Wall Street's Love Affair with Scott Bessent: Why Traders Trust Him

Wall Street’s riding an emotional rollercoaster—but one name keeps markets grounded: Scott Bessent. In this episode, David Nelson unpacks the tariff turmoil, shifting Fed bets, and why Bessent’s calm, clear messaging has traders reaching for the buy button.

Disclosure: "At the time of this article I currently hold shares in some of the companies mentioned as part of investment portfolios in funds I manage for Belpointe. Additionally, I may discuss other securities that are under consideration for future investment; however, discussing these securities is not a recommendation to buy, sell, or hold. My mention of these securities reflects my personal opinion and analysis at this moment and may change without notice. Please remember that all investments involve risks, including the possible loss of principal."

Transcript

0:03

Welcome to the pod, everyone. I'm David Nelson. It is Friday. It's just after the close. I'm smiling because we put in a positive week, and I wanted to get you my take on what took place this week. Before you dove into the weekend sentiment, it matters not just in finance, but almost every endeavor in life. When you are upbeat and hopeful for your future, the glass is half full. And when you're not, you hold back. It's been that way since the beginning of time, and for certain, over the last several weeks, investors have been living under a cloud, uncertain what the future was going to bring. And as you might expect, risk appetite vanished as even the biggest bulls pulled in their horns. Look, I'm not leaving myself out of this conversation. When you get into that mindset, you're thinking, what can go wrong and how can I avoid it? I'm bringing this up because on Thursday today, when we hold our internal call here at Bell Point for advisors around the country, we had good friend and colleague Krishna Kumar, founder and portfolio manager for Goose Hollow Capital. He pointed out that when sentiment gets this extreme, it is time to start asking what can go right. You'll see how important that is in just a few minutes. Well, here we are, just seven days from last week's podcast, and the sentiment on Wall Street is decidedly a little more upbeat. The reasons are obvious, but let's spell it out for the Trump administration. What matters as much as the message is who is delivering it? And for now, Wall Street is having a love affair with Treasury Secretary Scott Bessant. Even before Trump walked back, some of the harsh commentary on China saying tariffs are likely to be a lot lower than he first laid out. It was clear Scott Bessant had risen to the top of the decision tree and was now not only honing policy but honing the message as well. I'm also certain it was Scott that went to the president weeks ago when the financial plumbing was coming undone. Shortly after we got the 90 day moratorium, if for no other reason to give time for companies and countries to adjust and maybe respond positively. We talked about it on the spot. Credit spreads were widening, yields were rising, the dollar was falling and gold was hitting all time highs. And in combination it was screaming that there were fissures in the system. I also believe it was Scott who convinced Trump to walk back his threat to fire Powell. Look, I'm on record having said Powell was not the best Fed chair and that some historic mistakes were made. But firing him would create even bigger problems for both the administration and markets. I mentioned sentiment earlier and why it's so important. I stole this chart from Josh Brown, popular CNBC guest and president of Risk Recalls Management. Josh got it from Neil Mehta, economist for Macro. He created it. There are currently three critical players within the administration outside of Trump himself, that Wall Street is focused on when it comes to policy that is important for investors to consider. Peter Navarro, Howard Lutnick and Treasury Secretary Scott Bessant. When the news cycle is dominated by stories surrounding comments from either Navarro or Lutnick, the collective damage over the last couple of months has been approximately 719 S&P 500 points. That's massive. That's just this side of a controlled crash. When Bessant dominates the news cycle, we get about 52 points to the upside about 1%. Look, I fully realize that what the administration is trying to do is fraught with peril and that risks abound in this process. But the status quo so many are trying to protect, well, like the United States, in a death spiral that no one can fix. I also believe that while the administration has the right instincts, execution matters. And to date, that execution has been too chaotic with mixed messaging that actually damages the very policy you are trying to implement. Here is what I said earlier in the week. In an interview with Fox Business anchor Charles Payne. It was picked up later that evening on Special Report. I watch your show making money all the time and you had this great conversation about conversations. Take a listen. I wish the administration would just talk a little less. I don't want to hear about trade deals in the works or we're talking