Donald Trump’s not famous for subtlety, nor stoic reserve.

When in doubt, Trump goes with his gut and as he put it while deriding the Fed late in 2018 (and yes, the Trump-Powell soap opera’s now seven years old), “my gut tells me more sometimes than anybody else’s brain can ever tell me.”

That means Trump’s never actually in doubt. If your intuition’s infallible, well then you don’t really even have to consult it. You just do and say the first thing that pops into your mind, because it’s almost surely right and anyway better than whatever’s going on inside “anybody else’s brain.”

On the economy, Trump’s gut says run it hot. In that regard, his gut tells him the same thing as any other populist’s gut — namely that you want pedal-to-the-metal fiscal and monetary policy, unless and until inflation becomes intolerable.

Ironically, that was the strategy during the first year of Joe Biden’s presidency, not because he was a populist necessarily but rather because no one succeeded in prevailing upon him that juicing demand in the presence of an ongoing negative supply shock at a time when interest rates were low and the Fed was buying bonds, was a potentially explosive cocktail.

Water under the bridge, Joe. I’m willing to let it slide. Unfortunately for Kamala Harris, voters weren’t.

If you’re Trump, there’s nothing accidental about wanting to run it all hot. That inclination’s not born of any concern about lingering pandemic drag on the economy, nor even about buying votes given that we’re still in year one of term two. Rather, it’s his gut and as the figure below shows, it’s manifesting as a widening out of the disparity between, on one hand, rate cut expectations and on the other, sales and profit growth forecasts.

“As the demand for US interest rate cuts gets even louder, it’s worth reminding ourselves that the cuts embedded in market expectations have never occurred without a double-digit decline in profits,” SocGen’s Andrew Lapthorne remarked, calling the relationship “straightforward.”

As we were reminded in 2021, inflation can be a helluva boon to corporate top-lines when volumes are stable. That is: If consumers can afford to keep spending in the presence of higher prices, revenue will grow with inflation and because it’s hard for consumers to tease out what portion of price hikes constitute “honest” attempts on the part of management to recoup a share of higher input costs and what’s just opportunism, companies can pick up some margin without anyone being the wiser (i.e., so-called “greedflation”).

When inflation starts to slow, so does sales growth, but input costs tend not to be as responsive. The result is margin pressure and slower profit growth. Currently, by contrast, sales and profit growth have inflected for the better, even as the administration demands lower rates. “It’s quite unusual to see sales growth picking up while the market prices in an increasing number of rate cuts,” Lapthorne went on, in the same note.

Earlier this week, Trump said rates should be as much as four full percentage points lower. That’d put Fed funds more or less on the lower-bound. If you think that’s crazy, well… no guts no glory. And remember: His gut tells him more sometimes than anybody else’s brain can ever tell him. Including and especially yours.