A recent interview with @Geo_papic offered some interesting perspectives: 1. Trump's actions in Venezuela aren't a genuine attempt at a large-scale ground invasion, which is something he dislikes. Rather, it's another application of Trump's "seven-step maximum pressure strategy," not a genuine desire for war, but rather an attempt to force Maduro to reveal his "trump cards." The core objective is still to gain access to Venezuela's abundant oil resources.
Another reason is that the Saudi Crown Prince is unlikely to cooperate with Trump in lowering oil prices because Saudi Arabia faces significant fiscal pressure and needs sufficient funds for future investments. The Crown Prince is also using low oil prices to eliminate rivals, and his tolerance for low oil prices has reached its limit.
Trump needs to continue suppressing oil prices before the midterm elections, or to control inflation and meet his so-called "affordability" requirements. He needs to prepare for higher oil prices and reduce costs in other parts of the US economy through supply-side reforms. At this point, Trump needs to find new sources of oil.
Of course, Marko Papic himself believes it's difficult to push oil prices even lower.
2. In preparation for the 2026 midterm elections, Marko Papic believes there's limited room for fiscal policy maneuvering. Bond advocates are also preventing him from doing so, as evidenced by rising long-term bond yields.
If fiscal policy space is limited, what will stimulate the economy? The only way is monetary policy.
This is the only way for the US to revitalize its economy in 2026, especially by incentivizing consumers who have been deleveraging over the past 15 years. If you look at the ratio of household debt to disposable income, we've already returned to 1990s levels.
Marko Papic expects Trump to focus on housing affordability, lower borrowing rates, and essentially reignite the housing cycle. In other words, Trump will do everything in his power to win the midterm elections, regardless of the odds.
3. Marko Papic also believes Hassett is the most likely candidate for the Federal Reserve, given his qualifications and extensive experience. Hassett was a professor of economics at Columbia University before entering think tanks, including the more center-right American Enterprise Institute, and served as an economic advisor to every Republican president until Donald Trump took office. Since the Bush era, Hassett has provided economic advice to every Republican presidential campaign.
