they’re fallacious. A variety of sensible Democrats are embracing their sturdy data on crime, refusing to cede the problem to the celebration whose chief, Donald Trump, described the January 6 rebellion, through which scores of cops had been injured and 5 later died as a ‘lovefest between the Capitol Police and the those that walked right down to the Capitol.’”

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For extra:

SE Cupp: MAGA Republicans, please cease calling your self conservatives

Van Jones and Janos Marton: Florida instructed them they might vote. DeSantis had them arrested for it

Dean Obeidallah: Democracy is Kari Lake’s actual opponent within the Arizona governor’s race

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As a 19-year-old school scholar in London, Ana Diamond traveled to Iran to go to family, solely to be arrested, she wrote, “on trumped-up fees of espionage for MI6 and alleged ‘infiltration’ of the Iranian political system.” She was despatched to the infamous Evin jail. “Whereas in detention, I endured months of solitary confinement, lengthy hours of interrogations and a mock execution,” recalled Diamond, who was ultimately acquitted.

Final week’s hearth on the jail and the story of Elnaz Rekabi, the Iranian rock climber who competed with out carrying a hijab, introduced again reminiscences of Diamond’s time within the nation.

“Whereas the Iranian authorities are fast responsible current protests on international powers fomenting chaos and dysfunction contained in the nation, these of us who’ve lived in Iran know that this women-led rebellion was a very long time coming,” Diamond noticed.

“Girls – together with, I believe, Rekabi – are not afraid of the prospect of imprisonment. This usually occurs in totalitarian states when life exterior jail nonetheless looks like imprisonment, and there’s little or no left to lose.”

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Katherine Keel lives within the Rocky Mountain city of Basalt, Colorado. A former Division 1 swimmer now coaching to be a paramedic, she moved 5 years in the past to a rural group very a lot affected by local weather change.

“Main roads shut commonly as a consequence of flooding and mudslides, reducing off our city from the assets of the town. Most summers, smoke inhalation is an inevitable a part of recreating outside, and it’s change into commonplace to test the air high quality index day by day to see if it’s protected.”

Writing for CNN Opinion’s sequence, “America’s Future Begins Now,” she famous, “I’ve taken up fly fishing as a interest, and Colorado Parks and Wildlife advises anglers to chorus from fishing when the water temperature in our rivers hits 67 levels – because it locations excessive stress on the fish. Tourism is down when snow totals are low within the winter, which impacts a significant supply of revenue for my rural group.”

“After which there are the wildfires.”

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Keel is way from alone. A 3rd of American adults have been personally affected by an excessive climate occasion prior to now two years, in line with Gallup.

“After a long time of stalling,” wrote Jonathan Foley and Jamie Alexander of Venture Drawdown, “the federal authorities is lastly taking decisive motion on local weather change. The current passage of the Inflation Discount Act and different climate-related laws has set the stage for vital progress towards reducing greenhouse fuel emissions and constructing America’s renewable vitality future.”

“It’s an incredible begin, however federal coverage alone gained’t get the job finished. Bringing local weather options into the world at scale requires that each a part of the economic system convey its superpower to bear: real enterprise management shifting markets, traders and philanthropists shifting capital, employees constructing photo voltaic panels and wind generators, and cities and states making local weather options a actuality within the locations we dwell and work.”

Sierra Membership President Ramón Cruz wrote that “State governments have an important position within the equitable implementation of the IRA, as residents of their states more and more expertise the traumas of shedding their houses, family members and livelihoods by means of climate-fueled disasters similar to wildfires, hurricanes and droughts.

“The impacts of the local weather disaster aren’t confined to both blue or crimson states, however are felt in communities throughout the nation. This contains low-income communities and communities of colour in Michigan, for instance, which are among the many most polluted within the nation and have larger than common charges of bronchial asthma. It contains communities of coal miners affected by black lung illness and fighting entry to medical care. These communities and plenty of extra stay in determined want of help — which the IRA can present.”

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Chimére L. Smith, a middle-school trainer, noticed the issues in America’s well being system firsthand whereas experiencing a extreme case of lengthy Covid. “My signs began with a sore throat and diarrhea, however quickly snowballed right into a dwelling hell: constipation, burning lungs, dehydration, abdomen aches, delirium, reminiscence loss, joint and muscle ache, sleeplessness, weight reduction and lack of imaginative and prescient in my left eye. And so they wouldn’t cease,” she wrote.

