CIO Insights: Not every trump card wins

10 minute read

In our 2026 Macro Outlook: Just the FACTs, we argued that Trump would remain a key driver of markets, extending a dynamic that shaped much of 2025. That assessment is being reinforced early in 2026. A rapid sequence of policy announcements and public signals has brought renewed focus to the outlook for US growth, inflation, economic policy, and geopolitics.In this month’s CIO Insights, we step back from the headlines to assess what these developments mean for markets, and separate the near-term noise from the longer-term signals that matter for investors in the year ahead.

Key takeaways

• The Trump policy agenda is off to a forceful start to the year, but past experience argues for caution in reacting to headlines. Trump’s actions in the first few weeks of 2026 – from foreign policy moves to pressure on Fed independence – have been intense and market-moving. History suggests that their lasting impact depends on whether they translate into implementable policies. 
• Trump’s constraints, not his rhetoric, determine which actions will matter for markets. The market volatility of 2025 showed that investors are better served stepping back and focusing on the longer-term policy picture, rather than reacting to each announcement. Legal limits, institutional checks, and geopolitical trade-offs mean only a subset of actions can translate into lasting macro or market impact
• The outlook continues to lean toward a hotter economy, with added volatility from geopolitical headlines. Policy actions that support Trump’s political base and sustain economic momentum into the November midterm elections will be easier to implement and are likely to have a more direct impact than geopolitical developments. This would reinforce our “run the economy hot” scenario and broadly favour risk assets. Meanwhile, policies aimed at strengthening domestic industry and improving the business environment could provide incremental support to sectors like energy, industrials, materials, and financials. At the same time, ongoing policy uncertainty and geopolitical tensions argue for allocations to real and defensive assets to manage volatility. 

(See our Glossary at the end for a breakdown of the terms used in this article.)

Trump’s agenda is off to a fiery start in 2026

The Trump policy agenda has moved quickly at the start of 2026. In just a few weeks of the year, the administration has issued a steady stream of actions and statements – from military action in Venezuela, to renewed trade tensions with Europe tied to Greenland, and continued pressure on Fed Chair Jerome Powell.

While these moves have driven near-term market reactions, the pace and volume of Trump’s announcements make it difficult to judge which signals will last. As we’ve seen in the past, positions can change quickly. Earlier aggressive rhetoric, particularly around Greenland, has already been toned down dramatically. As with the events of last year, the lesson is clear: to parse the signal from the noise, it’s critical to be able to distinguish between rhetoric and policies that have a credible path to implementation. 

A framework for interpreting Trump’s policy priorities

We find it useful to step back and view Trump’s agenda through a more structured lens. Rather than treating each announcement in isolation, our expanded Trump macro framework groups policy actions into four broad strategic pillars that reflect what the administration is ultimately trying to achieve: 1) consolidating power and control, 2) fostering a pro-business climate, 3) securing energy and strategic materials, and 4) supporting Main Street – illustrated in Table 1 below.

(See the Appendix at the end of this note for a full table with more details.)

Looking at Trump’s agenda through these pillars helps separate the policies with a clearer path to implementation from those that are more rhetorical or constrained. As we shared in our 2026 outlook, with the midterm elections approaching in November, the administration’s policy choices are increasingly shaped by the need to deliver visible economic outcomes and reinforce support among key domestic constituencies. 

(Read more in our 2026 Macro Outlook: Just the FACTs.)

Understanding the trump cards that can constrain Trump’s agenda

Predicting specific outcomes for Trump’s policies is nearly impossible. As we’ve already seen this year, positions can shift quickly, and his initial announcements often come with unclear paths to implementation. In this section, we examine each pillar, outlining what they are likely meant to achieve and where the key limits to implementation lie.

Understanding the constraints each policy area faces helps distinguish actions that are easier to execute from those that are more likely to stall or be diluted. Before turning to each pillar in detail, Table 2 summarises how we assess the ease of implementation, speed of impact, and overall feasibility across the four policy pillars.

1. Consolidating power and control

What is it? The policies that fall under this pillar are about reducing institutional resistance and expanding executive influence. In practice, this has taken the form of sustained pressure on the Fed, legal challenges, and efforts to shape priorities through appointments and public messaging.

What are the constraints? The main check here lies in the design of the institutions themselves. Independent agencies are protected by law, courts are still a check on executive power, and overreach can trigger legal, political, or public backlash. As a result, actions under this pillar tend to generate immediate headlines and market volatility, but translating pressure into lasting control is difficult and slow. The recent Department of Justice investigation of Fed Chair Powell drew swift pushback, including from Trump’s allies¹.

Overall assessment: Hard to implement and slow to deliver, with the impact on markets driven mainly by headlines and shifts in sentiment rather than long-lasting outcomes

2. Fostering a pro-business climate

What is it? The actions under this pillar aim to support investment and profitability through deregulation, investment incentives, and policies that favour domestic production. The administration has signaled this direction, though large-scale regulatory rollbacks typically require time and formal rulemaking.

What are the constraints? The key constraint here is speed. Markets often respond quickly to shifts in tone or intent, but realised benefits depend on implementation. Progress depends heavily on the pace of rulemaking and legal review, which tends to be slow. For example, analysis by the Brookings Institution highlights how procedural requirements can delay or limit the real-world impact of deregulatory efforts². Taken together, this points to a supportive backdrop for business sentiment – as highlighted in Chart 1 – with actual capital expenditures likely to hold up but respond more slowly.

Overall assessment: Moderate feasibility with slower transmission. Gradual macro impact on medium-term investment and sector outcomes versus an immediate boost

3. Securing energy and strategic materials

What is it? These policies relate to securing access to critical inputs for energy, defence, and industrial competitiveness, and reducing reliance on foreign suppliers. They include actions related to energy supply, trade measures, diplomatic pressure, and, in some cases, overseas interventions or sanctions.

