Trump to develop a budget

Summary

President Trump stated, ‘We will make a budget,’ following a series of major policy proposals.Zhitong These include a plan to increase the 2027 military budget by 50% to $1.5 trillion, funded by tariffs, while asking defense firms to halt buybacks.etnet+ 2 He also concurrently pushed for a $200 billion tax cut, bank deregulation, and intense pressure on the Federal Reserve for rate cuts.Wallstreetcn Other proposals floated include allowing 401(k) withdrawals for home down payments, a 10% cap on credit card interest rates, and a potential ban on stock buybacks for builders.Sina Finance+ 2 This aggressive stimulus is expected to boost short-term growth but raises concerns about long-term debt, financial risk, and the erosion of Fed independence.Wallstreetcn+ 2

Impact Analysis

This isn’t a budget; it’s a chaotic pre-election stimulus blitz. They’re throwing everything at the wall: a 50% defense spending hikeetnet, tax cutsWallstreetcn, and populist candy like 401(k)-for-housing schemesSina Finance and credit card rate caps.Sina Finance The story is that tariffs will pay for itetnet, but the reality is a massive wave of debt is coming.

More importantly, they’re simultaneously trying to neuter the Fed, calling Powell ‘incompetent’ and threatening his job to force rate cuts.Sina Finance This is a classic emerging-market playbook: fiscal dominance where the central bank is forced to print money to fund government spending. The combination is wildly inflationary. The market is cheering the stimulus but seems to be underpricing the institutional decay and long-term debt risk.Wallstreetcn The clearest trade is a yield curve steepener. Stay long defense stocks, but the threat of rate caps makes financials a minefield. This whole strategy screams for a higher risk premium on US assets.