Swamp Notes: Trump’s next 100 days
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We are now more than four months into President Donald Trump's second term. It's not a neat landmark, like 100 days, but it's a good time to look back because the last three weeks have brought us some relative calm.

We have answered some questions like, will the U.S. find a way to negotiate with China? For now, yes. Will the markets rebound after the initial, quote unquote, Liberation Day tariffs? For now, yes. And yet these answers don't really have the feel of being totally final. This is Swamp Notes, the weekly chat show from the Financial Times, where we talk about U.S. politics, finance, and the economy. I'm your host, Mark Filippino. And this week, we're doing a live show and we're asking, what will the next few months of President Trump be like?

Here with me to discuss is Katie Martin. She's our markets columnist and the co-host of the FT's Unhedged podcast. Hey, Katie. Hi. And we've also got Chris Giles with us. He's the author of the FT Central Bank's newsletter and an economics commentator for the FT. Hey, Chris. Hey. Okay. So before we get into the next few months, I want to ask you how you would describe the last few months. Did you see any of this coming? Yeah.

Well, I think we knew it was going to be lively and chaotic, but I don't think anybody hand on heart can say that they predicted what the first few months of the Trump administration have been like.

You know, I wrote at the start of the year, actually, that this was going to be a year when investors were, and all the rest of us, frankly, were just operating with, you know, blindfolded. Like we just did not know what was going to happen. And the landscape in front of us was like scattered with rakes. And that's exactly what's happened. We've just been like stumbling into one rake after another for the past few months. Chris?

Well, we knew it was going to be sort of bonkers. And we knew ahead of time, for example, that tariffs would be a big thing because they had been in the campaign. And what Donald Trump had said in the campaign was going to be like, you know, decades big back to the 1930s.

But we all thought, oh, that's just in the campaign. That's exaggerating for effect. So it won't be that. We knew that what we're currently undergoing, a budget negotiation, that might be quite important as well. And we knew sort of that there might, in my world, we're thinking about the central banks, there might be quite sticky moments for the Federal Reserve, and that's the US central bank situation.

And we sort of had an idea, because Trump has been president before, that you won't go through the normal checks and balances of the US system where there would be things like a council of economic advisors, discussion papers, slow processes. So I think what's really surprised us is, one, how feeble Congress has been. We don't hear almost anything from Congress at all. And second, how much like a medieval court,

the Trump administration is. So it's about battling for power behind the scenes to have the ear of Trump for five minutes or so, and then he'll make a decision. You brought up central banks. I think one of the key themes that we've talked about a lot on our show is the idea that Donald Trump is going to

Or if he wants to remove Jay Powell, the pressure on Fed Chair Jay Powell to cut interest rates. And if he doesn't, he will replace him. And the thing that I take away from that is, can he do that? Not just for the Federal Reserve, but just generally putting out policies without congressional approval, saying things and then backtracking them and then going forward. How do you handle that when everything is a big question mark?

Well, I mean, that is a particularly big question, Mark, and I spent quite a lot of time in March having a really good look at what the constitutional protections are for some of these people. And I think what we learn is that people aren't as quite as protected as you might think. Now, I think what the Fed chair, Jay Powell, which is quite interesting, is that

Where we sit today, at this moment, he's quite safe because Donald Trump has said he doesn't want to fire him after having flip-flopped a bit on this in the past couple of months. But equally, at the same time...

The administration is trying to fire three or four other officials who have exactly the same constitutional protections, and that is going through the court system. Supreme Court, right? Well, it's actually in the appeals court. It's gone back to the appeals court. It will go to the Supreme Court.

Absolutely will. It's quite likely with the majority on the Supreme Court that they might side effectively in favour of the President and against Congress because the protections that these people have, including everyone on the Fed, come from laws passed by

uh by congress and the question is are those laws constitutional or not and that's what we'll find out the moment if the supreme court says they're not constitutional well then loads of officials in who have sort of delegated powers suddenly at the whim of the president can be fired

When we talk about Trump, I feel like I see the word whipsaw to describe markets maybe every day. Yeah. In particular, there has been a lot of focus on the strength of the dollar. Yeah.

Tell me a little bit about that. I mean, that again is a really novel thing coming out of the presidency. So let me deal with the sort of whipsawing bit of that first. What we've seen from Trump in his opening months is some pretty crazy pronouncements about, I want to get rid of Jay Powell from the head of the Fed, which if you're not a kind of market savvy person, let me tell you, this is third rail stuff. That's scary. You don't just get rid of the Fed chair. Right. It's just simply not a thing that happens with...

and results in anything good.

