I will be on the Schwab Network today at 8:20AM EST to talk about the Magnificent 7

Schwab Network

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Rebel Finance Podcast-Episode 6 is out, we talk to Stefan Rust about inflation, modern monetary policy, and stable coins.

Market Recap

A slightly hot inflation number was all the market needed to tank on Friday. Wednesday’s break below the 200 day was the clue and Friday was just follow through to the downside.

Yes, Trump could tweet something about tariffs and the market could come roaring back, but I think what is going on now is way beyond tariffs.

The Trade War Is About to Ramp Up. A Guide for Tariff Week.-Barron’s

Ever since DeepSeek you have had the market asking uncomfortable questions on all the capex going into AI. You have also had uncomfortable questions about our lead, if we have a lead, in AI. Trump is also working on trying to completely remake our economy. You can argue whether that’s a good thing, or whether it will be successful, but it will have short term ramifications (see more below).

Watch the lows on SPY at $548. If that breaks then it could get ugly ($550 as I write this). When a counter trend rally like this fails the odds are that we re retest the lows. If it holds then we probably get more chopping around, at least until “liberation day”. Anything can happen April 2, could be sell the rumor buy the news or just about anything else. Caution is warranted.

I’m on Schwab Network this morning talking about the Magnificent 7, as of Friday’s close META is the only one above it’s 200 day moving average, pre market it’s trading below.

My TLT long was looking like a double top there for a moment, but it had an undercut and rally at the 50 day. We know Trump wants lower rates, problem is he doesn’t directly control them. That being said I do like the risk reward of TLT vs. stocks……

If you missed gold I would be careful here, it’s way extended. If you are a long term investor I think gold is something you have to own, shorter term it’s always better to buy gold and the miners when nobody else wants them…..

Germany is another trade I wouldn’t chase, looks to have topped out, at least short term….

I do like China longer term, but short term I sold my BABA and BIDU. Looks like Chinese stocks at least have to go sideways for a bit, but if the overall market is weak they could come down…..

News vs. Noise

The AI Data-Center Boom Is Coming to America’s Heartland-WSJ

Germany’s SAP Overtakes Wegovy Maker Novo Nordisk as Europe’s Most Valuable Company-WSJ

I’m out of SAP right now, but think it will be one of the long term winners in AI.

Rigetti Computing Has Room to Grow. Why the CEO Is Tempering Expectations for Quantum.-Barron’s

I still have no idea when quantum will be viable….

Novo Nordisk’s diabetes pill slashes risk of cardiovascular complications by 14% after four years-CNBC

Will be watching if this can impact the stock. Would really like to see it move back above $73.80 to be buyable….

Norway urged to drop ‘crazy’ ban on investment in defence companies-FT

Trump’s Plan For the Economy

For Trump, Recent Setbacks Are a Price Worth Paying for Radical Change-WSJ

As I said above, I don’t think what is going on with the market is just tariff related. I also think that Trump and Bessent have been trying to tell us exactly what they are doing and have been preparing us for short term pain. I believe our economic policy has eviscerated the middle class. The goal has been to lower the cost of manufacturing by moving it to lower cost venues and lower the cost of labor with open borders. At the same time massive government spending has propped up asset prices. This has resulted in a two tiered economy, great for asset owners who can easily offset inflation with the increase in value in their stocks, homes, and business assets. Awful for anyone who doesn’t have assets. Basically helping Wall Street at the expense of Main Street. I think Trump is trying to flip this. You can certainly argue whether he should do it at all, whether he should do it differently. or whether he will be successful, but if you don’t plan for it you have a good chance of getting crushed. I had Chat GPT take a deep dive on Trump’s plans, his chances of success, and winners and losers…..

