How was the first year of Trump's second term?

January 20 marked one year since Donald Trump returned to the White House. Over this period, the S&P 500 and the Nasdaq surged by 14% and 18%, respectively, though this does not necessarily reflect broader economic or political developments.

Early on, there was hope that with Trump, global tensions would ease, but that hasn’t happened. Tensions in the Middle East remain high, with ongoing speculation about a potential attack on Iran. Clashes continue in Gaza despite the ceasefire, and in Ukraine, fighting persists even as diplomatic talks make some progress. These flashpoints have repeatedly fed volatility in energy markets, keeping oil prices elevated and sensitive to headlines.

Then there was the US military operation in Venezuela, which led to the capture of Nicolás Maduro and his wife, along with open threats toward other countries in the Western Hemisphere and renewed claims over Greenland. Outside of armed conflicts, trade wars remain unresolved. No wonder gold spot prices have surged more than 70% over the past year.

Domestically, Trump promised during the campaign to fix the national debt. Instead, it has now exceeded $38 trillion and is expected to keep rising, partly because of the so-called 'Big Beautiful Bill,' which extended Trump’s 2018 tax cuts, raised the federal debt ceiling by $5 trillion, and allocated billions for military spending and border security.

As for the U.S. economy, the picture is mixed. Annual inflation stood at 2.7% in December 2025, still above the Federal Reserve's 2% target, but showing no significant deterioration due to tariffs, at least so far. GDP growth was solid, reaching 4.3% in the third quarter and an estimated 5.3% in the fourth.

At the same time, the labor market is sending weaker signals. Unemployment has risen, with youth unemployment reaching its highest level in four years. On top of that, surveys conducted by The Wall Street Journal show that 57% of Americans have a negative view of the economy, while only 9% describe it as excellent.

So why does the market seem to be ignoring all this?

First, momentum matters. Second, as the dollar weakens, stocks can serve as a decent hedge. Third, markets are being driven higher by AI, driven by hopes for future profits, though it remains to be seen whether that success will materialize. Now, if things start to turn negative, for example, if the AI promises fall short, it could quickly snowball and hit the markets hard.