US stock market up 7% despite Trump policies, Rubin warns of hidden

The S&P 500 has climbed more than 7 percent since the United States launched its war in Iran, and 85 percent of the index’s companies posted first‑quarter earnings that topped analysts’ expectations [2].

Rubin argues that the rally masks a growing disconnect between market prices and underlying economic realities. He points to the administration’s destabilising moves – a war that rattled energy markets, repeated threats to annihilate Iran’s citizens, and a thinly veiled probe into former Fed chair Jay Powell that challenged central‑bank independence [2]. Those actions, he says, have already inflicted damage that will surface over the longer term, even if short‑term data look solid.

Historical parallels reinforce his warning. In the 18 months before October 1987, stocks surged while risk warnings grew, only to see the Dow plunge 22 percent in a single day. More recently, Greek sovereign bonds traded at narrow spreads for years despite fiscal concerns, then collapsed and sparked a European debt crisis [2]. Rubin suggests the same pattern could repeat in the United States if policy missteps persist.

He lists several policy choices that exacerbate existing problems: trillion‑dollar deficit‑financed tax cuts, failure to reform costly healthcare, and cuts to support cheaper alternative energy at a time when AI is driving up electricity demand and China is racing ahead with renewables [2]. New issues, such as politicising the Fed, attacks on universities, slashing federal research funding, and imposing tariffs that raise prices, further erode resilience [2].

Rubin notes that markets have so far been soothed by the administration’s occasional retreats – the cease‑fire in Iran, the Justice Department dropping the Powell probe, and the Supreme Court deeming many tariffs unlawful [2]. Yet he cautions that “disruption and uncertainty can wear away at an economy over time.” The real question is whether the US will recognize and correct these hidden strains before a sharp correction forces a painful adjustment.