And also with the tariffs, right, we saw these like really supersized tariffs on every country around the world, including islands that are inhabited exclusively by penguins. Yes, I saw that. And the rates were incredibly high. And both in relation to the Fed and in relation to the tariffs, markets did not like this stuff at all. So the stock market started falling really heavily. More importantly, the bond market started to get into a little bit of trouble. Yeah.

And so in both of these cases, Trump backtracked. So markets now feel like they've got the measure of Trump and you've got this thing called the taco trade, right? Trump always chickens out. And so people feel now like,

Like, oh, it's okay. He's only joking. He's not going to follow through with this. Like, we're only a couple of weeks away from him saying he was going to tariff foreign movies. Kind of like the boy who cried wolf sort of thing. So there's a boy who cried wolf thing going on. So markets feel like they can face him down on things. But...

In relation to the dollar, this is really important because when bad stuff happens, like tariffing penguins, for example... There's seals there too. Yeah, there are some seals, yes. But it's quite natural that stocks would fall based on that because this is just, you know, a completely standard market reaction to what seems like flaky decision-making and poor decision-making at the top of the US government. So it's perfectly normal for stocks to weaken in that sort of environment. But

The thing that is really worrying is that at the same time, US government bonds have been falling and the dollar has been weakening. So normally bad stuff happens means that dollar and bonds go up. That's not happening now. And that tells you that investors are not just worried about flaky decision making processes. They're worried about what that means for the centrality of the US in the global financial system.

And that's quite a scary question to be asking. It's like, can I really trust the dollar? Can I really trust US government bonds, which have been the bedrock of the system for decades? This is your safe place to go when something bad happens. You can always go to US government bonds. That's not working out so well right now. So investors that I speak to,

are not just asking questions like, oh, I wonder what tariffs are going to mean for inflation, kind of standard kind of finance wonky stuff. They're saying, okay, I'm a European investor. I've got lots of money parked in the US. Can I one day bring that back again? Or is Donald Trump going to tax it on the way out or stop me from being able to bring it home? I

I cannot overstate how ludicrous a question that is and what a mad situation it is that we've got to the point where sensible, normal people are asking really heavy questions like that. So I'm looking at you with quite an accusatory tone. You're the token American. Account for this mess. Sorry, guys. It is all my fault, to be fair. But this is how foreign investors are viewing this whole situation. So a lot of US investors that I speak to are like,

This whole situation is super embarrassing and bad, but don't worry. It's a blip. We will get back to normal. The USA will regain its crown in global markets. And foreign investors are like, oh, I think you might have screwed this one up, guys. I'm not sure we can go back to normal ever.

I'm glad that you brought up the investors that you talked to because we were chatting before this panel started about our jobs and how much harder it has become to do our jobs, which require quick turnaround. Swamp Notes is recorded and produced same day. The FT News Briefing, the other show that I produce, it's all done in the same day.

And from my perspective, it's very difficult to plan ahead and produce a show. And I want to know how you guys are affected in your roles. Well, I'll give you an anecdote from late January. So the first weekend after the inauguration, I was on a very nice trip to Venice with my wife.

And my newsletter comes out on a Tuesday, so I'd done it in advance, and that normally is relatively safe. And as we were sitting having a glass of wine overlooking the northern Italian plain, I saw that Donald Trump had announced tariffs on Canada, Mexico, and China, which were way, way bigger, because that's 60% of US trade. So that's really, really big. And you just thought...

That means, right, I've got to do it again. When we get home, can whatever you've done start again? You can't ignore something like that. That's utterly important for inflation, for what the Fed might do to interest rates, how other countries are going to respond, particularly Mexico and Canada. And then the whole global implications of that, what does it then mean for elsewhere? You've got to cover all of that. And

It means you just can't plan ahead. So it's made our lives miserable, I think, is the up and down of this. I was trying to avoid that word, but yeah. Yeah.

Won't anyone think of it? It's been a tough go of it. Think about the podcasters. Think about the newsletter writers. Yeah, think about us, Giles. Think about Mrs. Giles and her nice holiday to Venice. But yeah, that's absolutely it. Like I, you know, I always try to be a good soldier and write my pieces a little bit in advance and make sure that I'm not like filing copies sort of last minute. Yeah.

But now you have to file everything last minute. And, you know, it's not all about us. But what that means is that if we're operating like that as journalists and columnists and podcasters, like real people who manage your pension and manage our investments, they're in exactly the same situation where they just do not know which way is up. And that's why you've got really quite volatile markets everywhere.

Generally, when markets are volatile, something somewhere will break at some point. Something bad will happen. You don't like straight lines that go up or straight lines that go down. Not good. What are the stories that you guys are focusing on right now and I guess for the next few months?

