Donald Trump's hyperactivity since returning to power prevents us from assessing the scope of some of the initiatives he is taking. His decisions and his attitude towards financial markets are a clear example.
Expectations of financial deregulation already gave stock markets a boost as polls gradually increased Trump's chances of victory. When it was confirmed, the rally continued and has only been halted, at least for the moment, by adverse news about tariffs and rising inflation.
Trump inherits a stock market in turmoil. A euphoria largely driven by companies associated with artificial intelligence technologies. It is a phenomenon reminiscent of that of the dotcom in the late 1990s. Today, as then, the uncertain potential of the new technology is causing a flood of investments and a speculative race. Not even the appearance of DeepSeek has served to moderate the euphoria.
It is true that artificial intelligence can improve your productivity. But it is difficult to see these opportunities as a quantum leap for good. As has happened in the past, these advances improve productivity growth for a few years, and sooner or later diminishing returns set in. There is no technological improvement that will lead us to the Nirvana of a permanent increase in the rate of productivity growth. There is no philosopher's stone, or what physicists would call a perpetual motion machine. Only with successive waves of human creativity, of new technologies, will we be able to generate new growth surges. The stock market, as in other times, cannot accurately anticipate this future bonanza, and human nature tends to exaggerate it.
Another big question mark is to what extent the productivity gains will translate into higher profitability for companies or be passed on to consumers in the form of more services and lower prices. The emergence of DeepSeek suggests that the new industry could no longer be controlled by a small number of operators and become less profitable.
As if the bubble associated with artificial intelligence were not enough, Trump and his deregulation have propelled a new speculative phase in the world of cryptocurrencies. Trump himself contributed in person by launching the speculative financial product par excellence, one memecoin in his name, just the weekend before his inauguration. But he has also decided to stop work on the launch of the digital dollar, favouring the use of unofficial digital currencies. We are reaching unsuspected levels of financial madness, as shown by the case of MicroStrategy, a software company that has invested its cash in bitcoin and, in this way, has boosted its stock market value, despite the fact that its conventional business model is going through serious difficulties. Perhaps it has done so precisely for this reason. The example of this company is, unfortunately, being widely imitated. In addition, even pension funds and university endowments are investing in these assets, after their official legitimisation. And also a central bank, that of the Czech Republic, has already taken the step and will place part of its reserves in cryptocurrencies.
The Trump bubble will end badly. During his term or beyond, it is impossible to predict. In the case of artificial intelligence, the intrinsic value of the technology, although uncertain, is undoubtedly significant. However, when it comes, the correction of market excesses will hurt. Fortunately, not many economic agents are now over-indebted, as was the case before the great financial crisis, and the effect on the non-financial economy may be milder.
In the case of cryptocurrencies, their fundamental value is very low. They do not yield interest and their future scarcity is questionable: behind their creation there is only a decentralized and opaque system that does not generate any confidence. The demand for cryptocurrencies is associated with illicit transactions and will only increase if the authorities make the mistake, as they have already done in some countries, of allowing investment funds to hold such products in their portfolios.
Just a few days ago, President Milei was involved in a scandal precisely for celebrating, from his libertarian perch, a cryptocurrency that concealed a pure scam. The border between memecoins and cryptocurrencies is thin. And the opacity of the latter can easily shelter characters who inspire anything but confidence.
