Slightly over a year ago, CNN hosted a debate between then-President Joe Biden and Former (and current) President Donald Trump. President Biden’s approval rating heading into the debate was already low. The Pew Research Center’s survey in April of 2024 showed that the number of U.S. adults who disapproved of his performance as President vastly outnumbered those who approved. Times/Siena polls suggested Trump led Biden by about 3% among likely voters ahead of the debate, and that lead widened to 6% after Biden’s poor peformance and ultimately, he bowed to pressure from his own party to withdraw from the race. It was at this point, when the prospect of Trump returning to the White House went from possibility to probability, that economists and investors really began to weigh in on the implications of “Trumponomics” 2.0. Much of what was published at the time expressed significant concerns about some of his proposals, so much so that on July 11th, 2024, the Economist published an opinion piece entitled, “Trumponomics would not be as bad as most expect.” The authors taking a fairly balanced view said, “Mr. Trump and his advisers have many rotten ideas. They also have some decent ones.” This week marked two milestones. It has been six months since Mr. Trump was once again sworn in as president of the United States, and the S & P 500 just hit another all-time high. We are also kicking off the first earnings season, where publicly traded companies will report a full quarter’s worth of operating results under the new administration. .SPX 1Y mountain S & P 500 , 1 year During this period, the markets experienced historic volatility induced by policy proposals. However, did the chaos we observed in stock prices reflect chaos in corporate operating results? Early indications from both economic data and the ~10% of the Russell 3000 that have reported so far since July 1st are actually pretty good. A higher percentage of companies that have reported since July 1st of this year gave a positive revenue surprise, a smaller percentage reported a negative earnings surprise, the percentage above consensus for both revenues and earnings is higher this year, and earnings have averaged 10.9% growth YoY, well above long-term growth rates. So was The Economist right? Here are some points to consider. While tariff threats have been substantial, we still don’t know where exactly that will land. The government has benefited from additional tariff revenue, and some price increases are being seen. One potential reason revenues and earnings could rise is that businesses are pricing products in anticipation of tariffs, but due to delays, the impact has not yet been fully felt. Economists warned of another inflationary impact. Cracking down on illegal immigration would increase labor costs. So far, this too does not appear to be creating huge disruptions, but while border crossings have slowed to a trickle, deportations, while causing a bit of a political firestorm in some cities, have a real impact that is muted because, by its own reckoning, the White House claims 100,000 deportations since January 20th. At that pace, the administration won’t be able to deport even 10% of those who entered the country illegally under Biden, and because they are (supposedly) focusing on criminals, those deportations are not likely to impact wages paid at legitimate industries (yet). While the White House has been highly critical of Fed rate policy generally and Chairman Jerome Powell specifically, and the next appointee is likely to be more aligned with Trump’s rate wishes, FOMC rate policy is still by committee. History has not been kind to political interference in central banking activities, and it’s likely that even if the new chairman adopts a more dovish stance, the FOMC will remember the mistakes the Fed made during the Arthur Burns era. If they do vote to cut rates, I believe it will be based on inflation and employment data, not White House rhetoric. Deficits remain a complete disaster. Where in the past the predominant parties would at least pay lip service by either demanding higher taxes or lower spending, that appears to be out the window in DC these days. Valuations in several sectors are well above long-term averages relative to the market and to their own sector history. The most notable exception is healthcare. Time to hedge? Any or all of these factors could reemerge as a threat to equities, and while there are still several weeks until Labor Day, it’s worth remembering that September and October are months that have seen significant volatility in past years. With the CBOE Volatility Index (VIX) just over 15 as I write this, below the 10-year average of 18.6 and in the 39th percentile, now might be a good time to consider adding some hedges, either to high-flying constituents of one’s portfolio via put spreads or, more generally, by purchasing some relatively low cost put spreads on an equity market proxy, such as SPDR S & P 500 ETF Trust (SPY). For example, the Sep 30th, month-ending 630/600 put spread, which expires in 67 days costs less than 1% of the underlying. DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . 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