원문 보기
how Democrats might end up soiling Donald Trump's presidency that is his entire presidency it could end up being labeled a failure by democrats for something frankly out of his control and in part out of Democrats control as well but first let's understand how Donald Trump should benefit the economy and then let's talk about the real risk factor that right now the Federal Reserve says has a 57% chance of happening in the next 10 months which is a big problem and it would be very bad for Donald Trump but before we get to that let's talk about how Donald Trump should benefit the economy first the tax cut and jobs Act of 2017 benefited about 60% of Americans by lowering their taxes KL Harris likes us to believe that only those making over $400,000 benefited but that's not true about 60% of Americans benefited of course to different degrees some wealthy people benefited to the tune of millions of dollars and others benefited only to the tune of maybe hundreds to thousands of dollars but Donald Trump has proposed or argued that he is going to expand a lot of the tax cuts that expire in 2025 and start phasing out from this 2007 17 plan and so we expect in addition to an expansion of tax cuts for potentially uh vehicle purchases plane purchases boat purchases equipment purchases for businesses hiring employee uh tax cuts on potentially payroll tax cuts corporate tax cuts potentially even lower than the 20 uh 21% where we sit now or the no tax on tips maybe even no tax on overtime we might see these tax policies implemented my guess would be as soon as May 2025 Congress won't actually really get to work until February and it'll take a few months to pass some form of sweeping tax legislation if they make this their top priority I think they will and in my opinion you're probably going to see sweeping tax changes that benefit the economy and that impact should be felt sometime by the fourth quarter of 2025 or 2026 because obviously it takes time for you to start actually recognizing some of those tax benefits regulation Cuts should also help businesses over the long term I personally think if we're going to have let's say Optimus robots or full self-driving Vehicles without steering wheels we're probably going to get that sort of innovation faster under Trump though I don't think it's imminent I don't think I necessarily agree with Elon that we're in a 2026 but I do think that under Trump you probably shave a few years off the time frame as you're able to accelerate that Innovation and companies in the near term might actually avoid bankruptcy specifically companies like Spirit Airlines uh who might merge with jet blue because you're likely to get rid of these anti-m monopolistic folks like KH over at the FTC trying to break up Google other companies and prevents mergers between companies like spirit and JetBlue so in the near- term you might actually end up keeping more jobs at companies that don't go bankrupt because of trump policies that make the business environment more flexible and uh quite frankly more conducive towards growth I also think that Donald Trump's tariffs are much more of a negotiation point and that the worst case scenario for tariffs has already been assumed by the bond market that there's going to be all this inflation I actually think that's totally wrong and I actually think bonds might be forming a bit of a bottom in pricing right now on fears over Trump tariffs but I think a lot of this is Trump negotiating and if the economy continues to slow I think the last thing Donald Trump is going to do is Implement potentially economically crushing tariffs early in his 4-year term maybe if we avoid a recession and we get through the next two or three years maybe it's more of a second half of his term consideration but I don't think tariffs are really going to be a big day one issue nonetheless American businesses are rallying look at stocks alike Tesla up 133% today John Deere's up 1.3% jx's green Apple's green Microsoft's green Tesla uh obviously we already talked to 133% is remarkable caterpillar these are all American manufacturers and they benefit from us-based production the exception of Apple which obviously contracts out to China but people see apple as still an American company that should benefit from uh Donald Trump's plans mostly because Donald Trump actually worked with Tim Cook to help exempt a lot of Apple products from tariffs you could study that history uh from the 2018 Trump China uh trade War but but anyway Donald Trump is expected to repeal support for the green industry this would probably take the form of repealing the inflation reduction act and while everything so far with the exception of tariffs which I don't think will come anytime soon anyway everything so far is expansionary for the economy the inflation reduction act will probably actually enhance layoffs starting in 2025 which is not great see companies like nase which is down 19% at the time of this recording hires contract manufacturers in the United States to build microinverters Tesla uh and solar Edge and First Solar hire companies or manufacturer themselves batteries solar panels solar inverters and they do that in America with the benefit of quite frankly Biden bucks to help motivate them to produce these batteries and sell them see it's the consumer who benefits from cheaper batteries but it's also the company who benefits with manufacturing tax credits for building out the manufacturing facilities to make this kind of product the inflation reduction Act is credited for creating about 330,000 jobs so far that's per Biden and that's probably overcounted but if Donald Trump does end up repealing the inflation reduction act at the same time as he passes job Cuts you're kind of boosting the economy at the same time as you're taking from the economy because you're going to be losing jobs and now I'm not saying that we need to Shi for green energy I'm just saying you're going to be adding to job pain while at the same time trying to prop up consumers the problem is the potential for a jobs recession especially at a time that we're trending towards not the best economic outlook for 2025 you've already got home builders falling I mean look at Dr Horton down about 5% Home Depot down over 4 and a half% on the lack of a potential tax credit for home buyers and a a new high now on the 30-year mortgage rate thanks in part due to markets trying to price in some tariff induced inflation under a trump Administration which I do think yields are likely to plummet not only because I don't think Donald Trump's tariffs are going to be that bad