Paul Krugman, who won the Nobel Prize in 2008 for his work on trade theory, argued in a new Substack essay that the financial markets have not yet responded to Trump's economic policies because they act in "complacency until the last possible moment." Markets seldom price in the "huge, disruptive" changes that Trump's policies seek to make, according to Krugman, and will act as if nothing is wrong "until it’s blindingly obvious that it isn’t." <


"So if the conventional wisdom is that economic conditions will remain more or less normal despite highly abnormal policy, markets will remain calm until the illusion of normality becomes unsustainable," Krugman wrote. "At that point market prices may 'change violently.'"