We’re only a few days into the Trump Plan to set the world to rights, but we’d be lying if we didn’t admit things look shaky.

After initially looking like the plan to sink the 10-year yield was working, it took off two days ago and kept going. It wasn’t until the 10-year yield hit 4.5% that it magically came back down to 4.341%, as of writing. I suspect a sovereign sold a bunch of 10-year notes, and then the U.S. Treasury came in to buy them, sending yields down.

It doesn’t look like China did it. Good friend of Paradigm Press and financial writer Tom Luongo suspects it’s the British!

Be that as it may, U.S. Treasury Secretary Scott Bessent has been the most proactive and professional Trump administration member. He’s the calm voice in a room full of people who are “literally shaking.”

But before I sing Bessent’s praises, let’s hear from another macro expert.

Martin Armstrong Concurs

I’m always happy when economists I think are sound agree with my position on why Trump is doing this. Here’s Martin Armstrong, writing yesterday on his blog (bolds mine):

Some believe that Donald Trump is deliberately attempting to cause a sharp downturn in equities to force a flight into treasuries. If so, the Federal Reserve would have more of a reason to slash interest rates—Trump’s longstanding desire. Trump has stated that the markets are undergoing an “operation” of sorts, but I would not underestimate his long-term plan here.

Trump openly states that he wants companies to move manufacturing to the US to avoid tariffs. This will also promote domestic trade as companies will seek to avoid levies. US farmers will be incentivized to sell domestically, which could lower the price of groceries, much to the pleasure of the American public.

The idea that a decline in the stock market could actually cause a flight into treasuries sounds counterintuitive on the surface, but when you understand how capital flows and confidence operate globally, it makes perfect sense. Capital moves globally and always seeks the safest place to park. Unexperienced and retail traders tend to panic at larger downturns and sell off.

Everything comes down to CONFIDENCE. A downturn in equities could cause a kneejerk reaction into treasuries because people still trust that the government will make good on their payments. Big institutional money began fleeing the public sector for the private sector years ago. What we have seen since the implementation of Trump’s tariffs is a new demand for treasuries.

He continued:

Lowering treasury rates will make homes more affordable by decreasing mortgage rates. Individual nations were fleeing US treasuries, creating a massive risk for an eventual default. Suddenly, at least temporarily, the stock market no longer seems like a safe place to park money. The Trump Administration first showed the world that it was cutting spending and attempting to reduce the deficit. A downturn in rallies DOES NOT guarantee a rally in the bond market, but we are witnessing a short-term flow into treasuries. However, the computer has warned that 2028 will mark a major turning point in confidence where any remaining confidence in government vanishes. For now, we may enjoy a temporary decline in treasury yields due to these tariffs.

I feel reassured. However, Treasury Secretary Scott Bessent is the true voice of reason and calm in this administration.

Scott Bessent is the Voice of Reason

I like Bessent because he’s a former macro hedge fund manager who understands things like leverage and capital flows that utterly escape bank CEOs. (That was former Goldman Sachs CEO Robert Rubin’s problem when he was the Treasury Secretary under Clinton.)

That’s why I have far more confidence in this plan than I otherwise would have. Bessent isn’t just a “good soldier,” he’s entirely on board with Trump’s plan.

Even though the S&P 500 has been down six consecutive weeks, Bessent told NBC News’s Meet The Press:

I reject that assumption — there doesn’t have to be a recession. Who knows how the market is going to react in a day, in a week? What we’re looking at is building the long-term economic fundamentals for prosperity that I think the previous administration had put us on a course toward financial calamity.

And that’s the onion.

Trump and Bessent are tearing down the old neoliberal (uniparty) model and replacing it with one where every American has a shot to succeed.

In another interview, Bessent referred to the U.S. economy over the past few decades as a "bodybuilder on steroids".

"Outside you're great, inside you are killing your vital organs. That's what was going on here. It would have been easy to keep pumping up the economy, borrowing a lot of money and creating a lot of government jobs."

Honestly, I’ve felt like this since 2009. The Fed and USG’s actions were pumping our economy full of stimulants. It was like Democrats and liberal policies on steroids.

Bessent has actively emphasized openness to negotiations. He stated that the administration is willing to negotiate tariff reductions, attributing the start of talks to inbound requests from approximately 70 countries, rather than market reactions.

Bessent criticized China's retaliatory measures and said countries refraining from retaliation would be prioritized in negotiations. He was optimistic about reaching trade deals but acknowledged that some tariffs might remain even if agreements are made. As we wrote, Bessent dismissed recession fears, focusing on building long-term economic fundamentals.

Gold and Silver Seem to Have Floors

Before I wrap up, this morning's good news is that gold and silver have rebounded by over 2% each. S&P and Nasdaq futures are flat this morning. Europe’s and Asia’s stock markets are mixed.

Wrap Up

No one’s thrilled when their stock portfolio falls out of bed. But if you’re close to, or already in, retirement, your equity allocation should’ve been reduced already. That’s why Bessent rejects the argument that he’s making “Americans” poorer. Sure, some are taking a hit. But far more important is laying the groundwork for a new economic paradigm.