Treasury Secretary Scott Bessent recently highlighted the confidence that individual investors have in President Donald Trump’s tariff policy. Despite the market turmoil and panic among institutional investors, Bessent noted that individual investors have held steady in their positions, demonstrating their trust in Trump.
Bessent referenced Vanguard, a prominent money management firm, which reported that 97% of Americans have not made any trades in the past 100 days. This data suggests that individual investors have faith in Trump’s approach to tariffs and the economy.
The recent rollercoaster in the stock market, triggered by Trump’s tariff announcements and subsequent suspension, led to a significant sell-off. The S&P 500 briefly entered bear market territory before rebounding slightly, with the index currently sitting about 10% below its all-time high in February.
Amidst the market turmoil, retail investors seized the opportunity to buy stocks at discounted prices, while hedge funds and professional traders opted to exit the market and increase bearish bets. Institutions, on the other hand, are concerned about the potential impact of steep tariffs on consumers and the overall economy, fearing a possible recession.
Economists like Torsten Slok from Apollo foresee a summer recession in the U.S. as trade-related shortages start to affect consumers next month. Ken Griffin, CEO of Citadel, warned that Trump’s trade policies could damage the reputation of the U.S. and diminish the appeal of U.S. Treasury debt.
The differing reactions of individual and institutional investors to Trump’s tariff policy reflect the uncertainties and risks present in the current economic landscape. Despite the market volatility, individual investors remain steadfast in their trust in Trump, while institutions brace for potential economic challenges ahead.