but also because of quite frankly the giant elephant in the room and this is what is not Donald Trump's fault this is what is mostly the Federal Reserve fault but Donald Trump un fortunately for him is probably going to take the blame for this we're going to explain this in just a moment but I want you to think about some of the ironies back in 2020 I joke that if Donald Trump lost the election in 2020 he would probably sit out all of the inflation and then he could potentially in the craziest irony come back when the inflation rate is back down well inflation rate when he left office was around 25% it's around 2 and 1.2% right now and it went up to 9% under Biden now obviously prices are significantly higher but the rate of growth that continued expansion of the inflation has slowed substantially so you do have this sort of irony but another irony is possible as well Donald Trump had to sit through the covid recession which fortunately was very short and a v-shaped recovery but Donald Trump might have another big problem on his hands he might open the door to the White House just as the economy walks into the next recession which actually means even though Donald Trump had low inflation under his first term of course with Co policies likely contributed at least somewhat to inflation he might be defined as somebody who has recession in 2020 and then recession in 2025 and so people might argue Mr Trump is Mr recession and I think this is how Democrats might try to soil the Trump Administration and then take power from Trump in midterms 2 years later as they show look Donald Trump's policies always create recessions now that's not fair because the policies that led to inflation and the Federal Reserve to act this way were a dual issue of both Trump and Biden but also frankly probably more so the fault of crazy government spending and the Federal Reserve failing to react quickly enough but I want you to think about this with me imagine this for a moment because this is a crazy scenario imagine this Trump takes office January 20th 2025 February job status shows negative government and payrolls data February 7th just 18 days later markets freak out that we might be either in a recession starting a recession or about to go into a recession as fears of recession begin to Skyrocket Donald Trump does not Implement any tariffs because he would just add fuel to the recessionary fire bond yields now plummet and the cost to borrow plummets leading bonds to Skyrocket and stocks to sell off unfortunately as stocks sell off you end up getting more joblessness now why would you get a bad jobs report in February because well you're going to get seasonal layoffs which might be resolved by the seasonal adjustments in the labor report because you know on February 7th we're going to get the January jobs report we'll see how many people have lost their jobs in January after the holiday season but then on top of that what do you have after that well you have a very real potential that election workers are now all unemployed obviously uh and they don't get captured in seasonal adjustments and now you have this big negative report on top of pay private payrolls which are already negative today now you really look and say wait a minute this sounds like the Federal Reserve uh and markets might need to start considering the potential for a recession and that's exactly what the Federal Reserve is warning in fact if you look here the Federal Reserve Bank of New York posts the probability of us recession and they haven't updated this since September but it's worth looking at it take a look at this probability of us September uh or or sorry a recession predicted by treasury spreads this is September 2025 so this looks forward to 2025 and it's been looking forward to 2025 you know frankly for the last 11 months here September 2025 57% chance of recession this is higher than where we were in 2007 when the chance of recession was 40% or higher than 2001 when the chance of recession was 45% and we went into recession each of those times every single time this chance went over 30% we went into recession no you did in you know the '90s have a 20 to 30% you know 29 perish but that's not over 30% we're at 57% chance of recession right now okay that's not particularly good so what does that mean well if we end up going into a recession Donald Trump's tax cut and tariff plan that people and markets think Donald Trump is going to implement will actually end up turning into something else it'll actually turn into what I'm going to call the I'm going to call it the uh Trump rescue package and tax cut act probably needs a lot of work on the titling there so let's just call it the Trump rescue package this ends up including tax cuts hiring incentives for businesses cheap loans for businesses personal loan support for financials that might be struggling now like a Sofi or a firm that are struggling with people not paying back their personal loans tax credits potentially new real estate investment tax credits to build homes as the building Market slows down people can't afford housing it's basically stimulus 2.0 you might even have stimulus checks again now look this I don't actually think will be enough to be inflationary that's because Congress will be really cautious about providing too much stimulus because they're going to be worried about inflation but because we're actually in a real recession that's sort of got a boot on its neck by artificial intelligence which makes it harder for people to want to hire more people because you could just put existing workers you have to work harder with AI which makes it harder for businesses to want to hire more in expand the recessionary deflation that occurs could end up meaning that the Trump rescue package doesn't do enough it basically just keeps us out of deflation but it doesn't actually cause any inflation what instead happens is the Federal Reserve is going to have to cut rates rapidly to 2 to 3% that won't be enough and as stocks fall and accelerate the pain Democrats blame Trump for causing another recession and then what ends up happening is Donald Trump replaces Jerome Powell in May when his term is up the FED gets a new chair that is encouraged to drop rates to zero which they then do and the FED basically fully capitulates under Trump pressure to get us out of a recession and that could be your most glorious buying opportunity not right now when markets are pricing in pure perfection right now markets are literally pricing in pure perfection the bond market is freaking out over inflation which is dumb I don't think