History Says There Are $8.3 Trillion Reasons the Trump Bull Market Is on Thin Ice
Key Points
The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite have thrived under both of Donald Trump’s terms as president.
Total financial assets held in money market funds rocketed to a fresh all-time high in the first quarter.
Despite six Federal Reserve interest rate cuts, assets held in money market funds have gone parabolic, signaling skepticism with the Trump bull market.
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Although the stock market has advanced under most presidents, the annualized returns of the iconic Dow Jones Industrial Average (DJINDICES:^DJI), benchmark S&P 500 (SNPINDEX:^GSPC), and innovation-driven Nasdaq Composite (NASDAQINDEX:^IXIC) are higher with President Donald Trump in the White House than under most other presidents.
During Trump's first term, the Dow, S&P 500, and Nasdaq Composite gained 57%, 70%, and 142%, respectively. His second, non-consecutive term has delivered an encore performance, with the Dow, S&P 500, and Nasdaq rallying 22%, 28%, and 34% through the closing bell on Sept. 2.
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The stock market has thrived under President Trump. Image source: Official White House Photo by Andrea Hanks, courtesy of the National Archives.
While it might seem as if nothing can stop the Trump bull market from heading even higher, one historical figure looms large. This $8.3 trillion warning suggests that Wall Street's historic bull market under President Trump is on thin ice.
Money market fund assets are soaring, and that's terrible news for stocks
Though several headwinds serve as a warning for investors, including record-high outstanding margin debt and nosebleed stock valuations, the total financial assets held in money market funds could be the biggest red flag of them all.
Money market funds are a type of mutual fund that invests in extremely safe, high-quality assets, such as short-term Treasury bills and certificates of deposit. Investors putting their money to work in money market funds typically want to protect their principal and generate reliable interest income.
When the Federal Reserve undertook an aggressive rate-hiking cycle between March 2022 and July 2023 to combat a rapid rise in inflation, fixed-income yields soared. This marked the ideal time for income investors to shift some of their assets into money market funds.
$8.3 Trillion is now sitting in money market funds, an all-time high 🚨 🤑 💰 pic.twitter.com/a63K7h0ell
— Barchart (@Barchart) August 5, 2026
But between September 2024 and December 2025, the central bank lowered the federal funds target rate six times, reducing yields on fixed-income securities and making money market funds less attractive. We would have expected to see capital flow out of money market funds as interest rates declined, but the opposite has been true.
The latest quarterly update from the Board of Governors of the Federal Reserve is that total financial assets held in money market funds reached a record high of $8.29 trillion in the first quarter. Even as yields have fallen, investors have been piling into money market funds like there's no tomorrow.
Ideally, we'd like to see this capital flowing back into the stock market -- but it's not, and that's quite telling.
The stock market entered 2026 at its second-priciest valuation spanning nearly 156 years. History tells us that premium valuations aren't sustainable over extended periods, which may have investors skittish about putting their capital to work in the high-flying Trump bull market.
Stock Market Shiller PE Ratio on the verge of taking out its Dot Com Bubble all-time high 🚨 🤯 👀 pic.twitter.com/CtCmSgWnLt
— Barchart (@Barchart) July 11, 2026
Furthermore, Wall Street's bull market under Trump has been powered by the artificial intelligence (AI) revolution. History has shown that, for decades, every game-changing innovation has endured an early-stage bubble-bursting event. Soaring assets in money market funds may signal that investors expect an AI bubble to form and burst.
To round things out, more than half a century of history shows that significant increases in assets held in money market funds have commonly been a precursor to economic and stock market downturns. Since the midpoint of 2022, total assets held in money market funds have soared 65%! Other instances in which money market fund assets soared include the lead-ups to the financial crisis and the COVID-19 crash.
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