The Trump Bottom | Buy Time for Stocks

Hey everyone, me Kevin here. Could we

have just hit a near-term bottom in the

face of Goldman Sachs telling us the

recession odds have just risen to 35%.

In this video, we're going to talk about

both. We're going to talk about how

maybe we're at a near-term bottom now.

We're also going to go through Goldman

Sachs data and this morning's NMI

numbers were somewhat optimistic. Third

month of up on those Chicago numbers

this morning, beating expectations

though still in contraction. A lot of it

though driven potentially by that pull

forward of production and business

demand as people try to frontr run

tariffs. I heard a lot of news that this

weekend was some of the best selling you

could have done for autos because hey

the tariffs are coming so if you need a

new car why not buy it now? Kind of

smart. I was also talking to an HVAC

tech since obviously you know do a lot

of real estate work. Houseack after all

you know the deal. Nonacredit investors

welcome at houseack.com. Uh they're

talking about, hey, now's the best time

to sell new air conditioners because

we're like, hey, you want to get in

before the summer? You want to get in

before tariffs and the summer? Buy now,

baby. It's like it's like a sales fest

out there for for the economy.

Everything's on sale. Stocks are on

sale, goods are on sale because they're

about to get more expensive. The coupon

code's about to expire. In a weird way,

when you look at it that way, it's all

actually somewhat bullish. Uh, yeah. So,

again, we're going to go through the

bearish Goldman Sachs piece in just a

moment, but I want you to pay attention

to some very specific levels here for a

moment. Look at SPY, okay? The proxy for

the S&P 500. Look at this level right

here. We bounced off this level on the

11th, the 13th, the 14th. We just are

sitting on that level right now. It is

the 55024 level. uh and it could be the

sign of potentially another bounce to

come here. Usually my belief is that

stocks hit their lowest point when you

are just before the catalyst event. In

this case, we know that liberation day,

which we're not quite sure if it's

liberation day yet or liquidation day,

but whether it's liberation day or

liquidation day, usually the biggest

fear in the stock market comes right

before the catalyst event. Today is also

month end. So you got month end

rebalancing going into April. Tomorrow

will be April Fool's Day and you got

April 2nd, the catalyst event. Usually

the most pain comes just before the

catalyst.

Now, at this point, markets are

convinced that the tariffs are going to

affect somewhere around 25 different

countries. There's also the potential

for some form of a flat tariff on on all

countries, somewhere around 15%. We

expect there to be exceptions and

exemptions for companies and countries,

though quote unquote from Trump, not as

many as previously said, though we sort

of been have been getting flip-flopping

data on this. So, I think at this point,

uh, analysts and Wall Street have really

gotten to the point of trying to price

in the worst, which is, all right, we're

going to be getting a lot of tariffs.

And part of that negativity is because

Donald Trump has really started flipping

from this mindset of, oh, tariffs are a

negotiating tool and we're just trying

to negotiate free trade. This is just,

you know, uh, art of the deal kind of

stuff. And, and we've actually started

seeing Donald Trump flip into a more of

a mindset of, hey, higher tariffs are

going to stay. And as a result of higher

tariffs staying because they're a

revenue driver for Trump rather than

just a uh you know tool for negotiating

well now all of a sudden you're going to

get institutions like Goldman Sachs here

reducing their earnings forecasts for

S&P 500 companies and increasing their

uh bearishness in terms of recession

forecast. So this makes sense. Wall

Street analysts are starting to get

nervous that Donald Trump is flipping.

This is no longer a negotiation tool.

This is now a weapon for tax revenue.

