Trump’s Bull Market: It’s Been Fun, Right?

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Okay, let’s talk about the stock market. It’s been doing that thing it does, which is mostly going up, especially while Donald Trump was, shall we say, occupying the White House. The Dow, S&P 500, and Nasdaq? They’ve been on a bit of a tear. Like a contestant on a reality show who suddenly discovers they’re good at something. During Trump’s first term, we saw gains of 57%, 70%, and a frankly embarrassing 142% respectively. It was… a lot. And it’s continued. Since January 20th, 2025, we’ve seen another 14%, 15%, and 16% bump. Honestly, at this point, it feels less like investing and more like a really elaborate game of chance.

The usual suspects are to blame, of course. AI, quantum computing… the usual techno-optimism. And let’s not forget the Tax Cuts and Jobs Act. Lowering the corporate tax rate to 21%? It’s like giving a toddler a credit card. Sure, they’re thrilled, but everyone else is bracing for impact. And the resulting share buybacks? Over a trillion dollars. It’s a good time to be a shareholder, if you can ignore the nagging feeling that this is all just… unsustainable.

But here’s the thing. Every party ends. And while everyone’s focused on tariffs and valuations (yawn), I’m looking at something a little more…interesting. The Federal Reserve. Yes, that Federal Reserve. The one that’s supposed to be the boring, reliable adult in the room. Turns out, they’re starting to look a little…fractured. Like a family trying to decide where to go for Thanksgiving.

America’s Foremost Financial Institution: A Potential Powder Keg

Normally, the Fed is Wall Street’s safety net. They’re supposed to maximize employment and stabilize prices. It’s a straightforward task, guided by economic data. Except, lately, it feels less like guiding and more like herding cats. Over the last seven months, this financial bedrock has started to… wobble. It’s like realizing your accountant is also a competitive eater.

Wall Street cares about one thing: credibility. The FOMC (that’s the Federal Open Market Committee, for those keeping track at home) makes decisions based on…past data. Which is like driving a car while looking in the rearview mirror. It works, until it doesn’t. Investors have tolerated this lag, mostly. But only if everyone agrees on which direction to go. And right now? They do not.

Since July 2025, we’ve seen dissents at every FOMC meeting. At least one person disagreeing. In October and December? They disagreed in opposite directions. It’s like a sitcom writers’ room, except with trillions of dollars at stake. There have been only three meetings since 1990 with opposite dissents, and two have occurred since late October. A lack of clarity at the Fed is… not ideal.

And it’s about to get worse. Jerome Powell’s term is ending, and President Trump’s nominee, Kevin Warsh, is… let’s just say he has strong opinions. He wants to shrink the Fed’s balance sheet. Which sounds sensible, until you realize that shrinking the balance sheet means higher interest rates, which means…well, you get the picture. It’s like trying to diet while working at a bakery.

The Nonlinearity of Stock Market Cycles: A Long-Term Perspective

Look, it’s not all doom and gloom. Bull markets end. Bear markets happen. It’s the circle of financial life. But here’s the thing: bear markets are usually short-lived, while bull markets tend to drag on. Analysts at Bespoke Investment Group looked at data going back to the Great Depression, and the results are pretty clear: corrections are temporary, while long-term growth is…well, long-term. It’s like choosing between a quick fling and a solid relationship.

There have been 27 downturns of at least 20% in the S&P 500 over the last 96 years. Only a third lasted more than a year. The average bear market lasted about nine and a half months. By comparison, 10 of 27 bull markets lasted over 1,200 days. The average bull market lasted over three and a half times longer than the average bear market. So, while the Fed looks like a potential powder keg right now, the long-term outlook for equities remains…surprisingly optimistic.

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2026-02-22 14:12