What are the constraints? While the administration can move quickly on announcements and unilateral actions, the constraints are practical rather than political. Supply chains, infrastructure, international cooperation, and capital investment all take time. This means that while announcements tend to result in swift market movements, real-world results tend to lag. Questions over export permits and political stability in Venezuela, for example, suggest that access to the country’s oil reserves will be slow and uncertain³. Similarly, while Trump has touted “total access” over Greenland, details remain light⁴.

Overall assessment: Easier to signal than to execute. Delivery tends to be gradual, with knock-on effects for inflation and sector performance over time.

4. Supporting Main Street 

What is it? Supporting jobs, wages, and household affordability sits at the centre of Trump’s political strategy – particularly ahead of the midterm elections. This pillar includes reshoring efforts, immigration controls, visible trade actions, and proposals for direct household relief.

What are the constraints? These measures tend to be the easiest to communicate. In many cases, they’re also easier to implement – even partially – through executive authority and messaging. Even where courts or Congress limit full execution, the initial signalling often achieves its political objective. As a result, this pillar offers the fastest and most visible payoff, and is most directly aligned with an approach that runs the economy hot in the near term. With Republican voters still broadly positive on economic conditions (highlighted below in Chart 2), the political focus will likely remain on sustaining momentum ahead of the midterms.

Overall assessment: High political feasibility and fast impact, with the clearest near-term support for growth.

The big picture: Main Street support points to a hotter growth backdrop

Viewed through this constraints-based lens, Trump’s policy agenda is uneven in where it can deliver results. Actions tied to Main Street – jobs, wages, and household affordability – are the most visible and politically effective, and therefore the most likely to shape the near-term economic backdrop ahead of the midterm elections. Other parts of his agenda matter, but they operate on different timelines and through different channels. Those headlines should be interpreted with greater caution.

Taken together, this reinforces the “run the economy hot” scenario outlined in our 2026 outlook. For investors, this favours:

• Cyclical, domestic exposure: Near-term momentum is likely to favour more cyclical and domestically exposed parts of the market, with broader participation beyond a narrow set of mega-cap leaders.
• Industrial and pro-business sectors: Over time, policies aimed at strengthening domestic industry and improving the business environment can shape investment and inflation dynamics, providing incremental support to sectors such as energy, industrials, materials, and financials.
• Defensive and real assets: Persistent policy uncertainty and geopolitical tensions point to continued demand for defensive assets, with real assets such as gold helping to manage volatility.

(For more on the US economy, see CIO Insights: AI runs hot, jobs run cool, and the Fed runs loose.)

Separate the signal from the noise

Rather than reacting to each Trump-related headline, for long-term investors the current environment calls for stepping back and focusing on where policies can realistically be delivered. While markets may see heightened uncertainty, periods of volatility are simply a normal part of markets. They often serve a useful purpose: helping to reset expectations after extended runs in one direction.

Over time, markets take their direction from durable economic trends rather than short-lived headlines. Against that backdrop, the underlying approach to long-term investing does not change: stay invested, stay diversified, and keep your decisions anchored to the fundamentals rather than the headlines.

Authors

Stephanie Leung, Chief Investment Officer

Stephanie and her team oversee the full spectrum of investment products and portfolios offered at StashAway. She brings more than two decades of investment expertise across multiple asset classes. Prior to joining StashAway in 2020, she managed investment portfolios at institutions such as Goldman Sachs and multi-billion dollar family offices in the region.

Justin Jimenez, Head of Macro and Investment Research

Justin has more than a decade of experience in economic and investment research, and contributes to shaping the investment office's views on the global economy and asset classes. Prior to joining StashAway in 2022, he was an economist at Bloomberg.

Glossary

Risk assets

Investments with higher potential returns but also greater price volatility, such as equities. These assets can perform well when economic conditions are strong and investor confidence is high.

Defensive assets

Assets that tend to hold value when markets fall, such as government bonds and gold. Investors may allocate to defensive assets to reduce overall portfolio risk during periods of uncertainty.

Real assets

Physical assets such as gold, commodities, or real estate. Because their market value is driven by factors like supply and scarcity, they tend to behave differently from stocks and bonds.

Cyclical assets

Investments in sectors that tend to rise and fall with the broader economy, like industrials and materials. These can outperform during expansions and underperform during slowdowns.

Policy transmission

How government policy changes flow through to the real economy. The effects of a tax cut, for instance, take time as businesses and households adjust their behaviour in response.

Appendix

Expanded Trump macro framework

References

1. Rappeport, A., Smith, C., Thrush, G., and Pager, T. (2026). Blowback Builds Over Criminal Investigation of Powell. The New York Times. Retrieved from: https://www.nytimes.com/2026/01/13/us/politics/jerome-powell-investigation-blowback.html
2. Kane, A. T., Schrag, E., and Patnaik, S. (2025). What will deregulation look like under the second Trump administration? The Brookings Institution. Retrieved from: https://www.brookings.edu/articles/what-will-deregulation-look-like-under-the-second-trump-administration/
3. Flowers, S., Thompson, G., Thyne, D., and Gelder, A. (2026). How Venezuela complicates the oil market's delicate rebalancing. Wood Mackenzie. Retrieved from: https://www.woodmac.com/blogs/the-edge/how-venezuela-complicates-the-oil-markets-delicate-rebalancing/
4. John, M., Heavey, S., Gronholt-Pedersen, J., and Holland, S. (2026). Trump touts 'total access' Greenland deal as NATO asks allies to step up. Reuters. Retrieved from: https://www.reuters.com/world/europe/trumps-greenland-climbdown-triggers-relief-way-forward-unclear-2026-01-22/