that's going to happen the stock market is pricing in that everything's going to go perfect and nothing's going to go wrong and that growth is going to keep going and there's not going to be a recession but then when we look at the latest data we go Q4 GDP estimates have just been revised down to 2.4% the average 3month uh employment uh uh growth is just 103,000 once we start getting to 50 to 80k we start worrying about session and really going negative with the total number which is only positive because of government jobs right now over the last 3 months the average of the first 6 months of 2024 were 228,000 jobs we already know the S rule has triggered and untriggered and it's likely to trigger again if you don't know what that is don't worry about it it's just a recession indicator and you know the alarm Bells have been going off on it it's the sahm rule in case you want to look it up but what's really important here is it suggests that the trend of deterioration in the labor market is getting worse quit rates are really low which is a recessionary signal job openings are really low which is a recessionary signal and you're in a position where hiring it just sucks private payrolls are negative anybody out there trying to get a job right now knows how hard it is to actually get a job right now at present at the time of this recording the yield curve is about 18 basis points uninverted now again fancy Finance math here the point here is just to say that we're getting close to a level of uninversity ready to blow basically and unfortunately if it blows up in Donald Trump's face Donald Trump's going to get blamed for it even though it's not his fault now the job report uh you know coming up in February or even just over the next few months will be closely watched but the Federal Reserve is likely to move too slowly to make any big difference until Donald Trump is actually in office we do have a Fed meeting tomorrow which I'll be covering make sure if you haven't yet signed up for the alpha report go to meet kevin.com Alpha get a free report on my thoughts uh on uh trades during the day uh or for the day leading up trend lines resistance lines uh volatility estimates where valuations are high their where valuations are low my thesis on Catalyst coming up and otherwise obviously it's not personalized advice but I encourage you to check it out uh but you know really you have to understand this the Federal Reserve by tomorrow will have cut interest rates by 75 basis points yet markets tighten yields by 80 so in other words the FED is like hey things are softening let's make things cheaper and markets are like huh let's make things more expensive by basically the same amount that's really bad because you just basically restricted the economy even more and when those High rates actually hit the economy which probably takes 3 to 6 months surprise surprise brings us back to q1 you know the first half basically of 2025 right when Donald Trump walks into office you probably end up in a recession Federal Reserve says it's more likely than a coin toss at this point it's it's more likely than not so what do you do like what do you do in a scenario like this well in in my opinion there are a few things that you should do and uh first of all keep in mind if you need personalized Financial advice I can't give you that on this channel because I don't know what your situation is we do have an option for you you go to stock hack.com and you can actually get personalized advice we look at your situation and help you figure out exactly what to do and what's best to do for your situation but let's think about this for a moment something to consider consider in the event that we are going into a recession is building a larger emergency fund something that's going to enable you to buy that stock dip when the Federal Reserve capitulates and something that's going to be able to let you float through potential job loss over the next 2 years and I'm not saying you're going to have your income go to zero but your income may fall let's say right now you're making $125,000 a year either by yourself or with your spouse or whatever what are you going to do if that goes down by 30 % what if your monthly budget was 30% tighter than it is today and if today you're living paycheck to paycheck imagine being another 30% down so I'd rather start thinking about how do you build more insulation for yourself do you do more side hustes do you take more shifts while the economy is still decent we're not in a recession right now but do you take more shifts and build more money now do you start setting trailing limits on some of your stocks you know maybe you say hey all my stocks are going up this is great okay that's totally fine so maybe what you do is you set a wide trailing limit hey you know sell Tesla if it falls by $40 okay well great if Tesla keeps going up it doesn't sell but if you have a trailing good to cancel limit of 40 bucks and it runs to 320 and then it goes back down to 38 or 280 boom it triggers the sell it's just an idea uh so maybe trimming a little bit of exposure from stocks but also minimizing your debt not taking on more debt during this sort of environment paying down debt that you have so that you have available borrowing capacity if you need it in a recession when things get tighter and something to really consider if you have equity in your real estate right now consider getting a home equity line of credit really good idea in my opinion to get a home equity line of credit now when valuations are higher because if valuations do Trend down you don't want to be in a situation where now you can't borrow anything you don't have a credit line anymore doesn't mean credit lines can't be frozen they can be but I think it's better to have and not need you don't have to borrow from it you don't have to pay any interest rate interest on it you know let's say you have 100K in equity in your home and you have an 80k credit line you're able to pull on it just have it at least open you know that way if there's uh you know some market crash or whatever you've got an insulative blanket that you know you weren't even paying any interest rate on or any interest expense on so these are just some things to keep in mind some things to consider but this right here is exactly the playbook for how Democrats could destroy a Donald Trump presidency recession and it wouldn't even be his fault but I look forward to covering the Trump rescue plan anyway subscribe to the channel if you like this sort of insight we'll see you in the next one thanks so much folks
Comments 0