Morgan Stanley’s Trump Warning.

hey everyone me Kevin here this summary

of a 100 page Morgan Stanley report is

excellent to give you another

perspective as to what could actually be

going on in the economy over the next 2

to 3 years under the Trump

Administration now keep in mind this is

Morgan Stanley's opinion so it could be

wrong everybody's got a guess as to

what's going on but I'll give you my

opinions on it as we go through it so

it's called a year ahead Outlook recap

so it's a recap of their 100 page report

and we're going to go through just the

recap here so over the next two years

under Donald Trump Morgan Stanley

expects lower immigration and more

tariffs both of those mind you to slow

GDP growth and make inflation stickier

now let's explain that quickly when you

have fewer people you have fewer people

who are buying goods and services and

that's a simple way to explain a GDP

argument businesses could potentially

also become less productive if they have

less immigrant workers now this is not

an argument here to say whether uh

illegal or legal immigration is good or

bad I'm an immigrant except I came here

with a green card uh and and a Le a Visa

and then a green card and then a citizen

right so there are legal ways and then

there are broken other ways uh to come

into the country but the point of this

is the fewer people you have and the

less unemployment growth you have or

rather the less employ employment growth

you have less your GDP tends to grow so

Morgan stly see slower growth here now

it has been a pretty common argument to

argue that because you'll have less

productive workforces you'll see some

Trump inflation and when you combine

that with tariffs yeah it makes sense

and it's one of the reasons why the bond

market has been so expensive in terms of

yields uh and and yields have been

relatively High 4 and a half to 5% range

here on the 10year for example the one

year is even higher it's crazy we're

about to we're about to invert again on

the twos 10 crazy uh which is a

recessionary signal but both of these

things are signals that are bearish

right higher inflation means potentially

higher interest rates of the FB slower

GDP growth means you're towing closer to

that recessionary line inflationary

pressures and policy uncertainty spark

greater fed caution leading to a pause

in the second quarter boy that would be

such a mistake that would just be the

nail in the coffin for the stock or for

um frankly the the US economy eventually

the stock market uh sometimes the stock

market can actually lead a poopy doopy

recession uh and usually the stock

market bottoms about 6 months before the

end of a recession well given that the

downtrend in the stock market hasn't

happened yet it's likely we're not in a

recession at this very moment unless you

want to just say the whole last three

years have been which is also unlikely

given unemployment growth uh but more

and more it is looking like we are

trending towards a larger slowdown and

Morgan Stanley though they don't think

it's going to happen as fast as other

people think I keep thinking 25 Morgan

Stanley has a different opinion they

think there'll be a pause in

q225 and they'll actually pause for one

year a oneyear pause and they'll resume

rate Cuts in the second half of 2026

that actually could be more than a

one-year pause that could be a 1 to 1.5

5e pause as higher tariffs hit growth

and job gains almost stop so they

basically think the jobs Market is going

to just hit a wall so uh for the 2025

season of

2026 uh overall they forecast real GDP

growth to slow from

2.4% uh this year to 1.9 and 25 and 1.3

and

26 they think that immigration bolstered

Supply allowing for this rapidly growing

econom and falling inflation net

immigration was around 3.3 million in 23

and accounted for about 85% of

population growth in other words we're

having fewer babies we're just letting

more people come into the country we

expect immigration only slightly below

that in 2024 but assume new policies

will dramatically decrease immigration

flows by the second quarter of 2025

tariffs are also stagflationary there

are attacks and while many of the

Imports under tariff will be consumer

goods many will also be intermediate

Goods used in domestic Manufacturing in

other words as we expect a gradual

increase in tariffs through the end of

25 and beginning of 2026 they actually

see oopsy dupsies coming uh in the way

of uh of of inflation sticking around

longer and so what I'm actually planning

on doing and let me know in the comments

if you're interested in this is I'm

putting together something that I'm

calling the trumponomics plan and it's

basically going to be your guide book

for what you need to do in 2024 and what

you need to do throughout

2025 from a tax point of view stocks

real estate bonds Commodities crypto

every single thing in every tax loophole

we could potentially think of we putting

it together uh so that way we can help

you and then update those As Trump

policies come out so stay tuned for that

but anyway take a look at this meanwhile

there is a negligible fiscal offset uh

in other words stimulative offset right

the majority of fiscal policy is

expected to be an extension of the tax

cut jobs act uh as some of those

Provisions start expiring in 2025 at the

