President-elect Donald Trump has announced that Elon Musk and Vivek Ramaswamy will co-lead a proposed "Department of Government Efficiency" (DOGE) after he assumes office. The department's aim is to dismantle bureaucratic structures, reduce unnecessary regulations, and revamp federal agencies. DOGE may operate independently and collaborate with the Office of Management and Budget (OMB) to provide recommendations for federal reform.
This arrangement permits Musk and Ramaswamy to continue their private sector roles without Senate approval. Ramaswamy, a pharmaceutical company founder, competed against Trump for the Republican presidential nomination and later supported him. Trump anticipates reforming the federal bureaucracy to enhance efficiency and eliminate wastage, hoping to cut $2 trillion in government costs by 2026, but the plan to achieve this is not yet clear.
Elon Musk has experience in reducing corporate expenses, notably cutting Twitter's workforce by 80% after acquiring it, which helped offset a $3 billion funding gap. However, managing government departments presents different challenges due to strong employment protections for federal employees.
Musk has stated that DOGE poses a threat to bureaucracy, not democracy, and promised to publish all of its actions online for transparency. He also plans to establish a ranking system for the most frivolous tax expenditures.
Alongside DOGE, Trump has nominated key officials for various positions, including Pete Hegseth as Secretary of Defense and William McKinley as White House Counsel, among others. Meanwhile, other essential roles such as Treasury Secretary and Secretary of State remain undecided.
The "Trump Trade," which boosted US stock markets following his election victory, has temporarily cooled, with major indices reversing recent gains. Morgan Stanley warns of three risks to the "Trump Trade": rising US Treasury yields, a strong dollar impacting large-cap stocks, and overvalued stock prices, particularly in AI-related themes.
The dollar index and US Treasury yields continue to rise, influencing investor expectations of inflation and fiscal conditions. Trump's potential policies, emphasizing domestic expenditure and protectionism, could further strengthen the dollar through the coming years.
The Federal Reserve's monetary policies also play a role, with recent rate cuts aligning with expectations but future cuts uncertain. Barclays forecasts a slower pace of Fed rate cuts, potentially pressuring Asian currencies and affecting their central banks' decisions.