The funny thing is we used to do other things, right? We used to sometimes think and talk and write about stuff that is not the Trump administration. And now it's the only thing that's in front of us. It's the only thing that matters in the global economy and in global markets. You're going to have a real tough time with Out of the Swamp where I ask you literally about another story that doesn't have to do with Trump in DC. So that is kind of getting, that is getting quite wearing. But yeah, the,

The other like sort of big story that comes out of this is for investors, at least it's like, okay, if not the US, then where, where do I want to park my money? Who do I trust? And increasingly the answer to that question is Europe.

And I've been doing this stuff for a long time, and I have never seen European markets perform this well compared to the U.S. But there are certain factors. Why Europe? Can you unpack those a little bit? Well, it's not the U.S. Well, that's genuinely the main one. Is that it? Anything but the U.S. So it's not good. It's just not the U.S. That is genuinely reason number one. Reason number two is that...

We do appear to be crawling slowly towards some sort of ceasefire in Ukraine, which would be unambiguously good news for Europe. And related to that, Europe has figured out that we can't rely on our friends in America anymore and that we do have a hostile actor to the east in the form of Russia and that therefore Europe has got to massively up its spending on defence and on infrastructure and we can't rely...

necessarily on US tech to do that for us. So there is a kind of homegrown splurge of spending on stuff like defence and infrastructure, particularly with Germany, which has always been allergic to spending money. Suddenly it's got the memo, thank God. And it's hard to see how this is not good news for the European economy. This is effectively a big injection of stimulus from taxation that should, fingers crossed,

be positive for growth in Europe. So yes, it's not the US, but there is a good story there also. Chris, what about you? Before we started, we were talking about the big, beautiful bill. Yeah, so this is something that Congress is actually looking at right now. It's about its budget, which is going to be a budget for a reasonable amount of time. And in the way the US does it, they have to at least look forward 10 years. And

And while the details are going to change in the next few days and then it's not necessarily going to be sorted for a while, I think what we know is that we heard in the first couple of months of the Trump administration all talk about Elon Musk, Doge slashing various bits of US government. Well, in the end, I mean, what is the US government? It's really a massive insurance company with a military attached.

And all the things were cut were outside that zone. So the insurance companies, basically health insurance and old age insurance is what the US government does. Not so much of that is going to be touched because that's what's really expensive, the rest of it. And so in the end, we're going to get some tax cuts. Some of them are extensions of tax cuts that Trump put in in 2017. But we're going to have less taxation.

and probably not much less public expenditure. And that means ultimately there's going to be a little bit more stimulus going into the US, almost certainly at a time when the US has still got a bit of an inflation problem. And that might then mean

It's likely to get a bit worse with some tariffs, and that's going to complicate the whole story we've had since 2023, which has been a disinflation story. So we've had horrible inflation around the world, and it's been going away gradually, a little bit too slowly for lots of people's liking, but it's been generally ebbing away. And the worry now is that that might turn.

How are we seeing tariffs shake out? I mean, we're in this kind of holding pattern for a lot of it, this 90-day period for so-called reciprocal tariffs. I mentioned the deal with China from a few weeks ago. What are you seeing coming out of this right now? You know how I said that we don't know? Yeah. I don't know. Oh, man. There goes the rest of my questions. We might wrap early, guys. But look, so yeah, we have had...

We've had successful talks with the UK, successful talks with China. There has been a cooling down of the heat from this situation from tariffs. But as you say, we are currently on a 90-day pause in the penguin-focused, extremely aggressive tariffs. I'm not sure how many days we are through that now. I think it expires in early July. Yeah, so I think we're sort of about six weeks away from these things happening.

potentially coming back into force. And again, when I speak to analysts and investors, they say, well, I don't know what happens on day 91. Are we back to those tariffs? Are they going to be enacted? And one of the weird things that's going on in markets now is that, again, taco trade, Trump chickened out, he paused the tariffs, he stopped threatening to fire Jay Powell from the Fed, and markets shot higher. Now,

You can question whether that shooting higher is rational and whether it's going to survive that experience when we do hit day 91. There is a fair amount of concern out there that if he does go back to plan A and put these tariffs in place, it's worth bearing in mind he's been talking about tariffs since the 1980s. This is not a new thing for Donald Trump. This is one of the few things he truly believes is that tariffs are a good thing. So if he goes back to plan A, all bets are off.

