Everything, everywhere, all at once

In recent months, the White House has been the world’s reality TV central, where bare-faced untruths and self-contradictions are rolled out not by extreme social media commentators or tin pot dictators but at White House press briefings.

Every morning, those in the Asian time zone would wake up to new episodes, each more absurd than the previous. What were once unbreakable alliances and partnerships, such as Europe and America; what were once friends with benefits (of trade) between neighbours, such as Canada and Mexico; what were once norms of polite diplomacy appear to no longer exist.

We are already living in a post-truth world where looking the part or pledging loyalty, rather than relying on science and facts, is more important to the vetting process to get into US President Donald Trump’s cabinet.

The open spat last weekend between Ukrainian President Volodymyr Zelensky and Trump’s vice-president JD Vance was about facts. Donald Trump did not get his hands on Ukrainian minerals and did not deliver peace on Day One, hence his desire to broker a ceasefire at any cost to the integrity of the old Western alliance.

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That the US voted along with Russia, North Korea and Iran on UN Resolutions would have been the surreal part of making one spill the breakfast coffee. It is juxtaposed with a generative AI video of Trump at a resort proclaiming, “Trump Gaza is finally here!” alongside Elon Musk dancing under a shower of US dollars. The video, released on Feb 25, finishes with Trump and Israel’s Benjamin Netanyahu sipping drinks on the new Middle East Riviera sans Palestinians, except for the bikini-clad belly dancers.

Instead of Hollywood, which still relies on mostly left-leaning actors and actresses, the next award-winning AI clips may feature the Panama Canal or Greenland under the Stars and Stripes — except those may be far more serious projects and not just talk.

An organised chaos
In his first term, Trump had not had the entire Republican Party “kiss the ring” and he had “traitors” in his cabinet, with the likes of former vice-president Mike Pence. A common perception by many world leaders was to take him seriously, but not literally. That was then.

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This time, it is different. Trump spent the last four years ruminating; moderate Republicans such as Liz Cheney have been purged to be replaced by cheerleaders the likes of Lindsey Graham and Vance, who, before baiting Zelensky on live TV, was berating European allies at the Munich Security Conference. It was in this city that Adolf Hitler declared his expansionist tendencies in a 1936 speech.

Under the 1938 Munich Agreement, the UK and France, still hurting from the Great War two decades earlier, allowed Germany to annex part of Czechoslovakia in the misguided hope that Hitler would be appeased and in the words of UK Prime Minister Neville Chamberlain, bring “peace in our time”. Within a year, Germany invaded Poland and the Second World War would not end till six years and more than 50 million lives later. One cannot help but notice the similarities a few weeks ago when Russia and the US met in Riyadh to talk about Ukraine — without the Ukrainians.

Now, in his second term, Trump seems more ready and is laser-focused on key issues of immigration, balance of trade, reducing deficits and shrinking the bloated bureaucracy — a job fronted by First Buddy Elon Musk, who is given unfettered access and power to wield the chainsaw.

Thus far, Musk has threatened to fire federal employees if they do not indicate five things they did in the preceding week via email. He has also tried to remove appropriations and budgets for various fiscal programmes that, traditionally, Congress, which sets the budget, is responsible for. Whether such actions survive the legal challenges or are validated by a compliant Republican Congress and Supreme Court majority is irrelevant.

For now, Trump has declared victory to his Maga base. Republican congressmen and senators who have misgivings about turning on allies, pardoning Jan 6 rioters and endorsing controversial Trump appointees, have stayed mostly compliant.

Meanwhile, the Democrats are left behind in shock and awe. In this organised chaos, it is more likely deliberate. Trump v2 needs to be taken not just seriously but literally. The juggernaut continues forward by kicking up so much dust and being thick skin enough to self-contradict a previous stand by taking credit as a clever win — even if it, in reality, a loss.

Trump, by unleashing shocking policy shifts — everything, everywhere and all at once — is not allowing the full media cycle to run. Before opposition or noise can take root, before considered commentary or review can start, the next drama is well on the way — be it firing generals or renaming the Gulf of Mexico. The White House is now The Apprentice on steroids. Except for businesses and Trump trade speculators, this show is starting to not look funny.