And of course, the sales pitch to the

majority of Americans, the majority of

Americans, by the way, don't really care

about the stock market. You watching

this are probably part of the minority

of people who actually care about

financial markets. Most people don't. uh

and uh and those folks are being sold

the idea that hey, you know, if we can

tax uh all of our, you know, allies or

or trading partners, then uh we can make

it so that 93% of Americans don't have

to pay taxes because we're going to

remove as a goal the income tax on those

making under $150,000 a year. Maybe you

don't even have to file an income tax uh

at all or tax return. uh instead, you

know, we'll we'll be cutting so much

money through Doge and cutting so much

waste and fraud that we're going to be

getting Doge dividend checks. Obviously,

a lot of that remains to be seen and and

while we hope we can reduce a lot of

waste and fraud, you know, we'll we'll

see what could happen. We'll remain

optimistic on that. The problem

is if Donald Trump truly does go down

the road of, hey, this is a permanent

revenue driver and we need companies to

invest in American manufacturing, you

have to remember there there are a few

problems that we face right now. The

number one problem that we face right

now is we're in a weaker economic time

where we don't have the luxury of

company pricing power uh that we had in

2021 and we don't have the labor market

like we had in 2022. The labor market we

had in 2022 was much more resilient to

this sort of stuff. Like if Trump won in

2020 and did this stuff in 2022, it

wouldn't be that big of a deal. We'd be

able to absorb it a lot better. Uh

unfortunately, our ability to absorb it

now is weakened by a Federal Reserve

that is much less likely to cut. Uh a

government that has much more debt. uh a

government that is much less likely to

stimulate because of fears of inflation,

but also a government that all in all is

is likely uh to say, "Hey, you know,

this is just the austerity that

basically we have to go through to

transition our economy to uh one that

drives a significant amount of income

from tariffs. But when you combine those

sort of lack of downside protections

that we have and the weaker economy with

an economy that transitions to no

tariffs as a source of revenue, we have

to say, okay, we now have to punish the

rest of the world's manufacturing so

much that it actually makes our

expensive manufacturing in America look

cheap. Because obviously our labor is

more expensive, our cost to produce is

more expensive, everything is more

expensive in the United States. So you

have to make everything else relatively

more expensive to incentivize

manufacturing here. That's what Trump is

doing through tariffs. Another option

would be lowering wages in America,

lowering the minimum wage. Or, you know,

a third option could be or in

combination with these other items. You

could also uh incentivize manufacturing,

right? Bring down the cost of

manufacturing in the United States

through like a, you know, Biden chips

act or whatever. Donald Trump is not for

a Biden chips act. It's very politically

unpopular to remove the wage floor, like

the minimum wage. So, you're more likely

to just see Donald Trump triple down on

this this high cost on producing

elsewhere tariffs. The downside problem

with that is those tariffs will likely

go away at some point in the future and

corporations aren't convinced that, you

know, those negative externalities are

going to stay for a very long time,

which makes investing in the United

States much much more complicated, which

isn't good because it doesn't really

accomplish what Donald Trump wants in

the long term. And this is, I think, why

Goldman Sachs is in part suggesting,

hey, we we might be knocking on the door

of more of a recession here. In fact,

what they're doing uh is is they say

that so far what we've seen this, you

know, 9 to 10% S&P 500 selloff has been

driven by a valuation contraction and uh

ultimately higher risk premium for

equities. In other words, for you to

have to be convinced to buy stocks right

now, you you need lower prices. You need

lower multiples.

But the problem with this is if you

price in a recession, you're probably

looking at more like instead of a 10%

S&P 500 draw down, you know, SPY

basically 550, you're probably looking

more like a

25% draw down from the highs. Well, 25%

draw down from the highs, which put puts

you at about 459 on the S&P 500, which

means we have a long way to go given

that we're on a 550 right now on this

buy ticker. So, you've got quite a bit

of a way to move down here. We're

looking at prior multiple bottoms uh

somewhere around 15, 13, and 14. We're

sitting at about 17 right now on a

consensus forward EPS. So, we still have

a couple multiples to notch down at

least in a recession scenario. Uh and uh

Goldman Sachs says, quote, "We recommend

investors watch for an improvement in

growth outlook, more asymmetric

asymmetry in market pricing, or

depressed positioning before trying to

time a market bottom." All right. in

English. Wait for things to get better

with Trump and tariffs. Like get through

the catalyst. Wait for more ridiculous

uh opportunities in in asymmetry in

market pricing would be like as an

example NASDAQ is down 15%, Tesla's down

90%. I'm just making that up as an

example. That's an example of asymmetry,

right? Because Tesla would be down so

much more like NASDAQ down 18%, Tesla

down 90%. that is an asymmetric pricing.

It's a massive spread between the two.