Well, what do you think that does to his base, right? Trump got elected largely on the fact that he promised to bring down inflation. That was one of his key selling points was, I'm going to fix the inflation that was created by former President Joe Biden. And now we're still in an inflationary environment. It doesn't look like the Federal Reserve is going to cut rates anytime soon. What does that do to his platform and his base, especially with the midterm elections coming up in a little bit more than a year? I think that

It can go two ways. I mean, there's one way of thinking about it is that if you are going to get some inflation, and we're not talking about the levels of inflation back to where they were in 21, 22. We're not talking sort of 8%, 9% because the tariffs aren't big enough and the US doesn't import enough for that to work out. Unless, of course, US companies say, hey, this is an opportunity. We can raise our prices, get a bit more profit because we can blame it on the tariffs, even though it's got nothing

nothing to do with the tariffs at all. So there is quite a bit of evidence that companies will try it on and it's probably easier to try on now because we've just had a bout of inflation. So people will accept excuses in a way they might not have done before. So that is a definitive risk. We're not seeing it yet, but we could.

So that's one question. And so if you get quite a bit of inflation, there's sort of threshold points when the public really notice inflation. So the Fed tries to target 2% a year. And that's a sort of a level where people can forget about price rises. It's not important. They don't have to worry about them in their daily lives.

The threshold where people tend to worry about is about three, three and a half. If it goes above that, then you have to think about, I need a pay rise out of my company because I can see I'm getting poorer and it's not something I can just absorb. So when you get to that sort of level, and it's not just a US thing, this happens pretty much anywhere, then people notice prices. And that is going to be difficult for his base because they are often not necessarily people who can absorb money.

the price increases. But also his base, the thing that goes against that, his base are incredibly loyal and loyal to him. And so they might suck up whatever excuse he comes up with. And so that's why, again, I think we don't know which way it's going to go. You can say there's these two forces, but I don't know which one's going to prevail. Kitty, what do you think?

I mean, as you say, he was elected at least partly on the basis that he promised to bring down inflation. And what we saw with all the many, many elections that we had around the world last year is that incumbents got carted out everywhere because voters hate inflation. And they will blame whoever is in power at the time for that inflation. But Trump does have this mercurial ability to just...

deflect the blame for anything. And so one of the really interesting things he's been doing over the past few days is that when one of the big supermarket chains out in the States, I think it was Costco? No, it was Walmart. It was Walmart, said, okay, you know, we've got higher input costs now. We have to pay more for stuff because you've got tariffs on everything. And so, you know, sorry folks, but this is going to land on your grocery bill.

They got carved out by the president who was saying, no, no, no, absolutely not. You're a company that makes billions of dollars a year. You can eat the cost yourselves. You've got no excuse for putting prices up. So all of a sudden you've got this supposedly very pro-business president who is telling people,

big companies, big employers to just chew down on massive cost increases, which Trump said China was going to pay anyway. So none of this stuff makes any sense. Again, the framework is very difficult to discern. But if there is a big rise in inflation over the next few months, then yeah, that's going to get very sticky for the midterms. All right, guys, I think we're going to take a quick break now. And when we come back, we're going to do Out of the Swamp.

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This guided program includes online content and audio exercises for an even more in-depth journey. The Mindfulness Habit by Lisa Wren, available now at blackwells.co.uk. All right, we are back with a segment where we ask our guests to tell us about a story they're following that doesn't have to do with US politics out of the swamp. Let's do this rapid fire, guys. Katie, what are you following?

I'm not so much following as doing. I'm seeking solace in community gardening. Oh, that's great. What kind of stuff do you grow? So myself and a few neighbours look after little patches of little pocket gardens down our road and make things look nice and...

It's quite a nice escape from thinking about this stuff five days a week. Oh, that's great. Chris, what about you? Well, on the personal theme as well, I'm very excited for Monday afternoon because the League Two playoff final between AFC Wimbledon and Walsall is taking place at Wembley and I'm going to be there supporting AFC Wimbledon, which is where I grew up. And it's the first time I go back to Wembley since they won the FA Cup in 1988.

That's great. I hope you have a good time. As for me, I'm going to go with gardening as well. I've become a real suburban dad and I take immense joy out of mowing my lawn, which will be overgrown by the time I get back. This is Swamp Notes, the US politics show from the FT News Briefing. If you want to sign up for the Swamp Notes newsletter, we've got a link to that in the show notes. Thanks to our guests this week, Katie Martin and Chris Giles. We have links to their respective columns, podcasts and newsletters also in the show notes.

Our show is mixed by Sam Giovanko and produced by Katya Konkova. We had help this week from Misha Franco-Duval and Edwin Lane. Special thanks to Pierre Nicholson. I'm your host, Mark Filippino. Our acting co-head of audio is Topher Forges. Original music by Hannes Brown. Check back next week for more U.S. political analysis from the Financial Times.

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