Making sense of market moves
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After all of Donald Trump’s cabinet appointment drama, Wall Street warmly embraced the president-elect’s nomination for Treasury secretary: hedge fund veteran Scott Bessent.
Bessent worked for famed investor George Soros before opening his own hedge fund, Key Square Capital Management. He made his fortune focusing on a strategy called macroinvesting, which means making market moves based on geopolitics, and was part of the team that bet against the British sterling ahead of Black Wednesday.
As a market veteran, Wall Street investors see Bessent as a familiar, friendly face—and a level-headed voice of reason.
What the pros are saying: “Bessent has had a long and distinguished career as an investor and brings to the Treasury position an impressive and unique resume spanning global macro and markets,” wrote Deutsche Bank analyst Matthew Luzzetti in a note today.
Paul Donovan, chief economist at UBS Global Wealth Management, concurred. “Investors prefer orthodoxy, predictability, and coherence from economic policy; there were fears that some of the candidates may not possess those attributes. Bessent does,” he wrote.
But not everyone is thrilled with the nomination. Elon Musk expressed his dissent about Bessent when the Tesla CEO and influential member of Trump’s inner circle called him the “business-as-usual” choice.
What’s on the agenda?
As the top dog overseeing economic policy, Bessent will have a say over spending, taxes, and of course, tariffs—something Bessent has strongly defended.
“Used strategically, tariffs can increase revenue to the Treasury, encourage businesses to restore production and reduce our reliance on industrial production from strategic rivals,” he wrote in an op ed published November 15.
He wooed Trump during the election by outlining the “3/3/3” approach he’ll use as a guide for economic policy: Slashing the budget deficit to 3% of GDP, reaching 3% annual economic growth, and increasing oil production by 3 million barrels per day.
But Bessent’s proposed level of fiscal restraint could be at odds with some of Trump’s other campaign promises, such as mass deportations, which may raise inflation.
Keep in mind: If there’s one thing we learned from the first Trump administration, it's that the president-elect ended up falling out with many of his more “business-as-usual," buttoned-up picks pretty quickly.
Only time will tell if today’s Bessent trade is pricing in too much optimism or forecasting an economic boom.—LB