Trump, The Fed, and The Market: Will Volatility Work in Your Favor?

The past week reminded investors once again that volatility isn’t just a market phenomenon—it’s a reflection of policy shifts, economic uncertainty, and global dynamics. Whether it’s trade tariffs, relationships with foreign nations, crypto regulation, interest rates, inflation concerns, or geopolitical tensions like the ongoing Russia-Ukraine conflict, each moving piece plays a role in shaping market sentiment. And with the recent speech from former President Trump alluding to the stock market being able to handle some volatility, we find ourselves watching policy not just as an economic driver, but as an intentional strategy.

The "Trump Put" and Market Intervention

One of the more interesting discussions in financial circles has been around the so-called "Trump Put"—the idea that Trump, who has often linked his success to the performance of the stock market, would not tolerate prolonged market downturns before adjusting his policy stance. This echoes the well-known "Fed Put," which has existed for decades and represents the market’s belief that the Federal Reserve will step in to prevent excessive economic damage during downturns.

We’ve seen other iterations of this before. In 2008, I can distinctly remember sitting at my desk in complete disbelief when Congress initially voted down the bank bailout package, the market plunged 777 points[i]—a significant move at the time. Within days, the government reversed course, offering a stark reminder that political decisions and market forces are deeply intertwined.

Fast forward to the COVID crisis, when markets plummeted 37% in a matter of weeks before staging a dramatic reversal, largely due to swift monetary and fiscal interventions. The moral hazard of these interventions is that they often reward risk-taking behavior, creating an environment where investors assume a safety net exists. But as history has shown, there’s no guarantee that the Fed, or any political administration, will always step in when expected—or that their intervention will have the intended effect[ii].

As Treasury Secretary Bessent put it in a recent interview on CNBC[iii]: “There’s no put,” he said. “The Trump call on the upside is, if we have good policies, then the markets will go up.” This underscores the reality that investors hoping for a safety net should not assume one exists—markets ultimately move on fundamentals, sentiment, and policy execution.

Policy, Rates, and Market Expectations

Some argue that Trump may allow heightened market volatility as leverage, particularly to pressure the Fed into lowering interest rates. If rates drop in response to economic uncertainty, markets could stage a powerful rebound. In this scenario, Trump could achieve his policy objectives, force the Fed's hand, and still take credit for a market resurgence.

Others counter that relying on a policy "Put" is dangerous, as there’s no certainty that intervention will come at the right time or in the right form. With inflation still being carefully monitored, the Fed’s primary concern remains price stability—meaning it won’t be eager to act simply because markets are choppy.

The Path Forward: Long-Term Investing Amid Noise

In times of policy-driven market swings, it’s easy to get caught up in the headlines. But at Members’ Wealth, we remain focused on the long-term fundamentals. Volatility often presents opportunity—not just risk. Rather than trying to predict political maneuvers or Fed actions, we use these moments to:

✅ Identify tax-loss harvesting opportunities

✅ Rebalance portfolios to maintain strategic allocations

✅ Seek quality investments at attractive valuations

The market will always be noisy. Policy debates will continue. But history has shown that those who remain disciplined, invest in strong businesses, and stay patient through the uncertainty tend to come out ahead.

Final Thoughts

Trump may or may not blink. The Fed may or may not intervene. But great investors know that the best opportunities often arise when the market is the noisiest. If you have questions about your portfolio or would like to discuss strategy in today’s uncertain environment, we’re here to help.

Let’s navigate this together.

[i] On September 29, 2008, Congress initially voted down the Emergency Economic Stabilization Act of 2008, commonly known as the bank bailout bill or TARP (Troubled Asset Relief Program). This bill aimed to authorize the U.S. Treasury to purchase up to $700 billion in distressed assets (mainly mortgage-backed securities) to stabilize the financial system amid the ongoing financial crisis.

The rejection of the bill led to one of the largest single-day point losses in Dow Jones history at that time—777.68 points (-6.98%). This sharp decline reflected the market's fear of further instability in the banking sector, as the financial crisis had already taken down major institutions like Lehman Brothers and forced the government to intervene in others.

A few days later, on October 3, 2008, Congress reversed course and passed a revised version of the bill, which helped stabilize markets, though volatility persisted in the months that followed.

[ii]  The Great Depression (1929-1933)

• The Federal Reserve failed to provide adequate liquidity to the banking system following the stock market crash in 1929. This inaction led to widespread bank failures and a deepening of the Great Depression. Many expected the government to stabilize the economy sooner, but the intervention came too late.

 The 1970s Stagflation Crisis

• Throughout the 1970s, policymakers struggled to control both inflation and unemployment. The Fed attempted to stimulate the economy but only exacerbated inflation. It wasn't until Paul Volcker’s aggressive rate hikes in the early 1980s that inflation was truly addressed—causing a severe but necessary recession.

[iii] Bessent, Scott Interview on CNBC. "There’s no put,” he said. “The Trump call on the upside is, if we have good policies, then the markets will go up.” CNBC.

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About the Author – Dane Czaplicki, CFA®

Dane Czaplicki is CEO of Members’ Wealth, a boutique wealth management firm that offers a comprehensive approach to serving individuals, families, business owners, and institutions. The firm’s goal is to preserve and grow its clients’ wealth to endure over time, while thoughtfully evolving its strategy to suit an ever-changing world. With over 20 years of wealth management experience, Dane and the Members' Wealth team thrive on bringing clarity and confidence to clients' unique situations. He believes everyone needs sound financial advice from someone whose interests are aligned with theirs, and is determined to put service before all else.

Dane received his MBA from The Wharton School of Business at the University of Pennsylvania and his bachelor’s degree from Bloomsburg University. Outside work, he enjoys spending time with his wife and kids, hiking and camping, reading, running, and playing with his dog. To learn more about Dane, connect with him on LinkedIn.

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