MW In Bessent we trust: How the U.S. Treasury secretary can rescue Trump's economy

By Louis Navellier

Bessent once worked with George Soros. He's learned that markets are more powerful than governments.

When U.S. President Donald Trump suspended so-called reciprocal tariffs for 90 days on April 9, U.S. Treasury Scott Bessent emerged as the economic face of the Trump administration, helping to calm investors' nerves.

Before the April 9 stock-market rebound, a weak U.S. dollar (DX00) and soaring Treasury bond yields proved that the "bond vigilantes" were in charge. After successful 10-year (TY00) and 30-year (US00) Treasury bond auctions, Bessent has been able to fend off the bond vigilantes, who are predominately large international investors.

The gossip on Wall Street is that Bessent and U.S. Commerce Secretary Howard Lutnick had to tell Trump that the bond vigilantes were net sellers of both U.S. Treasury bonds and the U.S. dollar, and that Trump had to "shock the system" with a 90-day tariff suspension. Back in 1992, a much younger Bessent, then working for veteran trader George Soros, helped to "break" the Bank of England, which was making an ill-advised attempt to defend a British pound currency peg. The net result was pure karma for Soros and Bessent, who profited from one of the most successful trades ever made.

This important lesson taught Bessent that market forces are more powerful than governments. I am sure it was hard for Bessent and Lutnick to explain to Trump that the bond vigilantes were actually in charge.

With Trump, surprises are common, especially the tit-for-tat retaliation rhetoric between China and the United States. China has been turning up the pressure in the tariff war, specifically by banning all rare-earth exports to the U.S., including rare-earth magnets. This ban will hinder the electric-vehicle, technology and aerospace and defense industries, among others. Furthermore, China ordered its airlines to stop accepting deliveries of Boeing $(BA)$ jets, which stranded 10 new 737 Max jets that were about to be shipped to three Chinese airlines.

As a result, the probability of a resolution of the trade spat between China and the U.S. is expected, since Boeing and the technology industry are likely putting pressure on the White House.

Trump, in a further escalation of the trade war, then banned Nvidia $(NVDA)$ from selling its H20 GPUs to China - hitting Nvidia with a $5.5 billion charge due to the ban. The H20 chip was made specifically for China to comply with the Biden administration's chip restrictions. But since the H20 chip is a lower-margin chip, Nvidia can now divert its resources to make more of its more profitable Blackwell GPUs.

Before Trump and Chinese leader Xi Jinping self-destruct in this futile trade war, I am hoping that Bessent will come to the rescue and cooler heads will prevail. Bessent's calm, professional demeanor is necessary to assuage nervous institutional investors, which often must react when equally nervous retail investors force redemptions.

Once the U.S. trade war with China and other nations is finally resolved, my hope is that free trade will flourish. The 10% nonreciprocal universal trade tariff that the Trump administration has enacted is expected to remain, to help raise money for the U.S. Treasury as well as to levy a tax on America's underground cash economy. If and when the U.S. dollar gets its mojo back, the dollar's renewed strength will help to mask that 10% universal tariff.

In the meantime, the fear over tariffs creating inflation has not yet materialized. The lowest crude oil (CL00) prices in several years are also helping to squelch inflationary pressures.

The European Central Bank just cut key interest rates 0.25% for the seventh time. I remain in the camp that expects that, due to recessions in France and Germany, the ECB will cut another three times this year, which will help trigger at least four U.S. Federal Reserve interest-rate cuts, beginning at the May Federal Open Market Committee meeting.

Meanwhile, Trump said last week that Fed Chair Jerome Powell's "termination cannot come fast enough." Powell's term as chair expires in May 2026. Trump argued that the Fed should have lowered U.S. interest rates already this year. These comments by Trump are exactly why we need Bessent, who is particularly skilled at painting a positive future. In Bessent we trust!

Louis Navellier is founder and chief investment officer of Reno, Nev.-based Navellier & Associates Inc., an SEC-registered family office that manages more than $1 billion in assets. Navellier & Associates owns Nvidia Corp. in managed accounts. Navellier and his family own Nvidia via a Navellier-managed account and in a personal account.

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-Louis Navellier

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April 21, 2025 11:42 ET (15:42 GMT)

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