Traders brace for Trump’s next 100 days

[UNITED STATES] As President Donald Trump embarks on the next phase of his second term, financial markets are bracing for the impact of his policies. Fast-money traders, known for capitalizing on short-term market movements, are closely monitoring the administration's actions, particularly in areas like trade, taxation, and regulation. While some see potential for profit, others express caution due to the inherent volatility and unpredictability associated with Trump's approach.

Market Volatility: A Double-Edged Sword

Fast-money traders often thrive in volatile markets, and Trump's unorthodox style has historically introduced significant fluctuations. His "from-the-hip" approach can lead to dramatic short-term moves in stock, bond, and currency prices, creating opportunities for traders who specialize in such conditions.

Recent data from the CBOE Volatility Index (VIX) indicates a sustained elevation in market anxiety, remaining above 20 for the longest stretch since early 2020. Analysts suggest this reflects a market pricing in both policy surprises and global uncertainty, including escalating tensions in the South China Sea and renewed instability in the Middle East. Fast-money players are now increasingly relying on options and hedging strategies to manage intraday risk.

However, this volatility is not without its risks. The first 100 days of Trump's second term have seen the S&P 500 experience its worst performance during a president’s first 100 days since Nixon’s second term, and the dollar index dropped by nearly 10%. Analysts like Keith Lerner from Truist Advisory Services caution that the market may be reaching a ceiling, with limited upside potential and a possible downside if recent lows are revisited.

Trade Policies: Tariffs and Their Implications

One of the most significant aspects of Trump's economic agenda is his aggressive trade policies, including tariffs on imports. While these measures are intended to protect domestic industries, they can also lead to higher prices for consumers and retaliatory actions from other countries, potentially disrupting global supply chains and hindering growth.

A recent report from the Peterson Institute for International Economics warns that additional tariffs on Chinese semiconductors and rare earth materials could significantly affect U.S. tech manufacturing, which is already grappling with post-pandemic supply chain delays. Industry leaders from the Semiconductor Industry Association have urged the administration to reconsider the latest tariffs, citing potential job losses and innovation slowdowns.

The impact of these tariffs is already being felt in sectors like technology, retail, and automobiles, which rely heavily on global supply chains. The increase in input costs could lead to higher prices for consumers and slower growth in these industries.

Tax Cuts and Deregulation: Stimulus or Inflation?

Trump's promise of lower corporate taxes and looser regulations in critical sectors like energy, technology, and financial services is expected to fuel investor optimism. However, experts like Nigel Green warn that inflation, spurred by both fiscal stimulus and proposed infrastructure spending, could counterbalance any initial gains in the stock market. Rising inflation may lead to higher interest rates, increasing borrowing costs and potentially suppressing consumer spending.

Meanwhile, some economists argue that the proposed tax reductions could increase the federal deficit beyond sustainable levels. According to the Congressional Budget Office, the projected deficit for fiscal year 2025 could exceed $2.3 trillion if proposed tax measures are enacted without corresponding spending cuts, potentially triggering further credit rating concerns and long-term economic instability.

Consumer Sentiment: A Growing Concern

Despite the administration's economic policies, consumer sentiment is showing signs of strain. The University of Michigan’s consumer sentiment index has steadily declined in 2025, and the Economic Policy Uncertainty Index has nearly doubled. Factors contributing to this decline include concerns over inflation, potential stagflation, and the impact of trade restrictions on China.

Retail sales figures from the Commerce Department show a 0.8% decline in March—the third consecutive monthly drop—reflecting growing caution among consumers. Economists note that high interest rates and persistent price pressures on essentials like food and fuel are weighing on middle-income households, limiting discretionary spending and slowing economic momentum.

Strategic Outlook for Fast-Money Traders

Fast-money traders are adopting a cautious yet opportunistic approach as they navigate the current market landscape. While the volatility introduced by Trump's policies presents opportunities for short-term gains, the associated risks require careful consideration. Traders are advised to stay informed about policy developments, monitor market reactions, and adjust strategies accordingly to capitalize on potential opportunities while mitigating risks.

In light of these uncertainties, institutional trading desks have reported increased demand for algorithmic strategies designed to execute trades in response to geopolitical headlines. Hedge funds are also leveraging machine learning models to scan policy speeches and press briefings for predictive indicators of market moves, emphasizing the growing role of AI in navigating a complex trading environment.

The next 100 days of President Trump's second term will be pivotal for financial markets. Fast-money traders, while recognizing the potential for profit, must remain vigilant to the risks posed by the administration's policies. By staying informed and adaptable, traders can navigate the complexities of the current market environment and position themselves for success.