Moneybeat: Encouraging sign on staff

MARY REICHARD, HOST: Next up on The World and Everything in It: the Monday Moneybeat.

NICK EICHER, HOST: Time now to talk business, markets, and the economy with financial analyst and adviser David Bahnsen. David heads up the wealth management firm The Bahnsen Group. He is here now. Good morning to you, David.

DAVID BAHNSEN: Good morning, Nick, good to be with you.

EICHER: Well, David, obviously, more to come on filling out Team Trump, but we did find out his chief of staff, and the position will be going to the first woman ever to hold the role, Susie Wiles. What do you take from that move?

BAHNSEN: I think it is absolutely an encouraging sign. There are a lot of appointments to go, but to have named a chief of staff who I believe is a very gifted administrator and executive—someone who has been dealing with his campaign for two years, and really much longer, because she ran the Florida operation going back to 2016—Sue is a grown-up. My concern would have been having someone who is only a big fan and not necessarily someone with the maturity, experience, and executive talent in that position. That would have been a concern. But I’m encouraged that Susie Wiles has been named chief of staff.

Now we move on to some of the other cabinet and advisory positions, which are really, to me, besides the election result itself, the most important thing in terms of what we can expect for the next several years. I by no means hold out hope that I’m going to like every single person who gets appointed—it just isn’t the way this stuff works. But philosophically and ideologically, there are certain people he can appoint to certain positions that will give a lot of indication as to where the agenda will go. This is a really pivotal time for the administration.

EICHER: Well, David, we did talk immediately after the election to get the initial market reaction to the Trump victory. Now that we’ve had a few days and you’ve had a little more time to process the data, what is your sense now of what markets are thinking about a second Trump presidency?

BAHNSEN: It’s really interesting, Nick. Inflation expectations, as measured in the bond markets’ TIP spreads, didn’t move. By the end of the week, even the bond yields themselves came back to where they started, while the Dow was up 2,000 points. Here you have the market placing a very big bet, and I really hope the market’s right. The market is betting that Trump is not going to do his tariffs. Tariffs are definitely inflationary, and the market’s betting on growth, not inflation. That’s another way of saying, maybe he’s going to threaten tariffs, maybe negotiate with them, maybe achieve some positive results by dangling them, but not actually implement them. That seems to be the consensus view right now. It’s not a foregone conclusion, but it’s certainly the one I’m hoping for.

Yes, after the election, I said this to you on Wednesday of last week, and I’ll repeat it now: the market was likely going to rally to some degree just by having it over. There was a removal of uncertainty premium, and the fact that it didn’t take two to three days, let alone two to three weeks—in fact, barely took two to three hours—is good for markets. I think when we talked on Wednesday, there was still a chance of 54 or 55 Senate seats. It looks like now we are going to end up right at 53. The Republicans have prevailed in West Virginia, as expected, Montana as expected, Ohio, which was 50-50, and then Pennsylvania, which was much, much less than 50-50.

So, that puts it at a net four pickup for the GOP in the Senate. Fifty-three is different than 51—you’re going to get the committees no matter what, you’re going to have a majority legislatively no matter what. But now you can afford to lose a couple of seats. Still, this is just a big pickup that gives a legislative agenda a lot more leverage going forward.

EICHER: So before we go, David, I wonder where you think Kamala Harris went wrong on economic messaging. Clearly, the economy was a motivator and a big issue for voters. Where do you lay the blame on her economic approach?

BAHNSEN: You know what’s funny, Nick? I was prepared to say, if Trump had lost, where Trump went wrong on economics was that Kamala refused to provide details and substance, and he had a chance to really lean into his first-term success and reiterate real policy, real data, real economic philosophy—you know, sounding more Reaganite, that kind of stuff. I felt his campaign didn’t do it as much; he did more pandering and so forth.

At the end of the day, Kamala had so many flaws as a candidate, and that’s a story for other political analysts to deal with. But on the economic front, I think she had two bad options and picked one of them. By not giving any detail, by not really leaning into any agenda, I think that was a tough thing to do politically. Platitudes, hope, and opportunity—what did she say?

EICHER: The opportunity economy, yeah.

BAHNSEN: Yeah, that’s what she went with. And it was vacuous, condescending, and insulting, and it didn’t work. But then, what was the other option? To say, “I’m a tax-and-spend San Francisco progressive”? Was that going to sell? Kamala’s problem was Kamala. She didn’t have the option, politically, of saying what she really believes. People keep asking, “Why didn’t Bill Clinton advise her to push back against that transgender commercial?” and “What would she do differently than Biden?” and “What would she do to bring down inflation?” The reason she didn’t do those things is because she doesn’t disagree with them. The political talent, the political athleticism, of a Barack Obama or Bill Clinton—to be reasonably left-wing economically, but know that the American people want to hear something more centrist and moderate—that’s a very tough thing to do. Kamala Harris just wasn’t that.

EICHER: David Bahnsen, founder, managing partner, and chief investment officer of The Bahnsen Group. If you’re not subscribing to David’s regular market writing, you can find out more at dividendcafe.com. It’s free, and you can receive it in your inbox.

Well, David, thanks! Have a great week!

BAHNSEN: Thanks so much, Nick. You too.

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