It took a very long time for medical doctors to place Smith on the trail to restoration, and that solely got here after she reached out to public officers, journalists and extra medical doctors, she stated. “Now, almost three years after my Covid-19 an infection, I’m doing a bit higher,” Smith wrote. “I can cook dinner, drive to appointments, learn and have hour-long telephone conversations with household and buddies. My will to dwell has been restored.” However she is just not in a position to return to educating.

“Although this virus affected Black and brown individuals at a better fee, I not often noticed Black lengthy Covid affected person tales on the forefront of conversations about this illness. I solely needed to look again alone expertise to know why: To be heard I needed to get mad sufficient to problem medical authority, ask questions, complain and agitate. I needed to disrupt a system designed to exclude me and individuals who seem like me.”

What will be finished to enhance well being care? Begin with nurses, wrote Theresa Brown. “When too few nurses work on a hospital flooring, sufferers die who would probably in any other case have survived. That isn’t hyperbole, however a truth nicely established by analysis.”

“Regardless of this, many hospitals have been understaffing their wards for years. Then, Covid-19 got here, confronting overworked nurses with extraordinarily ailing sufferers who had been dangerously contagious. Many sufferers died, and plenty of nurses stop. Of those that stay on the job, many are contemplating leaving.”

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“The disaster in nurse staffing arose largely as a result of many well being care entities prioritize earnings over therapeutic … Eliminating nursing positions provides hospitals a straightforward method to minimize their labor prices.”

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Elon Musk is the richest individual on this planet and the power behind Tesla and SpaceX, two firms revolutionizing their industries. However he occupies our thoughts house largely for an additional motive: greater than 109 million individuals observe his idiosyncratic account on Twitter, the social community he could lastly be within the course of of buying.

“If Elon Musk’s actions didn’t have such highly effective penalties,” wrote Frida Ghitis, “we might sit again and benefit from the present. However, since he likes weighing in closely on consequential issues, the remainder of the world has to fret concerning the affect and marvel whose aspect he’s on. What are the ideas – ethical, moral, monetary – that drive his rambunctious forays into world affairs?”

Musk made headlines lately along with his ill-received define of a negotiated settlement of the Ukraine battle. He requested his “followers to vote on a plan that seemed prefer it was drafted within the Kremlin, full with distorted historical past of Crimea – the Ukrainian territory annexed by Russia in 2014,” Ghitis wrote.

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“If a Putin-pleasing proposal was not sufficient, Musk had somewhat one thing for China’s President Xi Jinping. In an interview with the Monetary Occasions, he unveiled his proposal for resolving hostilities between Beijing and Taipei.”

“It’s value noting that Tesla has an enormous presence in China. If Beijing is proud of Musk, it may be good for enterprise.”

“Maybe it’s not honest to color the Tesla tycoon as a good friend of dictators. Life is just not Twitter, and in the actual world the Starlink web service made by Musk’s SpaceX has been a useful device for Ukrainians combating Putin’s invasion.”

For extra:

Kara Alaimo: The chilling downside with how Kanye West and Elon Musk outline ‘free speech’

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Carly Zakin and Danielle Weisberg: Girls can’t wait any longer for gender equality

Naka Nathaniel: Why I’m rethinking Boy Scouts for my son

Kent Sepkowitz: Paxlovid protection wrongly suggests the consultants blew it once more on Covid-19

Ben Mattlin: I’ve a incapacity that’s apparent — and one which’s not

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AND…

Whooping cranes birds us

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Saturday was “Half-Earth Day,” six months after the April 22 celebration of the Earth’s significance – and fragility. But it surely’s value noting for greater than an accident of the calendar, wrote Lydia Strohl.

“Half-Earth is the notion that for people to outlive, we should retain earth’s waning biodiversity by reserving half the planet for nature, stabilizing massive swaths of ocean, prairie, rainforest and desert to deal with the birds, bugs and ecosystems that have an effect on the water we drink, the meals we eat, the air we breathe,” Strohl noticed. “The Half-Earth Venture was impressed by legendary Harvard biologist E.O. Wilson, who died in 2021 on the age of 92. In ‘Half-Earth: Our Planet’s Battle for Life,’ Wilson wrote: ‘We might be clever to search out our method as shortly as potential out of the fever swamp of dogmatic spiritual perception and inept philosophical thought by means of which we nonetheless wander. Until humanity learns an incredible deal extra about world biodiversity and strikes shortly to guard it, we are going to quickly lose a lot of the species composing life on Earth.’”