end of 202 or sorry at the end of 25

beginning of 2026 so we'll probably see

uh little fiscal support here so

basically they're saying tariffs are

stagflationary and they hurt GDP less uh

immigration hurts uh GDP and is

potentially inflationary so where does

this leave us both slower immigration

and tariffs dampen disinflation relative

to a prior forecast slower immigration

and a tighter labor market push up

services inflation but a relatively flat

Phillips curve means that lower

unemployment rates moderate the effect

so in other words maybe it just it'll

just be a Slowdown and sofish Landing

but not sort of a boom take a look at

this on the labor side payroll growth is

expected to fall to 113,000 per month on

average in 2025 the unemployment rate

isn't actually expected to go up that

much though because there'll just be

fewer people in the workforce so it'll

seem like at the same time

more people are unemployed the workforce

is also shrinking so the percentage is

lower kind of weird how they pull that

off but anyway they see consumer

spending growth weakening thanks to

lower immigration right fewer people

buying things and the restraint from

high interest rates taking more of a

bite at the end of

2025 despite the drag caused by policy

shifts business investment will remain

strong in 2025 fueled by artificial

intelligence go super micro let's

go keep in mind if you haven't yet seen

it uh my Alpha reports have been calling

out uh the nonsense of the super micro

pain initially I was part of the oh no

this is this is really bad but then uh

once I actually did some fundamental

research I started talking about this in

the course member live streams and the

alpha report I'm like I don't know man

this valuation gotten pretty low and

that Stock's just been absolutely on a

tear in killing it hopefully it keeps

going uh and also in case you didn't see

my other video on the Trump press act I

did want to apologize to those of you

that tried signing up over at roboh

hack. for the Venture Capital due

diligence we're doing on a robotics

investment and multiple other VC

Investments that I know many of you want

to be a part of so many of us signed up

that we crashed the doc you sign and

they locked our account cuz they thought

we were spam so we're working to resolve

that uh if you email us though go to

roboh hack. you'll see the email there

it's invest roboh hack. uh we could give

you the link manually until we get that

all resolved uh oops thank you though uh

for for the support but anyway uh

investment slow in 2026 with tariffs

though we still see it running above GDP

growth so there's still bullish on AI

and AI investment they're bullish on on

really just the economy staying out of a

recession which is good but they do

think things are going to really slow

down in 25 and six uh I I personally am

of the mindset that all it's really

going to take to actually induce a real

recession is some kind of shock that

tanks the stock market like as an

example I'm not saying I think this is

going to happen but

as an example of what could do it you

know Bitcoin hits $102,000 maybe it even

extends a bit to 105 1110 then all of a

sudden there's some kind of crypto crash

crypto winter or whatever and I don't

know the sucker goes down to 70k and

micro strategy collapses you know by 50

60 70% or whatever we start running into

debt issues that turns into some sort of

risk off momentum which hits companies

companies are like oh no our stock is

down let's lay people off and it really

just accelerates you into a recession I

don't think you could really bet on that

I think you could Hedge for that but I

don't think you really bet on that

because things usually take a lot longer

than you suspect uh get TLT 2027

anyone but anyway against this backdrop

we expect a slightly higher terminal

rate in 2025 but more Cuts in 2026 due

to lower growth higher inflation in 2025

will keep the FED more likely to pause

Morgan Stanley does see 25 basis point

cuts at the next four meetings it's not

what the market sees right now Market

sees uh 50/50 chance of December and

like a 25% chance that you get two cuts

uh back toback December and January so

we'll see what the next data says I

suppose but uh uh yeah and and then we

got minutes coming out next week as well

so we'll be covering those on Tuesday

that'll be entertaining but anyway tight

immigration policy and deportations

imply lower potential GDP or productive

C capacity so the FED must restrict

demand to conform to lower levels of

Supply so if now you have restricted

manufacturing they don't want too much

demand because that's inflationary so

you restrict demand which is what the

FED can do and then they go oh yeah

we're going to have rates oh that's a

weird little reaction there uh then

we're going to have rates higher uh as

manufacturing is in the Poopers which

the last PMI report wasn't that

particularly fantastic either uh when we

were going through the PMI report we

definitely saw some weakening uh in uh

in manufacturing that had been some of

the worst that we'd seen in a while uh

anyway thank you so much for watching if

you want to see where I am on vacation

or see some clips or whatever make sure

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Kevin on X thanks so much we'll see you

in the next one goodbye and good luck