Is the White House trying to engineer a recession? This Wall Street pro explains the vision

[Bernardo de La Paz]

(emphasis added)

Is the White House trying to engineer a recession? This Wall Street pro explains the vision

https://www.morningstar.com/news/marketwatch/20250305148/is-the-white-house-trying-to-engineer-a-recession-this-wall-street-pro-explains-the-vision
(via MorningStar)
Provided by Dow Jones Mar 5, 2025
By Steve Goldstein

Traders are starting to price in the possibility that the U.S. economy might fall into a recession- and one Wall Street veteran says that might actually be the Trump's administration's plans.

Charlie McElligott, a strategist at Nomura dubbed Wall Street's most wired analyst by the Financial Times for his manic missives that are focused on the options market, laid out the argument in a note to clients.

He said the Trump administration needs an engineered recession to cause a growth slowdown and disinflation that will translate into Fed rate cuts and a meaningfully weaker U.S. dollar for the next phase of his economic agenda.

[...]

McElligott said there's almost nothing Trump can say right now to calm markets unless he completely backed down on policy. He said a Trump put - a floor under which the White House would be spurred into action to boost the stock markets - is priced far below current levels.

[sop]

1. It's classic disaster capitalism.

Trump and his billionaire friends will use a deep recession to advance their plans of radical privatization.

[Lonestarblue]

2. What is the next phase of Trump's economic agenda that requires a weak US dollar?

The only thing I can think of is using that as an excuse to ditch the dollar and replace it with unregulated crypto. If the dollar is jettisoned, we will have a global economic crisis. In many countries around the world, people want tourists to pay them in dollars because their currencies are unstable. I admit to knowing very little about crypto, other than that it is favored by international criminals because it is untraceable, but how does the small restaurant in Tuscany or the craftsperson selling wares at a local market in Africa switch to crypto payments instead of dollars?

[Bernardo de La Paz]

4. I don't think the plan is to ditch the dollar. But crypto will be pumped

A weak dollar makes US exports cheaper and imports more expensive. It is like a sneaky tax, a sneaky tariff.

It goes along with lowering interest rates. (Inflation be damned, I guess.)

Those two are the standard narrative for ordinary times. But like you, I have questions as to whether there are other hidden items on his agenda, or hidden thrusts.

[Raven123]

3. Is this sane washing Trump's behavior again?

He made an absurd claim about tariffs, that was criticized by Democrats and many, if not most Republicans. But they fell in line behind him anyway and he was elected. He won and they are just along for the ride. He has no reason to believe he is wrong.

[Bernardo de La Paz]

5. No, not sane-washing, I think. More like: that is their thinking however irrational it might be

I wish I could find more about his conjecture of "the next phase" of his economic agenda. But the only link search gave was to zerohedge members only.

[mwmisses4289]

6. Not trumps plan. Putins.

[bif]

7. His ultimate goal is to make Americans poor and dumb

By destroying the stock market and dismantling the Department of Education. The real question is why? Orders from Putin?