Wilson’s phrases rang very true after the World Wildlife Fund’s Residing Planet Report famous every week in the past that its examine of sure vertebrate species had discovered a median decline of 69% since 1970.

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Strohl quoted Elizabeth Gray, the CEO of Audubon, who’s in her 50s. “We have to take heed to what the birds are telling us. We’ve misplaced three billion birds in my lifetime. Birds are sentinels for wholesome land and water – if birds are in hassle, individuals are too,” Gray stated.

“The canary is singing,” Strohl concluded. “Hear, earlier than its voice is stilled.”

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Trump names former Texas state Rep. Scott Turner to lead Housing and Urban Development

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Trump names former Texas state Rep. Scott Turner to lead Housing and Urban Development

President-elect Donald Trump’s first administration repeatedly sought to make deep cuts to the Department of Housing and Urban Development’s budget. Those plans never passed Congress. But many housing and anti-poverty advocates think this time will be different.

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President-elect Donald Trump has chosen former Texas state Rep. Scott Turner to serve as secretary of Housing and Urban Development. Turner spent nine seasons in the NFL with teams in Washington, San Diego and Denver before being twice elected to the Texas House of Representatives, serving from 2013 to 2017.

Turner now chairs the Center for Education Opportunity at the America First Policy Institute, a think tank set up by former staffers from Trump’s first presidency.

In a statement, Trump said during his first term, Turner was the first executive director of the White House Opportunity and Revitalization Council, “helping to lead an Unprecedented Effort that Transformed our Country’s most distressed communities.”

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“Those efforts, working together with former HUD Secretary, Ben Carson, were maximized by Scott’s guidance in overseeing 16 Federal Agencies which implemented more than 200 policy actions furthering Economic Development,” the statement read. “Under Scott’s leadership, Opportunity Zones received over $50 Billion Dollars in Private Investment!”

Trump’s first administration tried to restrict housing aid and cut HUD’s budget

The first Trump administration repeatedly proposed deep budgetcuts to HUD, but they never passed Congress. Some executive action to restrict public assistance — for housing and other benefits — was made later in the term and never finalized. But many housing and anti-poverty advocates think this time will be different.

Scott Turner, chairman of the Center for Education Opportunity at the America First Policy Institute, speaks during an event at the institute in January 2022

Scott Turner, chairman of the Center for Education Opportunity at the America First Policy Institute, speaks during an event at the institute in January 2022

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“The agenda is much more organized now,” says Peggy Bailey, executive vice president for policy and program development at the Center on Budget and Policy Priorities. “We do anticipate some pretty significant budget fights.”

For one thing, she says, there will be fewer moderate Republicans likely to push back in the next Congress. And the Trump team will enter office with an extensive agenda of policy proposals laid out in Project 2025. Trump has denied any connection to the Heritage Foundation document, but the chapter on HUD was written by his first-term HUD Secretary, Carson, and includes many proposals from his time leading the department.

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The Project 2025 proposals include:

  • Ban families with undocumented members from living in federally assisted housing. Undocumented immigrants are already barred from receiving subsidies. But a HUD analysis found the rule would have put tens of thousands of their family members who are U.S. citizens or legal residents, mostly children, at risk of eviction or homelessness.  
  • Eliminating a new federal fund to boost the supply of affordable housing. A footnote to this item says federally subsidized housing distorts the market by raising demand. It suggests a better approach is to encourage construction by loosening local zoning rules and streamlining regulations. 
  • Repealing (again) a rule meant to prevent segregation and comply with the Fair Housing Act. Carson had argued the rule demanded “unworkable requirements.”
  • Ending a homelessness policy known as Housing First, which places people in subsidized housing and then helps them address drug and mental health addictions. Trump and conservative allies have said sobriety should be the first requirement, something homelessness advocates say has been tried before and failed. 
  • Tightening work requirements for people who receive federal housing subsidies. (The first Trump administration also tried this for recipients of food aid, but it was blocked in federal court.)