Trump's Economic Initiatives: Reshaping the US Economy

President Trump's second term economic strategy is notably ambitious, reflecting his "America First" agenda intensified by significant geopolitical competition. Through tariff escalations, digital asset advocacy, strict immigration enforcement, aggressive energy policies, and public pressure on the Federal Reserve, Trump seeks not only to reshape the American economy but also to position the U.S. favorably in an evolving global economic order.

Here's a deeper look at each initiative, how they interconnect, and their potential impacts:

① Tariffs and Trade Policy

What He's Doing:

• Imposing significant tariffs primarily aimed at China, but also increasingly targeting Mexico, Canada, and the EU.

• Leveraging tariffs explicitly as geopolitical tools to bolster domestic manufacturing and national security.

Goal:
To repatriate supply chains, stimulate American manufacturing, reduce reliance on strategic rivals (especially China), and boost employment domestically.

Likelihood of Success (7/10):

• Partial success is likely, as some industries (e.g., semiconductor, defense, renewable energy supply chains) respond positively to policy incentives to "reshore."

• However, broad-based reshoring in consumer industries remains unlikely due to deeply integrated global supply chains and cost inefficiencies of US-based manufacturing in certain low-margin products.

Investment Winners:

• US-based manufacturing (Rockwell Automation, Carrier, Deere, Eaton, Honeywell, Caterpillar)

• Semiconductor and defense sectors (Nvidia, AMD, Raytheon, Lockheed Martin)

Investment Losers:

• US retailers and consumer discretionary sectors overly dependent on imports (Walmart, Target, Nike, Apple supply chains).

• Companies with complex international supply chains (auto manufacturers heavily dependent on Canadian and Mexican components).

② Cryptocurrency

What He's Doing:

• Officially established a U.S. strategic crypto reserve focused on Bitcoin, while signaling openness to altcoins like Dogecoin.

• Integrating crypto into broader financial policy, pushing regulatory clarity, and positioning the US as a global leader in digital finance.

Goal:

• Increase US leadership in blockchain and crypto, enhance dollar dominance via digital assets, and attract investment and talent in fintech innovation.

Likelihood of Success (8/10):

• High probability, given bipartisan support, innovation-friendly regulatory frameworks, and extensive backing from Wall Street and Silicon Valley. Likely establishes the US as a crypto leader globally.

Investment Winners:

• Crypto exchanges & platforms (Coinbase, Robinhood)

• Crypto infrastructure and mining companies (Marathon Digital, Riot Platforms, MicroStrategy)

• Financials leading crypto integration (Visa, Mastercard, PayPal, Block)

Investment Losers:

• Traditional banks and financial intermediaries slow to adapt (regional banks, traditional payment systems without clear crypto strategies).

• Jurisdictions lagging behind the US in crypto adoption (China, EU crypto infrastructure providers).

③ Deportations and Immigration Policy

What He's Doing:

• Aggressive enforcement of immigration policies aimed at deportations and tightening border security.

• Drastic reduction of undocumented immigration, promoting US labor-force prioritization.

Goal:

• Enhance domestic wage growth, reduce public-sector spending on undocumented residents, and emphasize national security and rule-of-law narratives.

Likelihood of Success (5/10):

• Mixed success likely, with initial effectiveness at reducing undocumented immigration temporarily.

• Long-term economic success questionable, as labor shortages could rise in construction, agriculture, hospitality, healthcare, and lower-end manufacturing.

Investment Winners:

• Automation & robotics companies (Rockwell Automation, ABB, Fanuc) benefit from labor shortages and cost pressures to automate.

• Recruitment & labor training platforms (Robert Half, ManpowerGroup) capitalize on tight labor markets and need for skilled labor.

Investment Losers:

• Labor-intensive sectors reliant on immigrant workforce (construction companies, hospitality and food-service industries).

• Housing and real estate developers affected by higher construction labor costs.

④ Aggressive Energy Policy ("Energy Dominance")

What He's Doing:

• Removing regulatory constraints and incentivizing domestic oil, gas, coal, nuclear, and geothermal production.

