Trump's Economic Plan - Bravery Or A Gamble?

I welcome you once more to my corner. I have not posted since January for the right reasons. Now that quarter one (Q1) is almost over, I know it's necessary to give a follow-up of my New Year's speech. Let's get to it. It's all about interest rates and the message hasn't changed. 

What a show Trump has put on in DC. Trump came in threatening that Jerome Powell resign because Powell and co have kept rates high, despite Trump seeking lower rates.  He quickly realized or was cautioned that such an approach would not work. On 01/01/2025, I wrote that our focus should be on the US Federal Reserve (FED). This bank (if you choose to call it a bank) is the most powerful institution in the world and I want to add now that another department we need to quickly update ourselves about is the US treasury, championed by its secretary, Scott Bessent. Collectively, these guys all want lower interest rates. The FED will not drop rates until the incoming data suggests it is appropriate. On the other hand, Trump and Bessent wish to deliver this data to the FED so they can go ahead and drop the rates. The FED has a dual mandate: keep inflation and unemployment low. Trump and his team are seeking to force the FED's hand. That's just one part of the equation. 

       

 

I say equation because from what I reasoned and have come to understand, whatever is at play is multivariate in nature. America first, lower inflation and subsequent interest rates, addressing the budget deficit, and cutting taxes, deregulation. There are many moving parts to what I think the Trump administration is trying to do. I think I said this before, and I will say it again: Trump will only have a strong presidency if those interest rates drop as low as possible, and as soon as possible. Like it or not, he has a pretty strong team to deliver the agenda he is on for the economy. Let me slot it in here that I think it has to be bravery to switch from the globalist agenda to purely America First. Trump must pull all resources back to the US, reduce spending as much as possible, and produce like never before. All these while cutting taxes on US citizens and delivering them higher wages. Some say the dollar's power will suffer, but that is why he is creating a crypto reserve for the US. It's a hedge against future dollar volatility if you ask. But this will be a topic for another day. Regardless of how you conspire about such moves, I look at all from a profit perspective. 

Every part has to keep moving, otherwise, his presidency will turn into the worst. It's a slippery slope if you ask me, but he has a team that is bent on delivering for America. Don't get me wrong, I'm not naive and do know that all these people are also in it for themselves. His moves with tariffs led me to the famous Laffer's curve, where I have come to understand tax policy on a deeper level. If you think of his 2017 Tax and Jobs Act, you understand he is out for more. Just like in 2017, everyone will see a difference, but for sure, the ultra-wealthy should enjoy hefty chunks. If ever you had any doubt, take a look at the Department of Government Efficiency (DOGE). It's bravery to know you'll be hated and still go on and do what needs to be done. If my home country had a DOGE like this one, I would probably not be in the US lol. DOGE alone could save his presidency because at the core of inflation is government spending. And for the US, it's been a lot of spending. Look, as an example, the whole EU had partially dialed back on defence spending because the US was protecting them. 

There's a lot to unpack here, but this write-up is already long. If you question and analyze every move Trump makes in the eyes of someone looking at interest rates, you'll quickly see where everything is going. Look, guys, Trump has some crazy in him, and he doesn't look like someone who is scared of being different. I was never in a position to pay attention to the markets the first time he was around, but this time, I'm fully engaged. Forget media rhetoric, read and absorb as much info as you can. While markets are fearful of tariff uncertainty and the US first policy, I see this as a unique opportunity to buy valuable assets. Honestly, I call their bluff on the US first policy. At the end of this, the US is still going to be the world's superpower and dictating how the world operates. One thing we can be sure of is fewer wars (military confrontation). Many are not paying attention, but the only war Trump likes fighting is trade wars, and the US has some serious power too. Their main enemy is China, and manufacturing is where they need to be focusing to beat China at their game. 

If you thought you had seen crazy from Trump, I say get your popcorn, sit on the side, and watch. It's just starting. Trump is like bamboo, because once you let it grow, you can then spend many years trying to make it go away, and it will not. I think it's bravery to take on the fight he has taken with Elon, Scott, and the whole host of others. I was excited when my idol Ray Dalio was in DC and said he was in favor of their move to address the budget deficit. At the end of the day, it's a gamble. So, ladies and gentlemen, we should be excited that they are all depending on data and have market experts working on it; we should call it a Brave Gamble. 

"If you think something can't be done, move aside so those who believe it can be done can try doing it."