Beyond Project 2025, Bailey and others point out that congressional Republicans have continued to propose major funding cuts to HUD, along with trillions of dollars in cuts over a decade across a wide array of other social safety net programs including healthcare, food aid and assistance with heating and cooling bills.

When it comes to deep funding cuts, ‘the optics there might not be great’

If all these budget proposals were to be enacted, “you should expect large increases both in the scope of poverty and in the depth of poverty,” says Bob Greenstein, a visiting fellow at the Brookings Institution and the founder and former president of the Center on Budget and Policy Priorities.

Dr. Ben Carson, former secretary of Housing and Urban Development, speaks during this summer's Republican National Convention in Milwaukee.

Dr. Ben Carson, former secretary of Housing and Urban Development, speaks during this summer’s Republican National Convention in Milwaukee.

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He also sees an irony, since many of the programs target not only the poor but also modest and moderate-income people. “Among the people who would be hurt most seriously are working-class families, the very people who are now part of [Trump’s] political base,” he says.

But not everyone thinks that’s likely.

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“I would be surprised if there were substantial budget cuts actually enacted,” says Kevin Corinth, a senior fellow at the American Enterprise Institute who served as an economic adviser in the Trump White House.

The presidential campaign made clear that the high cost of living is a huge issue for many Americans, he says, and “the optics there might not be great to roll things back.”

He does think the administration will be better able to push through the regulatory changes it started in its first term, restricting noncitizens in public housing and tightening enforcement of work requirements.

Corinth also supports longer-term goals that Project 2025 lays out for HUD. They include selling land owned by public housing agencies to private developers for “greater economic use.” That could mean fewer people living in traditional public housing, and more instead using federal vouchers to rent in the private market. Project 2025 also calls for shifting rental assistance to other agencies, and pushing people to become self-sufficient by setting time limits on rental subsidies.

Corinth says time limits make sense because people do not have a right to rental aid like they do with food or health care; only 1 in 4 people who qualify can actually get it. “So it’d be much more fair to families to say, ‘Look, you’re going to get this assistance but it’s only for a couple of years, get you back on your feet,’” he says.

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But none of those changes are “a real solution,” says Sarah Saadian, with the National Low Income Housing Coalition. She says breaking up HUD would only shift responsibility. And most residents who can work already do, “they’re just not getting paid wages that are high enough to afford housing,” she says.

In any case, Corinth thinks the next Trump administration will have more urgent priorities than a sweeping transformation of HUD’s role. They include pushing through a major tax cuts package in its first year. If housing does then rise on the agenda, he thinks it’s more likely to focus on the private market – and addressing the massive shortage that has sent home prices and rents skyrocketing.

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Video: Heavy Rains and Wind Wreak Havoc on the West Coast

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Heavy Rains and Wind Wreak Havoc on the West Coast

A series of atmospheric rivers has caused flooding and damage in the Pacific Northwest and Northern California, knocking out power for hundreds of thousands of people.

It just crashed through the front of the house, crashed through the kitchen, and it broke the whole ridge beam. The whole peak of the house is just crushed.

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How long will Trump’s honeymoon with the stock market last?

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How long will Trump’s honeymoon with the stock market last?

Few were surprised when US stocks jumped after Donald Trump’s decisive victory in the presidential election. Amid widespread assumptions of weeks of uncertainty, a clear result was always likely to prompt an initial relief rally. More unexpected was what has happened since.

The president-elect has nominated a string of hardliners to senior positions, signalling his intent to push ahead with a radical agenda to enact sweeping tariffs and deport millions of illegal immigrants that many economists warn would cause inflation and deficits to spiral upward.

Yet the stock market — the economic barometer most closely watched by the general public, and one often referenced by Trump himself — seems to have shown little sign of concern.

The S&P 500, Wall Street’s benchmark index for large stocks, is still up about 3 per cent since the vote, even after a slight pullback. The main index of small cap stocks is up almost 5 per cent.

The relative cost of borrowing for large companies has also plummeted to multi-decade lows, and speculative assets such as bitcoin have surged.

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Under the surface, not every part of the stock market has been so calm. A Citi-created index of stocks that may be vulnerable to government spending cuts, for example, has tumbled 8 per cent since the election, while healthcare stocks have been hit by the nomination of vaccine sceptic Robert Kennedy Jr to head the health department.