Uh that's an option. Or you just look at

overall depressed positioning like S&P

500 down 25% or whatever. Uh and Goldman

says that we're not there yet because

even though sentiment is negative and

people are talking a bearish talk, they

still have more equity allocation than

ever before. This basically means people

haven't capitulated yet. They haven't

paperhanded yet. Uh, and so you know,

for you to get to the the paper, oh man,

I hate it when it does this, and we

talked about this last time, where it

clicks between the pages, you got to

change it to continuous scroll. So much

more pleasant. But anyway, uh, so so

their POV here, uh, is, hey, there there

is downside risk if we have to price in

recession. And for every 100 basis point

change in US GDP growth, you really need

to take about 3 to 4% off of the S&P 500

earnings growth. Uh, and that needs to

be priced into stocks. So, Goldman's

raising their recession outlook to 35%.

And to me, you kind of have to look at

this and say, all right, is this peak

bearishness? Or are we, you know, right

before liberation day hitting peak

bearishness? And what you really have to

ask yourself is, is Trump done? Is Trump

going to U-turn on these tariffs? My

opinion is no. In fact, he's probably

more likely to become more aggressive on

tariffs rather than less, which does

create some more potential downsides.

Even though I think we have a near-term

bounce potential here at 550 on on the

S&P 500, I think there's a chance you're

going to see a lot of profit taking. We

were talking about the gamblers fallacy

a little bit this morning. There's this

gamblers fallacy where you go to the

casino with a,000 bucks and you're up at

let's say you know 1,500 bucks or

whatever and then all of a sudden you're

down at 500 and you're basically just

praying to get back to a,000 like please

just let me win one more hand. Let me

get break even and let me get out. And

that's usually how people end up going

to zero when they're at the casino. But

the gamblers's fallacy applies to stocks

as well and this idea of like just give

me one more green day and and I'll get

out. I swear, I promise I'll diversify.

Uh, yeah, we had that, you know, we had

that bounce right here and a lot of

people didn't get out. And you can see

how rapidly we can return back to the

downside. Now, I'm not long-term bearish

here. I'm long-term very, very Train

America. And and I know in the future we

will return to low interest rates and we

will return to uh a Train America stock

market go up. I just don't know what

we're going to go through here in the

short term. So obviously I always

recommend being risk averse uh in terms

of you know debt and margin but watch

this for a tactical bounce right here. I

think this is an interesting level

especially since it's a Q is aligned

with this as well. I mean look at QQQ.

QQQ right at 460. Tesla's at 248 which

is a huge line. Uh and the S&P 500 is at

550. We are at major

uh decision points right now. you know,

IWM, the Russell 2000, not so much uh

not as desirable. Well, actually here

it's this seems pretty zoomed in here.

See, because right now we're trading at

198. I thought 200 was a line. It's

actually 199 is a line. Not as clean as

the others. You can see here it was a

little cleaner than it is over here. But

anyway, I think we're at sort of like a

major decision point for markets here

where can we get a solid bounce here or

are we just going to continue to bleed?

Usually when we get the news, it's not

as bad. The problem is we know we're

going to get reciprocal tariffs from

other countries and then is Donald Trump

going to lash out? Like does Donald

Trump really believe the other countries

are just going to bend over and take it?

I don't know. Uh so anyway, as we go

over here, uh let's look at a little bit

more to Goldman. An improvement in the

growth outlook due to an accumulation of

healthy data or an inflection positive

DA messaging. That would be a buy for

them. So basically, if Donald Trump

flips and he starts becoming a little

bit more accommodative, that would be a

buy for them. As well as data that

suggests we're growing again, like you

could potentially look at the the um uh

Atlanta Fed real GDP numbers. Uh

obviously, we've been watching those

very very closely. And uh seeing some

kind of turn up would be nice relative

to the turn down that we keep seeing.

Unfortunately, we keep getting worse and

worse numbers here. These numbers out

from 3 days ago, putting our latest

estimate of GDP at -2.8% 8% with the

gold adjusted figure

at.5%. You know, we're we're rotating

down more than we're rotating up on on

GDP estimates, which which isn't great.

Uh so a reversal in this along with a

reversal of Trump's attitude

uh then some form of uh you know major

asymmetry, major opportunities. Uh this

morning in the course member live, by

the way, we were talking about some of

my favorite stocks right now. I've got

three to four that I'm really really

jazzed about. Uh, and you could join

that uh in the course member live

streams. You already know this. I don't

I don't need to go deep into this. So,

you know, you know what it is. We have a

Meet Kevin membership now. You don't

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Try it. Try it out for 30 days. It's

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these lock in your prices for life right

here because we're going to be raising

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prices here, your pricing here. Uh we're

going to be raising the pricing probably

coming up here in the next week or so.

