Changes Through Executive Orders

President-elect Donald Trump is preparing to issue a series of executive orders immediately after his inauguration, leveraging executive authority to prioritize key policies related to immigration, energy, and government reform.

  • The planned actions aim to underscore the urgency and ambition of his administration's agenda.
  • The planned executive orders are expected to bring significant changes to immigration, energy, and federal employment policies, bypassing Congress to enact immediate reforms.

According to Republican officials briefed on the plans, these measures reflect the incoming administration’s intent to reverse policies established under the Biden administration and implement new directives that align with Trump’s campaign promises.

Border Security and Immigration

One of the central initiatives involves declaring a national emergency on the U.S.-Mexico border, unlocking additional Pentagon funding and resources. Plans also include redeploying troops to assist in border infrastructure development and reviving the Remain in Mexico policy, which mandates that asylum seekers remain in northern Mexican cities while their U.S. court proceedings are underway.

  • In addition to these measures, Trump is expected to designate drug cartels as foreign terrorist organizations and introduce new restrictions on entry into the U.S., potentially through a travel ban.
  • While details on the travel ban remain unclear, the broader immigration enforcement strategy includes raids in major cities such as Chicago, Boston, Washington, D.C., Miami, Los Angeles, Denver, New York, and San Antonio.

The scale and specifics of these operations are still under discussion.

Federal Employment & Energy Policy

Reforming federal employment practices is another cornerstone of the president-elect's agenda. Trump plans to reinstate Schedule F, an executive order initially issued in 2020, which eliminates certain job protections for federal employees and streamlines the process for terminating staff. The Biden administration had blocked this order, but the incoming administration intends to revive and expand its scope.

  • The administration also aims to prioritize energy independence by declaring a national energy emergency and rolling back Biden-era restrictions on drilling and fossil fuel production.
  • The planned directives will focus on reversing policies that promote electric vehicles and reallocating resources currently dedicated to addressing climate change.

According to those familiar with the plans, these initiatives will be part of an “energy omnibus,” which seeks to terminate limitations on offshore and federal land drilling. Spending on renewable energy and climate-related programs is also expected to be significantly curtailed under the new policies.

What About Markets?

The S&P 500 and Dow Jones Industrial Average logged their best weekly performance since early November, buoyed by an inflation report suggesting easing price pressures. Investors, braced for disappointing data, were encouraged by the results, driving a recovery in the stock market rally. The yield on the benchmark 10-year Treasury note also pulled back, ending the week at 4.61%.

  • While these gains put stocks in positive territory for 2025, analysts remain cautious. The potential for inflation to reaccelerate under Trump’s proposed tariffs and immigration policies has left many investors wary of a repeat of the economic challenges seen in 2022.
  • Concerns about inflation remain prominent among market participants. Memories of 2022, when rising interest rates and inflation caused stocks and bonds to tumble simultaneously, continue to influence sentiment.
  • Analysts warn that Trump’s proposed policies, including tariffs and mass deportations, could drive up prices, leading to higher bond yields and renewed pressure on equities.

Stocks have also been weighed down in recent weeks by signals from the Federal Reserve about a more cautious approach to cutting interest rates. Surging bond yields have further dampened returns, with rising rates keeping stocks volatile through December.

Benchmark's Take

Short-term market predictions are fraught with difficulty, particularly under shifting political and economic conditions. Policies introduced during Trump’s first term, including tariffs, tax reforms, and deregulation, had significant impacts on global trade and U.S. competitiveness. With similar policy themes likely to emerge in his second term, volatility and unpredictability may characterize markets in the near term.

  • Instead of speculating on immediate outcomes, taking a global approach allows investors to evaluate where opportunities and risks are concentrated.
  • This perspective considers not just individual stock indices but also the economic trajectories of major regions.

China’s Turbulence: A Risky Market

China's economic challenges cast a long shadow over its market prospects. The country continues to grapple with the aftermath of prolonged lockdowns, structural imbalances, and slowing growth. Key sectors such as real estate remain under stress, with ripple effects spreading across its economy.

  • Moreover, geopolitical tensions with the United States, coupled with policies aimed at achieving technological and economic self-sufficiency, have disrupted supply chains and investor confidence.
  • For global investors, these factors suggest heightened risk in Chinese markets, dampening their appeal.

Europe’s Weak Posture: Struggles Continue

Europe faces its own set of challenges, further diminishing its attractiveness to investors. The continent is dealing with stagnant growth, energy insecurity, and the lingering effects of the Ukraine conflict, which have strained budgets and increased inflationary pressures.

  • In addition, structural issues such as aging populations, slow policy responses, and reliance on external energy sources continue to weigh on Europe's economic prospects.
  • These challenges make it difficult for the region to compete with the dynamism seen in other parts of the world.

U.S. Market Optimism: Resilience

Despite domestic political uncertainties, the U.S. market appears better positioned than its global counterparts. Strong corporate earnings, a robust labor market, and resilient consumer spending underpin the U.S. economy's relative strength.

  • Trump’s pro-business policies, such as tax cuts, deregulation, and a focus on energy independence, may provide additional tailwinds for U.S. markets.
  • While risks such as inflationary pressures and higher interest rates persist, the U.S. remains a preferred destination for investors seeking stability and growth potential.

Disclaimer

Please note that Benchmark does not produce investment advice in any form. Our articles are not research reports and are not intended to serve as the basis for any investment decision. All investments involve risk and the past performance of a security or financial product does not guarantee future returns. Investors have to conduct their own research before conducting any transaction. There is always the risk of losing parts or all of your money when you invest in securities or other financial products.

Credits

Photo by Sophia Simoes / Unsplash.