The prospect of inflation arising from tariffs and a tighter labour market has also spooked many in the $27tn Treasury market, with some high-profile groups warning about over-exuberance.

But the contrasting signals raise some key questions for traders and policymakers alike: are equity investors setting themselves up for a fall by ignoring high valuations and potential downsides of Trumponomics, or will they be proved right as gloomy economists once again have to walk back their dire prognoses?

“Any time . . . you get to the point where markets are beyond priced to perfection, you have to be concerned about complacency”, says Sonal Desai, chief investment officer at Franklin Templeton Fixed Income.

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But, she adds, “the reality is you also need to very actively look for triggers for sell-offs, and right now . . . I think the underlying economy is strong and the policies of the incoming administration are unlikely to move that significantly.”


The bull case was on full display at the Wynn resort in Las Vegas this week, where more than 800 investors, bankers and executives were gathered for Goldman Sachs’ annual conference for “innovative private companies”.

With interest rates now trending downward, capital markets specialists had already been preparing for a recovery in stock market listings and mergers and acquisitions activity, but the election result has poured fuel on the fire.

Walter Lundon, a trader, shows off his pro-Trump T-shirt on the floor of the New York Stock Exchange
Walter Lundon, a trader, shows off his pro-Trump T-shirt on the floor of the New York Stock Exchange. Investors believe Trump will follow through on pledges to cut taxes and regulation © Timothy A. Clary/AFP via Getty Images

With Republicans controlling both houses of Congress in addition to the White House, investors are assuming that it will be easy for the Trump administration to fulfil promises to slash corporate taxes and scale back regulation. At the same time, more contentious proposals such as the introduction of tariffs were frequently dismissed by attendees as a “negotiating tactic”.

David Solomon, Goldman chief executive, said at the conference: “The market is basically saying they think the new administration will bring [regulation] back to a place where it’s more sensible.”

One hedge fund manager in attendance sums up the atmosphere more bluntly. “There are lots of giddy investors here getting excited about takeout targets,” he says. “M&A is now a real possibility because of the new administration. That’s been the most exciting [element of Trump’s proposals] . . . I think the mood is better than it’s been in the past four years.”

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The emphasis on tax and deregulation is clear when looking at which sectors have been the biggest winners in the recent market rally: financial services and energy.

The S&P 500 financials sub-index has jumped almost 8 per cent since the vote, while the energy sub-index is up almost 7 per cent. Energy executives have celebrated the president-elect’s pledges to withdraw from the Paris climate agreement and open up federal lands for fracking in pursuit of US “energy dominance”.

The Russell 2000 index, which measures small cap companies, has also risen faster than the S&P thanks to its heavy weighting towards financial stocks, and a belief that smaller domestically focused companies have more to gain from corporate tax cuts.

Chris Shipley, co-chief investment officer at Fort Washington Investment Advisors, which manages about $86bn, says that “we believe the market has acted rationally since the election”, citing the concentration of gains in areas that could benefit from trends such as deregulation and M&A.

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Even policies that most mainstream economists think would have a negative effect overall — like a sharp increase in tariffs — could ironically boost the relative appeal of US stocks by hitting other countries even harder.

The Europe-wide Stoxx 600 index, for example, has slipped since the election as investors bet the export-dependent region will be heavily hit by any increase in trade tensions. At the same time, the euro has dipped to a two-year low against the dollar.

“The ‘America First’ policy, not surprisingly, will be good for the US versus the rest of the world,” says Kay Herr, US chief investment officer for JPMorgan Asset Management’s global fixed income, currency and commodities team.


The worry among economists and many bond investors, however, is that Trump’s policies could create broader economic problems that would eventually be hard for the stock market to ignore.

Some of Trump’s policies, such as corporate tax cuts, could boost domestic growth. But with the economy already in a surprisingly robust state despite years of worries about a potential recession, some like former IMF chief economist Olivier Blanchard fear an “overheating” that would lead to a resurgence in inflation and a subsequent slowdown.

A shale gas well drilling site in Pennsylvania
A shale gas well drilling site in Pennsylvania. The incoming Trump administration is expected to open up federal lands for fracking in pursuit of US ‘energy dominance’ © Keith Srakocic/AP

Demand-driven inflation could be exacerbated by supply-side pressures if Trump follows through with some of his more sweeping policy pledges.