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Risk assets wobble
Many American CEOs and businesses were optimistic about Trump being good for business, growth and markets. Post-Nov 7, the US equity markets continued to make new highs despite already being an ageing bull market in its third year. What is there not to like? Lowering corporate taxes? Tick. Rolling back diversity, equity and inclusion? Tick. Fostering new industries like crypto? Tick.

On Mar 7, David Sacks, the White House Crypto and AI Czar (yes, that is his official title), will lead the first crypto summit or roundtable at the White House. Even so, Bitcoin has reversed course. It broke through US$80,000 ($108,104) days after Trump’s victory last November, having appreciated in anticipation of his win. Despite heading above US$100,000 and staying above it most of January, as chaos reigned in the new administration, it was back down to US$84,500 by the end of February. At least its fall has not been as dramatic as the Official Trump Coin which rallied when issued just before Jan 20 to US$75, and is now US$13.89.

Meanwhile, Musk’s Tesla is down 23% since the start of the year. At US$280, it is close to where it was before Trump’s victory on Nov 7. At 150 times P/E, this counter still looks extreme considering that its sales in markets across Europe have tumbled 45% from consumer boycotts and as his polarising DOGE crusade continues unabated. Those who joined the Trump bro trade but did not exit at its highs in December are US$200 off the US$480 high.

What about all the tech CEOs who “bent the knee” at Trump’s inauguration? The Nasdaq made a new high of above 20,000 points on Feb 17, but strains are starting to show as it dips below 19,000, the level it reached last November. Are markets losing faith in Trump? Or has the fear of the uncertain results of US policy on business, as described previously by Chew on This, coupled with record-high valuations, started to play out? We were cautious about companies which trade wars could impact. Taiwan Semiconductor Manufacturing Co and Nvidia Corp have felt the chill, and with market expectations built in so high in the stocks, even with record results, they too reversed.

Closer to home, Yangzijiang Shipbuilding (Holdings), having doubled in two years, was a superstar among the Straits Times Index component stocks. It gave back one-third of the value last week as the Americans started designing complex policies around charging for cargo at US ports based on the ownership and construction of the vessel.

Elsewhere, the additional 10% tariffs kicking in for China somewhat slowed the Deep­Seek rally in Chinese equity assets. A pullback or correction was deserved after a 10%–30% increase in leading and technology indices. Ironically, Feb 17, the same date as the then Nasdaq new high, was President Xi Jinping’s business symposium in Beijing. The list of invited CEOs in the second row included DeepSeek’s founder, Liang Wenfeng, and a potentially rehabilitated Jack Ma of Alibaba Group Holding.

Rates silver lining looms
All is not doom and gloom, however. Assuming that chaos is just deliberate noise by a president set about to achieve his core objectives, certain sectors may be in for a surprise. Trump had expressed dismay about the Fed not cutting rates last month due to worries over “Trumpflation” policies. However, Treasury Secretary Scott Bessent has made it clear that the market barometer he is watching is not the Nasdaq per se, TikTok, TSMC or any individual company. Instead, it is the 10-year Treasury yield.

Suppose Trump’s tariffs, disruptive DOGE cancellation of congressional appropriations and budgets, the withdrawal of USAID and military presence, plus US$5 million gold cards or US residency visas, kick in. These could reduce the deficit. If so, the long end of the yield curve may not steepen but could fall. Cuts to the Federal workforce, reduction in public spending and lowering of consumption that may follow repriced imported goods could lead to a slowdown and rise in unemployment.  

Unlike Singapore, where higher GST did not “turbocharge” inflation as some populist politicians here claim, Joe Biden’s policies of absolving student loans and huge fiscal spending did add fuel to supply chain disruptions and energy price inflation following Russia’s invasion of Ukraine. “Trumpflation”, as it turns out, may be disinflationary.

We were early last November warning about the precarious “Trump Trade”. Cracks abound and many prices are back where they started. Perhaps there is a genius in all this chaos. The way the economy is beginning to respond to his policies, Trump might get his lower interest rate wish sooner than the market expects. It may indeed be a parallel universe where boring domestic rate-sensitive stocks here get a boost.