Trump just dropped two bombs. One pumps $1.2T into the system. The other nukes half the global supply chain.
The second one gets decided THIS WEDNESDAY.
THE PUMP PROMISE:
Trump floated giving every adult citizen a $5K "dividend" if GOP sweeps midterms. That's 245M adults = $1.2T straight into consumer pockets. Biggest stimulus since COVID. 70% of US GDP is consumption. For equities and crypto? Pure rocket fuel.
THE NUKE THREAT:
Trump said he'll "halt trade" with EVERY country the US runs a deficit with if the Fed doesn't CUT rates. Fed decision drops Wednesday. Market's pricing in a HIKE. So Warsh is about to do the exact opposite of what Trump wants, 3 months after Trump appointed him.
If Fed hikes and Trump executes? Trade gets cut with ~50% of US partners: Mexico, China, Taiwan, Germany, Japan, South Korea, Canada, India.
Why this WRECKS markets:
• 40% of $SPX revenue comes from overseas
• Taiwan + Korea = 90%+ of advanced chips. No chips = no AI data centers. AI is 41% of $SPX gains
• Supply chain collapse = inflation spike = Fed has MORE reason to hike, which is the opposite of what Trump wants
So we've got:
• Promise 1: Inject $1.2T into consumption
• Promise 2: Blow up the supply chains that feed that consumption
And Promise 2 doesn't wait for November elections. It hinges on what Powell does Wednesday.
Is the trade threat just theatre to bully Warsh? Or is Trump actually ready to pull the trigger if Fed defies him?
The second one gets decided THIS WEDNESDAY.
THE PUMP PROMISE:
Trump floated giving every adult citizen a $5K "dividend" if GOP sweeps midterms. That's 245M adults = $1.2T straight into consumer pockets. Biggest stimulus since COVID. 70% of US GDP is consumption. For equities and crypto? Pure rocket fuel.
THE NUKE THREAT:
Trump said he'll "halt trade" with EVERY country the US runs a deficit with if the Fed doesn't CUT rates. Fed decision drops Wednesday. Market's pricing in a HIKE. So Warsh is about to do the exact opposite of what Trump wants, 3 months after Trump appointed him.
If Fed hikes and Trump executes? Trade gets cut with ~50% of US partners: Mexico, China, Taiwan, Germany, Japan, South Korea, Canada, India.
Why this WRECKS markets:
• 40% of $SPX revenue comes from overseas
• Taiwan + Korea = 90%+ of advanced chips. No chips = no AI data centers. AI is 41% of $SPX gains
• Supply chain collapse = inflation spike = Fed has MORE reason to hike, which is the opposite of what Trump wants
So we've got:
• Promise 1: Inject $1.2T into consumption
• Promise 2: Blow up the supply chains that feed that consumption
And Promise 2 doesn't wait for November elections. It hinges on what Powell does Wednesday.
Is the trade threat just theatre to bully Warsh? Or is Trump actually ready to pull the trigger if Fed defies him?
