Over the weekend, in “Dead End,” I suggested The White House has no real plan for domestic policy in 2026, not on the macro front and not on any other front either.

Donald Trump came into his second term determined to follow a plan blueprinted on Viktor Orban’s so-called  “illiberal democracy” in Hungary, a project which conveniently overlaps unitary executive theory, a vision for the presidency popular among some of the Supreme Court’s conservative justices.

Just 10 months in, Trump’s established something that looks very much like soft-touch autocracy in America where the rule of law’s called into question on a weekly basis.

That’s not a partisan assessment. It’s just a fact, and I don’t think Trump would apologize for it, which is to say if you’re inclined to “defend” the president against such allegations, just be aware that he might agree with my assessment more than yours, disdainful as he is for the norms and decorum we tend to associate with liberal democracy (small “l,” small “d”).

In the Weekly linked above, I noted that household sentiment is, in aggregate anyway, the worst it’s ever been in America and the labor market’s deteriorated such that firms are now shedding jobs on net. So far, this simply isn’t a macroeconomic success story. Anyone who says it is is either deliberately lying to you or accidentally lying to themselves. (I see a lot more of the latter than the former, by the way.)

But if you ask Morgan Stanley’s Mike Wilson, there is, at least, a macroeconomic plan. Last month, I said that in my opinion (which I’m still entitled to, as far as I know), Wilson’s year-ahead outlook felt partisan, and I didn’t necessarily mean that as a criticism. We’re all partisan to a greater or lesser degree.

With that in mind, consider the following (very short) excerpt from Wilson’s (very long) year-ahead piece. It’s worth highlighting because i) it’s a kind of counterpoint to the Weekly mentioned above and more importantly ii) it does contain some statements of fact — as opposed to opinion — which are useful in framing your own outlook for the year ahead.

Via Morgan Stanley’s Mike Wilson (truncated):

If the Fed is truly concerned about its inflation mandate and no longer running an asymmetric inflation policy, then what would be the justification for cutting rates further in light of an economy that is expected to see real economic growth well over 3% in Q3 with earnings growth for the median stock at its strongest level in four years? We think this is all part of an overall strategy to run the economy hot to deal with the massive debt and deficits. The main message is that with debt and deficits so high as a percentage of GDP, the government has no choice but to let inflation run hot. Of course, this won’t work without better real growth, too. The end goal, in our view, is to get nominal GDP growth as far above the cost of borrowing as possible to bring down the debt/GDP ratio over time. The wider the spread, the better. With borrowing costs fast approaching 4% since the Fed raised rates in 2022, the bogey for nominal GDP growth could be 6-7% with roughly half of the contribution coming from real growth and the other half coming from inflation. Lowering rates can also play a role, but with the back-end rising sharply last year when the Fed cut rates, it’s questionable how low borrowing costs can fall. If this is correct, it would imply the Fed would need to move away from its stated 2% inflation target. Meanwhile, real GDP will also need to rise which is the goal of the administration’s policy initiatives. The “rebalancing” of the economy on three levels (exports > imports, investment > consumption, and real wage growth redistribution) is a good blueprint to achieve that goal, in our view. Success is still very much to be determined, but we think the market is taking the view that this is a step in the right direction, and we concur. Notably, we don’t think this is a partisan choice. While one can debate what strategy has the best chance of success, we would argue capital allocation done by the private sector has a better chance of driving productivity, while a shift in real wage growth is a more sustainable approach to stabilizing lower/middle income consumption. In our view, a real GDP growth mix that favors productivity over labor force growth is ultimately more favorable for capital markets and equities as an asset class.