Trump – Mixed picks
Trump started to nominate people for his administration in the past week, selecting a generally hawkish mix of tariff proponents and loyalists.
Marco Rubio, a hawkish senator on China and Iran, is set for secretary of state. Pete Hegseth, a Fox News host and former National Guard member, will be defence secretary. John Ratcliffe returns to lead the CIA, and Mike Waltz, a congressman and National Guard colonel, becomes national security adviser. For domestic roles, Trump chose Matt Gaetz as attorney-general, surprising many with his controversial reputation. Thomas Homan will manage immigration, Kristi Noem will lead Homeland Security, and Susie Wiles will be the first female White House chief of staff. Elon Musk and Vivek Ramaswamy will head a new Department of Government Efficiency. Going forward, a key focus lies on the appointment of the Treasury Secretary, which is between Bessent, Lutnick and Kudlow, whereby Bessent is generally perceived as the more market-friendly choice.
US – Exceptionalism ahead
The cleanest trade during the week was a stronger USD, up 1.5%, as the EUR and CNH weakened on tariff fears and the exceptionalism. The S&P 500 finished the week 1.5% down, as health care stocks were hit after the RFK nomination for Health Secretary, and tech stocks started to react to higher US yields. Fed speak generally turned more cautious as core PCE is rising again. In turn, markets trimmed odds for the Fed to cut in December to 50%.
Algebris Investments’ Global Credit Team
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