Market Prep: Trump vs. The Fed And Why It’s Just the Beginning

Hard Assets, Greenland, Defense and Rotations Analysis

Hi Traders,

The markets are poised to bleed 1-2% at the open tomorrow. If you’ve been watching the headlines this weekend, you know exactly why.

We aren’t just looking at standard volatility anymore; we are watching a distinct regime change. The legal shots fired at Fed Chair Powell this weekend—DOJ subpoenas alleging “criminal mismanagement” over building renovations—are not about drywall or contractors. They are a blunt instrument. This is political intimidation sparked by Powell’s refusal to slash rates at the speed the White House demands.

This constitutional standoff is just one head of the hydra. Add in the proposed cap on credit card interest rates (which would decapitate Big Bank EPS beats) and the looming restrictions on institutional ownership of single-family homes, and you have a recipe for domestic equity dislocation.

And then, there is Greenland. What sounds like a headline from a game of Risk is compounding the uncertainty, creating a geopolitical flashpoint that further validates our defensive posture. The trust is, USA doesn’t really need to annex Greenland. Here is an article that explains in very detail what contracts and agreements are in place guaranteeing U.S. the security it needs.

The “Trump Cycle” Thesis

Here is the alpha: We have seen this movie before, but you have to know which scene we are in.

Trump has a history of viewing the stock market as his personal scorecard. However, his tolerance for volatility is higher than the market assumes—at the start. He is willing to break things to get his way. He will push the limits, weaponize policy, and accept a degree of market fluctuation if he believes it serves a larger negotiation leverage.

Right now, he is pushing. He is testing the Fed’s independence and the market’s pain tolerance.

But—and this is critical—he listens when the market screams.

In his previous term, when the going got tough and the “scorecard” turned too red, he made corrections. He pivoted. He is capable of pushing the limits again, and he is doing so right now. But we trust that eventually, if the market speaks loudly enough, through a 10% or 15% correction, he will listen.

The Play

We are currently in the “Limit Pushing” phase. This is not the time to be a hero on the long side of equities and blindly buy the 1-2% dip. Instead, we’ll continue methodically restructuring our portfolios, just as we’ve been doing over the past couple of months, while tracking the rotations and flows of institutional smart money.

This is the time to deleverage, perhaps get some hedges, rotate, and capitalize on momentum across assets that are absorbing the liquidity fleeing the dollar and the chaos.

Let’s dive into the details!