On the campaign trail, Trump proposed a baseline 10 per cent import tariff on all goods made outside the US, and 60 per cent if they are made in China. Economists generally agree that the cost of tariffs falls substantially on the shoulders of consumers in the country enacting them. Walmart, the largest retailer in the US, warned this week it might have to raise prices if tariffs are introduced.

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Deporting millions of undocumented immigrants, meanwhile, would remove a huge source of labour from the US workforce, driving up wages and reducing the capacity of US companies to supply goods and services.

Economists at Morgan Stanley and Deutsche Bank both predicted this week that Trump’s policies would drag on GDP growth by 2026, and make it harder for the Federal Reserve to bring inflation back to its 2 per cent target.

Tom Barkin, president of the Richmond Fed and a voting member on the rate-setting Federal Open Market Committee, says he understands concerns among the business community about tariffs reigniting inflation, and says the US was “somewhat more vulnerable to cost shocks” than in the past.

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But some investors believe the risks to be minimal. “In our view, the inflationary concerns . . . regarding tariffs are overblown,” says Shipley of Fort Washington.

Fed policymakers have been quick to stress that they will not prejudge any potential policies before they have been officially announced, but bond investors have already scaled back their forecasts for how much the central bank will be able to cut interest rates over the next year.

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Interest rate futures are now pricing in a fall in Fed rates to roughly 4 per cent by the end of 2025, from the current level of 4.5-4.75 per cent. In September, investors were betting they would fall below 3 per cent by then.

Meanwhile, the yield on the 10-year Treasury note, which rises when prices fall, is up about 0.8 percentage points since mid-September to 4.4 per cent. As a consequence, the average rate on a 30-year mortgage is also ticking upward, to near 7 per cent.

“The bond market has been very focused on deficits and fiscal expansion, and the equity market has been focused, it seems, on deregulation and the growth aspect,” says JPMorgan’s Herr. But “at some point, a higher [Treasury yield] is problematic to equities”.

In part, that is because higher bond yields represent an alternative source of attractive returns at much lower risk than stocks. But the more important impact could come from the warning signal a further increase in yields would represent.

The rise in yields is being driven by concerns both about inflation and also higher government debt levels, says Kristina Hooper, chief global market strategist at Invesco. “2024 marks the first year in which the US spends more to service its debt than it spends on its entire defence budget. And that’s not sustainable in my opinion over the longer term, and so we have to worry about the potential for a mini Liz Truss moment.”

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Former UK prime minister Truss’s attempt to introduce billions of pounds of unfunded tax cuts and increased borrowing in 2022 caused a massive sell-off in British government debt that spilled into currency and equity markets.

Demonstrators in New York protests against Trump’s immigration proposals
Demonstrators in New York protest against Trump’s immigration proposals. His plans to deport millions of undocumented immigrants would remove a large chunk from the US workforce © Michael Nigro/Sipa USA via Reuters Connect

The structure and scale of the US Treasury market makes this sort of “bond vigilantism” less likely, strategists and investors stress, but many institutions have begun paying more attention to the possibility.

“Over the next two to four years, do I think that there’s a very serious risk of bond vigilantes coming back? Absolutely. And that’s entirely based on what the multiyear plan will be, and the impact which comes out of it,” says Franklin Templeton’s Desai.


Trump and his advisers have dismissed concerns about their economic agenda, arguing that policies such as encouraging the domestic energy sector will help keep inflation low and growth high.

Even if they do not, several investors in Las Vegas this week suggested that the president-elect’s personal preoccupation with the stock market would help restrain him from the most potentially damaging policies.

“I think Trump and all his donors measure their success and happiness around where the US stock market is,” says the hedge fund manager. “It’s one reason why I’m pretty bullish despite the market being where it is.”

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Economists have also consistently underestimated the resilience of the US economy in recent years. The combination of Trump’s attentiveness and economists’ poor past forecasting means even sceptical investors are wary of betting against the US market.

“There are risks out there,” says Colin Graham, head of multi-asset strategies at Robeco. “If some of the more extreme policies that were talked about during the campaign get implemented, our core view for next year is going to be wrong.

“But what is our biggest risk here? Missing out on the upside. The momentum is very strong.”

Data visualisation by Keith Fray and Chris Giles

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