1. Fed independence may be compromised under Trump, affecting monetary policy decisions. 2. Potential for expansionary monetary policy could lead to inflation and economic instability. 3. Risk of stagflation increases as the U.S. debt grows beyond sustainable levels. 4. The U.S. dollar's value may decline, affecting global trade dynamics. 5. Federal policies may shift power dynamics, increasing risks of financial crises.
The potential loss of Fed independence could lead to economic instability, resembling past financial crises. Historically, similar circumstances in the 1970s resulted in stagflation, which severely impacted stock market performance.
The article illustrates critical macroeconomic risks that can undermine investor confidence in the stock market, significantly affecting S&P 500 prices in the long run.
Risks associated with Fed control and economic management can take years to manifest, similar to the delayed economic impacts seen in the post-2008 financial crisis recovery.