• Promoting energy self-sufficiency to reduce geopolitical vulnerabilities, control inflation, and secure industrial growth.

Goal:

• Strengthen domestic energy security, lower manufacturing input costs, and position US as a global energy superpower.

Likelihood of Success (9/10):

• Very likely, given substantial domestic resource base, strong political support, and existing industry infrastructure. Significant bipartisan support for nuclear and clean energy, enhancing energy security.

Investment Winners:

• Natural gas producers and infrastructure (Cheniere Energy, EQT, Devon, Chesapeake, Citadel's energy investments in Haynesville).

• Nuclear and geothermal companies (Constellation Energy, Vistra, Ormat Technologies, Cameco).

• Energy infrastructure and equipment providers (Halliburton, Schlumberger, GE Vernova, Baker Hughes).

Investment Losers:

• Renewable-only companies highly reliant on subsidies and opposed to fossil integration (pure-play solar firms like Sunrun, First Solar could face competitive pressures).

⑤ Jawboning Interest Rates & Monetary Policy

What He's Doing:

• Publicly pressuring the Federal Reserve to maintain low interest rates and dovish policy, aiming to stimulate economic activity and equity market growth.

Goal:

• Keep equity and housing markets elevated, stimulate consumer and business investment, and boost economic growth, providing favorable macroeconomic optics.

Likelihood of Success (4/10):

• Limited likelihood; Fed independence likely holds firm against prolonged political pressure, especially if inflation persists. However, short-term sentiment impacts on markets are notable.

Investment Winners:

• Asset-heavy and leveraged sectors (real estate, homebuilders, leveraged financial institutions benefit from lower interest rates and higher equity valuations).

• High-growth tech sectors sensitive to interest rates (AI, robotics, crypto startups).

Investment Losers:

• Banks and lenders dependent on higher interest rate spreads (regional banks, financial institutions heavily reliant on net interest margin).

• Companies exposed to inflationary pressures (consumer staples, lower-margin businesses struggling to pass costs onto consumers).

Macro & Investment Implications

Current Macro Impact:

• Trump's policies drive a bifurcation of US economic outcomes: growth in manufacturing, energy independence, crypto adoption, and strategic autonomy, coupled with potential higher costs, labor shortages, inflationary pressures, and geopolitical friction.

Future Macro Trends:

• Increased automation, manufacturing reshoring, continued AI-driven productivity gains, sustained crypto innovation, and persistent labor market pressures could define US economy this decade.

• Higher geopolitical tension with China, strategic alliances in energy (Europe, Japan, India), and technology competition likely intensify.

Likelihood of Overall Success (7/10):

Trump's aggressive reshaping of the economy has high likelihood of partial success, especially in energy, crypto, and selective reshoring of critical supply chains. His strategy to dominate globally significant sectors (AI, crypto, advanced manufacturing, energy) has significant support and pragmatic alignment.

However, success in immigration and interest rate management is less certain, presenting risks to growth, labor availability, inflation, and market volatility.

Bottom Line Recommendations:

• Immediate:

  • Increase exposure in domestic manufacturing, crypto infrastructure, energy producers and infrastructure, and automation companies.

  • Trim investments in companies significantly exposed to import-heavy supply chains, labor-intensive low-margin businesses, and traditional financials without clear digital asset strategies.

• Long-term:

  • Strategically diversify into sectors benefiting from technological disruption (AI/robotics, quantum computing, advanced semiconductors, nuclear and geothermal energy), taking advantage of policy incentives and market positioning.

Final Thought:

Trump's economic initiatives reflect an aggressive yet coherent strategic vision, seeking to reorient America toward self-sufficient, tech-driven, and strategically autonomous growth. While not all initiatives may fully succeed, the targeted impacts will profoundly reshape the investment landscape. Investors positioned correctly—emphasizing innovation, automation, energy autonomy, and crypto infrastructure—are likely to benefit significantly over the long term.

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