Uh so lock in that pricing now uh and

get in before that pricing goes up. If

you lock it in, your recurring

subscription will be locked in at that

price. Guaranteed you'll have the lowest

price. But going back to Goldman over

here, so you know, they actually think

the S&P 500 is going to bottom this

summer. So, a little bit different than

this potential for a bottoming now off

of that 550 on the SPY right before

catalyst event. Now, liquidation day, I

mean, liberation day. And I don't know,

is that joke ever going to get old?

Probably. Uh, but um that's that's their

take. Now, they're also implying a

larger recession likelihood, moving us

to about a 35% recession likelihood

here. Uh, higher recession risk, higher

uncertainty, blahy blahy blahy

blah. I don't know, you know, I mean,

nobody really knows right now. We But we

what we do know is that household

allocation is very, very high for the

stock market. And that high-end

consumer, you know, that upper 10% of

consumers, they're the ones driving all

the spending right now. So what happens

when the wealth effect kicks in and you

know their stock portfolio start getting

whacked a little bit more and they stop

spending. Well, the current estimates

are that the wealth effect probably

won't kick in kick in until S&P 500 hits

about

225. Uh now that's somewhat around what

we saw in the August levels. So look at

this right here. Right here is August.

225 is sort of where we where we hit

multiple times over here. were somewhere

between 21 or 511 and 22 or 525 511 525

in this range right here. And uh this

for an extended period of time could

create a negative wealth effect and that

could lead to uh you know lower jobs,

lower hiring, lower spending, but we're

not there yet. We're still at a pretty

solid support point right now. So watch

that 550 level on the spot. Watch for a

bounce right here. Watch that bounce at

248 on Tesla. very very common place for

Tesla to sit right here between 248 and

250. Critical potential breakout point

right here. Uh I like to send trade

alerts when I see trends and I'm trading

them. Uh obviously we talk about them in

the alpha reports or the course member

lives which are welcome to be part of on

the weekend membership. But uh but

otherwise I mean look Amazon look at how

low it's gotten relative to the 242

where it was. I mean you're really

starting to see some serious discounts

here on stocks. Uh you know the Amazon's

come down. Look at Google. Complete

rejection there at 208. You're down in

in the 153 range. I mean, this is a

remarkable company. And you're trading

for, you know, April of 2024 prices. I

mean, you're almost trading at November

of 2000 21 of 2021 levels. Look at that.

November of

2021, Google was closing at 149. You're

at 153 right now. That's remarkable.

Some remarkable discounts here. You

know, Tesla's trading basically where

it's been trading for the last three

years, so it hasn't gone anywhere. Robin

Hood's back at its IPO pricing.

Restoration Hardware, look at that line

on Restoration Hardware. Holy smokes.

Could you ask for a better line? I mean,

there are some honestly attractive entry

points right now. And I'm not here to to

say we're definitely going to hit a

bottom. this what it really comes down

to is your thought of, you know, is

Trump going to go bullish off of this

and can we recover here and and rapidly

avoid a recession with with the damage

that's already been done. It's possible,

very, very possible. So, we'll keep our

fingers crossed that we can avoid a

recession here. And don't even get me

started on the rocket mortgage

acquisition of Mr. Cooper. Boy, we had

some discussions about that this morning

in the course member live stream. Uh,

but anyway, thank you so much for

watching. Uh, go check out the Meet

Kevin membership over at meet.com. If

you're interested in house hack or have

questions, email us at irr houseack.com

or just go to househack.com to check out

that nonacredited round that we have

going on. Great way to diversify from

the stock market right now and a lot of

people are. We've already raised

multiple millions on this round because

of I think people's desire to to uh

diversify right now. Anyway, thank you

so much for watching and we'll see you

in the next one. Goodbye folks and good

luck. Why not advertise these things

that you told us here? I feel like

nobody else knows about this. We'll

we'll try a little advertising and see

how it goes. Congratulations, man. You

have done so much. People love you.

People look up to you. Kevin Papra

there, financial analyst and YouTuber,

Meet Kevin. Always great to get your

take.