The stock market loves more government spending. It doesn't like "cutting" government spending.

People who don't understand the capital market and finance in general often lump the stock market (Wall Street) and "neoliberalism" together. That couldn't be further from the truth.

The stock market loves when there's a lot of spending and investment, especially if it comes from the government.

That's why stocks usually rise more when Democrats are in power than when Republicans are in power, even though Republicans are seen as more of a "pro-business" party.

Here's the latest, somewhat anecdotal example.

The German DAX stock index has risen by as much as 13% since the beginning of the year, even though the German economy has been in a (mild) recession for two years, there's a lot of uncertainty about tariffs, the auto industry is on shaky feet, their industry in general has been in a long-term downward trend, etc. However, the new German government intends to release the brakes, increase the deficit and launch a massive investment cycle in defense, energy infrastructure renovation, etc. - and the stock market has been waiting for that.

At the same time, we have a new US administration trying to cut as much government spending as possible (DOGE), and despite initial optimism after Trump's victory, stocks are down 5% year to date.

DAX up 13%, S&P 500 down 5%.

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