to China. We're going to get something. Tell me after it's done. I know Wall Street to me has a vested interest. They don't want to see change. They like that profit margin. That's the problem. They like that profit margin. They like. They don't. They like the status quo. So talking about all of this and like maybe there's a deal and we're going to see de-escalation from China. Is that not helping? Is making it more volatile? The good news is that Scott is the adult in the room and for the moment seems to have the president's ear. I said earlier that sentiment matters. Well, nothing changes sentiment more than price. And for investors, this week's market performance shifted the focus to what could go right. Welcome to The Money Runner. I'm David Nelson. And this is. All right. Let's go to the charts. This chart on your screen. I. It's from a couple of days ago. And I drew out some, you know, support and resistance lines on it. That 4800 level at the bottom. Believe it or not, we were there just a couple of weeks ago. Obviously a pretty big move since then. Some pretty scary moments in between. But the all important 5500 level that was important to get above. We actually did that today, even if it was just by a by a small amount. But as you can see on this next chart, that red line that's what's important. That's the Liberation Day line, the Liberation Day Rubicon, as I put it in this week's post. We need to cross that line and get above that. It's very close to around 5700 because that line represents where we were on April 2nd when President Trump announced reciprocal tariffs. We start living above that line. Maybe this will get a little bit more believable. So I said sentiment is important. Let's take a look. You can probably see it best in this chart. What you see on your screen right now, this is the Air U.S. Investor Asset Allocation Survey. It's mostly retail investors that blue line, that sentiment, and that goes all the way back to 2006. And what you can see there is that sentiment only cratered like it has right now a few times back in 2008, 2009, the financial crisis, we didn't even get to these levels during during COVID. All right. So obviously, U.S. investors best is at home. Retail investors are pretty, pretty bearish right now. Now, what's interesting is that white line, that's actually how they're invested. And for all intents and purposes, they're all in. All right. They're still pretty invested. I think that's really because this just happened so quickly. There wasn't even time to pull the trigger and get out. We talked about the Trump Powell war and how, at least for the moment, President Trump has stepped back from the edge and has said he has no intention of firing Jay Powell. So what's Powell going to do? We know Trump wants him to cut. And Jay has hinted very loudly that he sees no need to rush and cut the Fed funds rate right now or any time soon. Well, Wall Street isn't buying it. And as a matter of fact, Wall Street is betting with real money. Probably the best poll on the planet. Look at this chart of Fed fund futures. And you can see right now for June, there's a better than 5050 chance of the Fed cutting rates in the June meeting. As a matter of fact, you go out to July, it's a better than 80% chance. So right now, the Wall Street is Wall Street believing that the Fed is going to cut that, obviously be, you know, a strong tonic for markets. And you know what? If you look if you look around and you see, you know, some of the inflation numbers, I look at it, energy or energy prices are down. Energy touches every line item in the income statement. We might find that inflation is not our biggest concern. It is still early in the earnings season, and so far I'd have to say decidedly mixed, as you might expect, just about every CEO is talking about tariffs and is either issuing tempered guidance and in some cases no guidance at all. I've got one last chart before we get all balled up. Let's remember a few things. Markets are in large part being driven off headlines, and as we've learned over the last few weeks, markets can shift on a dime. Take a look at this intraday chart of S&P futures from Friday. Markets picked up right where they left off Thursday.

But at about 1: 10:37

30 p.m. Eastern Standard Time, futures fell a quick one half percent in just seconds on the heels of some comments President Trump made on Air Force One. The president is on his way to the pope's funeral. I guess he was talking to reporters and said that he will not draft China tariffs unless China gives us something. Well, I get that it makes sense. But you can see how quick markets can react. Well, the good news is that at least for the day, investors decided to go into the weekend long as most markets closed near the highs and maybe more importantly, the Magnificent Seven, which is a pillar of American exceptionalism, was up well over 2% on the day and up over 9% on the week. Well, that's it for this Friday. That's it for this week. Don't forget, if you want to learn more about yours truly and the Money Runner, subscribe for free at my substack site. DC Nelson 1 to 3 at Substack Rt.com. I'm David Nelson and this is the Money Runner.