About the Donald - you should worry less about these 2 things

It’s easy to make a big deal out of things that come out of Donald Trump’s (DJT) mouth, or to overplay it, or to make it sound a bigger deal than it is. But then again, this is the President of the United States (POTUS) - he is arguably the most powerful person on the planet, so on occasion, some alarm is warranted.

That's why I’m going to give you three things to consider about some of the Donald’s antics – two that you should worry less about, below, and one that isn’t getting enough play, coming in my follow-up piece. For all of DJT’s bluster potential, markets have been amazingly productive under his watch (remember -- combining your investing and your politics is almost always a horrible idea).

He gets into office the first time in January 2017, and the S&P 500 is around 2250 (ahhh, the good ol’ days). By the time he leaves in January 2021, it’s up to 3720 – so up around 15% per year in total return. And remember that includes the 25%-ish drop from COVID in early 2020.

He comes into office last January for his second term and we’re at 6050, which is around 6852 as I write this, up over 13% in 9 months, which annualizes to almost 18%. Again, pretty solid. But then again, you saw what happened in April when he brought out his colourful tariff placards – markets rolled over, and hard. That’s the thing about Trump, this guy has an influence on markets that is broad, and that is often an overreaction, hence why I want to cover these two topics that get a lot of media, but that you, the investor and the market participant, should worry less about.

FIRST THING: Tariffs – worry less

I’m not saying don’t worry, I’m just saying worry less. Markets have (eventually) listened to me on this too, clearly.

The truth is, he applied tariffs in his first term, although mainly on China. After the beating he copped from his political enemies after that, especially those on the left, you know how many tariffs the Biden Administration removed from China after Trump left office?

Zero -- exactly none of "Trump's tariffs" were removed by Biden.

And the economy did just fine, both US and global (granted, that was to some degree because of excessive Government spending in some major developed markets). In fact, for all of the DOGE hoo-ha, the recently-passed “One Big Beautiful Bill” Act spends more money in the future than the Federal Government is spending now.

And whilst Government spending has been a big deal at the edges, the key element in the US GDP equation (which is C + I + G +(X-M)…remember??) is always the C, consumption - - it's around two-thirds of US economic activity. And whilst consumer spending has softened a little of late, the American consumer has an amazing habit of finding a way to spend.

Regardless, whilst there might be a transitory inflation impact, and potential consumption impact, the truth is that deals are going to get cut all over the place and the bark of tariffs is almost certainly going to be much worse than the bite -- hence the TACO trade (you know, Trump Always Chickens Out). Like I said, markets have figured that out and they’re looking through the noise. For now, at least, stop worrying about it.

SECOND THING: His 3rd term – literally don’t worry, at all

The Big Orange fella has no chance of a third term. He even essentially admitted it so erase it from your mind. He loves sticking it to the media and to Democrats, because in his mind, they’re both after him. I know he says some dumb stuff but there’s very often, almost always actually, a morsel of truth in it. This is why the media goes nuts, so whenever he gets a chance to put them into a lather, he takes it.

This is a classic example. He cannot get a third term, and he knows it. There are people in his orbit who seem convinced it will happen, like Steve Bannon, but Bannon was equally convinced that the 2020 election was stolen, and that Barack Obama was born in Kenya.

Turns out he was wrong both times. But for giggles, let’s walk through the two ways Steve Bannon might be right:

1. Donald Trump runs and successfully wins the inevitable Supreme Court case which challenges his third term candidacy as a breach of the 22nd Amendment

The US Constitution is very clear. It says, and I quote:

“No person shall be elected to the office of the President more than twice, and no person who has held the office of President, or acted as President, for more than two years of a term to which some other person was elected President shall be elected to the office of the President more than once.”

That paragraph very clearly disqualifies a third DJT term.

The justices on the Supreme Court of the United States (SCOTUS) may have whatever flaws you believe they have but they are appointed for life, and they do not favour a single person. I know people think they do, but they don’t. They might favour someone’s politics, but not them personally. Once a SCOTUS Justice is on the bench, DJT can do literally nothing to remove them unless they do something so untoward that it makes Congress act. Not DJT, only Congress can act.

The SCOTUS will do what the Constitution says, and DJT cannot serve a third term. Stop worrying about it.

2. JD Vance runs for President, Donald Trump runs as VP, they win the election, and Vance resigns to hand over to Trump

Think about what’s required here. It means JD Vance, when he is just 44 years old, wins a US Presidential Election. That would make him only the 46th person to become President of the United States of America. And you’re telling me that he is going to voluntarily hand over half of his possible Presidential term to an 82-year-old man so that he then has to run all over again, to repeat the monumental effort required to become POTUS.

I don’t think so….never mind that if that does happen, see point number 1 – there will almost certainly be a court challenge and DJT has no obvious path to winning that case.

If JD Vance wins the Presidency in 2028, he is going to stay President, and he is going to run again in 2032, when he will be all of 48 years old.

Oh, and did I mention the 12th Amendment?

Go back at point 1, let’s say the SCOTUS lets you down and they vote for DJT on the 22nd Amendment case. Good news…..enter the 12th Amendment. Here’s the bit that matters:

“But no person constitutionally ineligible to the office of President shall be eligible to that of Vice-President of the United States.”

The Donald can’t run for Veep anyway….stop worrying about it.

There is one thing though that you should be paying attention to, and it’s not getting much media. As much as we think about the US as a country of laws, the truth is, those laws get enforced and acted upon through a series of norms. And DJT is nothing if not a norm-breaker.

I’ll cover that, and any markets impact, in my follow-up……stay tuned.

Good luck out there.