The Real Reason Behind Trump's Market Chaos

The "controlled demolition" of the US economy has begun...

Before we get started, I wanted to let you know the new episode of my podcast Room to Run is live on Spotify and Apple Podcasts.

In this week’s episode we discussed:

• Why Trump is tanking the market (and how his plan might actually work)

• Discuss the pros and cons of selling your portfolio and "going to cash"

• How to re-balance your portfolio during this trade war

• Preview of this week's FOMC and other market moving events

Each 10-minute episode can be listened to for FREE on Spotify and Apple Podcasts. If you enjoy the podcast, please leave a review.

This is easily the wildest market I’ve seen since the COVID crash in March 2020.

We just experienced the fifth-fastest S&P 500 correction in the last 75 years. The Nasdaq has swung at least 1% intraday for 17 consecutive sessions. The Magnificent 7 stocks that drove the bull market in 2023 and 2024 are now all officially in bear-market territory. And of course high-beta assets like crypto are getting crushed.

But here’s the kicker: the market chaos we’re seeing isn’t accidental. It’s by design.

Before you accuse me of having Trump Derangement Syndrome like the hundreds of people in the comment section of my recent Instagram posts, hear me out: Trump and Treasury Secretary Bessent have openly indicated this turbulence is intentional. They describe it as a period of economic “detox” or “transition,” carefully leaving open the possibility of recession.

Why on Earth would they purposely cause economic pain?

Believe it or not—and trust me, as someone heavily invested in stocks and crypto, this isn’t easy to admit—they have a logical reason for what I’m calling a "controlled demolition" of the US economy.

If you're unsure what I mean by that, keep reading—because understanding this could make or break your portfolio.

Anatomy of an Economic Demolition

When Trump returned to office, he didn’t exactly inherit a flawless economy.

Sure, stocks had enjoyed years of gains, but remember: "the stock market is not the economy." Inflation remains stubbornly high, housing affordability sits near historic lows, and the U.S. economy has become dangerously reliant on massive government spending.

Under the Biden administration, federal spending reached staggering levels leading into the 2024 election. The U.S. government has issued roughly $1 trillion in new debt every 100 days since mid-2022, ballooning our national debt to an unprecedented $36 trillion. Interest payments alone now surpass $1 trillion per year—more than we spend on national defense.

Let’s be clear: this isn’t about blame. Excessive spending and debt accumulation are bipartisan traditions decades in the making.

Both parties have cheerfully kicked this debt "can" down the road. But reality eventually catches up, and Trump and Bessent now seem determined to face it head-on, intentionally forcing an economic reset.

But how exactly does tanking the stock market factor into that strategy?

Going After America’s Wealthy

Since Trump’s inauguration, U.S. markets have shed roughly $5 trillion in value, driven primarily by uncertainty around his unpredictable tariff policies. But this volatility isn’t accidental—it’s strategic.

Consider this fact: just 8% of Americans own 94% of all U.S. stocks. These wealthy households, typically earning more than $250,000 per year, have fueled nearly half of all U.S. consumer spending growth in recent years.

Trump wants these wealthier investors—people like you and me—to panic and move their money from volatile stocks into safer assets, primarily cash.

But here's the catch: when investors sell stocks due to volatility and hold cash, their brokerage accounts typically place that cash into money-market instruments, especially short-term U.S. Treasury bonds. This flood of investor cash into Treasuries pushes bond prices higher and yields sharply lower.

But why does the Trump administration want lower Treasury yields?

The Elephant in the Room

The U.S. government needs to refinance roughly $9 trillion of debt over the next year.

Think about it: Would you rather refinance your debt at a 5% interest rate or at 2.5%? Lower yields obviously save trillions. And historically, the most effective way to dramatically reduce Treasury yields is through a recession—which forces the Federal Reserve to aggressively cut interest rates.

This is exactly why I'm calling Trump’s strategy a "controlled demolition." They're deliberately shaking investor confidence, pushing money out of stocks and into safe-haven Treasury assets. That surge of cash drives bond yields lower, making refinancing cheaper and more manageable.

Yes, it’s an ugly, painful strategy—especially if you own stocks and crypto (like me).

But we’re not here to complain about the cards we’ve been dealt. Our job is to play that hand as skillfully as possible.

The Next Few Months Will Likely Be Bumpy

Trump and Bessent’s strategy might actually work. If it does, we’ll emerge on the other side with significantly lower interest rates, a lighter debt burden, and potentially a stronger, healthier economy.

But there’s also the risk that this approach spectacularly backfires. You need to prepare your portfolio—and your mindset—for both outcomes. That means carefully recalibrating your holdings (you can see how I've adjusted my own portfolio here).

Trades that worked beautifully over the last few years and helped me earn a +36% return in 2023 and a +45% return in 2024 likely won’t work in this environment. It’s wise to consider trimming or exiting positions that fall below key technical levels—like the 200-day moving average—unless you have high conviction in their long-term prospects.

Truthfully, no one knows exactly how this plays out, especially given Trump’s unpredictability. While a return to volatility was my #1 prediction for 2025, even I didn’t expect the market to pull back this sharply, this early in the year.

As I keep telling our TikStocks Portfolio community: Stick with your highest-quality long-term investments, selectively take profits from riskier trades, and keep cash available to seize opportunities when the next market leaders emerge.

And no matter how this unfolds, I'll be right here to help you navigate the chaos.

Stay safe out there,

Robert