The Strategy Page: President Trump Edition

At a glance:

1. Majority Rule… Sort Of
2. #Tariffs: More Bark Than Bite?
3. #Tax Cuts at What Price?
4. Interest Rates and T-Bills: The Strange Case of Mixed Signals
5. What It All Means: The Big Contradiction
6. For Vistage: #Technology Trends?for 2024 and beyond
7. For Vistage: #Ecological Trends?for 2024 and beyond
8. Insurance Conundrum
9. Book – Momentum: How Companies Decide What To Do Next

Note: We will not provide any partisan commentary.

Where to begin?

After the most contentious U.S. election of our lifetime, we find ourselves in familiar territory—pundits scratching their heads, polls falling short, and business leaders wondering what it all means.

Majority Rule… Sort Of

As of this writing, it appears Republicans will hold a razor-thin majority in both the House and Senate. A handful of moderates will wield enormous influence, much in the way Joe Manchin did in the last Congress. Expect a similar dynamic, only now with a few GOP senators such as Susan Collins of Colorado acting as the adults in the room.

The upshot? Don’t count on a unified, aggressive agenda from Congress. Legislative moves, especially anything sweeping or controversial, will need to pass the “moderate test,” which will slow down any bold policy shifts. This will take some bite out of Trump’s campaign promises.

Tariffs: More Bark Than Bite?

The President Elect never saw a tariff he didn’t like. Many economists believe his proposals are merely a negotiation tactic. The president?does?have the ability to impose tariffs unilaterally.

For businesses, the impact of tariffs is more nuanced than headlines suggest. A 60% tariff on Chinese goods would certainly be countered with a tariff on U.S. goods. Some of the tariffs get absorbed into profit margins, some are passed onto consumers, and some get offset by a strong dollar, which makes imports slightly less painful. Bottom line: unless you’re heavily dependent on Chinese imports, don’t panic. Tariff negotiations could create short-term fluctuations, but the probable impact is far less than what we see in the news. Also, in Trump’s first term, tariffs didn’t take effect for roughly 9 months.

Tax Cuts at What Price?

There was plenty of talk about tax reform this election season, and with the Tax Cuts and Jobs Act due to sunset in 2026, it’s a front-burner issue. Republicans campaigned on tax cuts, and they’ll make moves to deliver on that promise. But here’s where the plot thickens: the U.S. debt has now reached a staggering $35.9 trillion, and deficit hawks are squeamish at the idea of piling on more.??

The numbers don’t lie. Our national debt now accounts for roughly 120% of GDP, and the federal deficit has been expanding like it’s on a crash diet of stimulus and spending. Given this backdrop, expect tax reform to bring modest cuts.

Interest Rates and T-Bills: The Strange Case of Mixed Signals

Last week the Federal Reserve cut rates again—a move that traditionally signals cheaper borrowing. But here’s the twist: instead of following suit, mortgage rates have edged up in recent weeks. The reason lies with Treasury Bills (T-bills), which have yielded higher returns as investors demand a premium for buying government debt. In fact, T-bill yields are hovering close to 5%, creating a scenario where conservative investments look more appealing in a euphoric equity market.

What It All Means: The Big Contradiction

The markets had priced in 4-quarter-point cuts next year. But if you buy that both tax cuts (which spur economic activity) and tariffs are inflationary, how could the Fed cut more? Powell is clearly in a pickle, as his priority is to curb inflation.

But know that 2025 is already baked, and the impact of tariffs and tax reform are to take hold in 2026. As the old saying goes, the devil is in the details.

By Marc Emmer for Vistage: Technology Trends?for 2024 and beyond

As we look forward to 2024, our technology narrative has been consumed by AI. However, we must remember that AI is only a component of a broader digital revolution that includes blockchain, quantum computing, nanotechnology, synthetic biology, robotics, 3D printing, AR/VR, and other emerging innovations.

Read more

By Marc Emmer for Vistage: Ecological Trends?for 2024 and beyond

While large-scale weather events are hardly the only measure of climate change, their accelerating frequency and magnitude cannot be ignored. In 1980 there were three $1-billion weather catastrophes in the U.S. Last year there were 18, including Hurricane Ian, which cost $114 billion.?Economists point at the lagging cost of disasters including health care and insurance premiums, which don’t factor into these estimates.

Read more

Insurance Conundrum

Book by Marc Emmer – Momentum: How Companies Decide What To Do Next

In a world of volatility and hyper-competition, management teams face gut-wrenching decisions about how to grow, where to diversify and when to take on risk. As soon as a company establishes competitive advantage, its strategies are copied by competitors, requiring them to reinvent themselves once again.

Momentum offers the secrets of high-growth companies and practical techniques that management teams can use to chart their course and seize the opportunities ahead.

Purchase on Amazon

The Strategy Experts

Marc Emmer ?is President and Chief Strategist & Facilitator at Optimize Inc.

He is an author, speaker and consultant recognized as a thought leader throughout North America as an expert in strategic planning.