Trump RESPONDS: RECESSION & Stock Market Crash.

a lot to talk about Donald Trump's

speech last night we have recession odds

skyrocketing but maybe a tariff deal and

we just got Tesla figures from Germany

uh February and worse the ADP report a

lot to cover so I'm going to go through

all of the data I've got it written down

here so we'll keep it organized and

let's get straight to the point thanks

for being here by the way okay ADP

report hiring slow to the smallest gain

since July with trade and transportation

Healthcare and education and it showing

job losses small business employment

also fell we were expecting like 164,000

job gains from the ADP report this is

the private survey this is not the

government's you know Bureau of Labor

Statistics survey that comes out on

Friday and tomorrow we'll get

unemployment claims which last week were

up but those are also very volatile this

one doesn't always align with the

government one in fact it rarely does

people like this survey though as a fact

Checker to the what people say is the

rigged government one anyway we were

expecting 164 we got 77 that's bad

obviously uh why well the chief

Economist says policy uncertainty and a

Slowdown in consumer spending might have

led to layoffs or a Slowdown in hiring

last month so this is very interesting

because yesterday and actually frankly

for the past few weeks I've been saying

on the channel That in order to really

recover from some of the damage that the

economy has re received from even just

the talk of tariffs is a you need

tariffs to go away but B you're going to

need some form of stimulus to the

economy I'm not necessarily saying

stimulus checks but dose checks could

potentially do that uh it could be

anything you know it could be more

government spending in in some form uh

I'm not trying to shill for government

spending I'm just saying in order to

help to go back to a trajectory of

growth it's not only going to have to be

getting ter tariffs away and we'll talk

about tariffs in just a moment and

reason I say that is because this ADP

reported it's basically first quote says

a policy certainty and a Slowdown in

consumer spending might have led to

layoffs right so this is their

interpretation it's that Duality it's

not just one thing now you could say hey

but consumer spending you know that'll

come back up again if tariffs go away

will it doesn't always work that way you

know once you start the cycle of pain

business goes damn revenues are down

revenues start coming up again slowly

are they going to go right back to

spending again and blowing it all no

they might still be a little Shell

Shocked

like we're going to keep a little in

reserve there just in case we have

another slow month like that Jan fed

period again anyway our data combined

with recent indicators suggest a hiring

hesitancy amongst employers as they

assess the economic climate ahead wow

okay so small businesses actually lost

jobs it's not a surprise to me that

small businesses are starting to uh uh

to to dump jobs this this happens a lot

because small businesses the reason

they're small is often because they have

the tightest margins I hate to say it

you know they rely much they can have

high margins but that relies pretty much

on an owner operator right uh and then

it comes down to how much time does that

person want to put in but when you start

growing that business is when you can

scale the efforts of that one person uh

and that's hard that's a very hard

transition to make and so usually uh the

margins at small businesses are tighter

usually not always you know some

businesses are good uh but uh small

businesses actually shrank Goods

producing and natural resources and

Mining shrink construction manufacturing

was up uh but again A lot of people are

putting an as risk on manufacturing

because of trying to get ahead of the

tariffs and then wow yeah trade

transportation and Utilities Red

information red uh Financial activities

Business Services those were green

education and Health Services down 28k

Leisure hospitality uh was was actually

uh up in 41k so that's nice but wow

that's a that's a pretty rough report

77k that's definitely against

expectations so how does this tie into

what some folks are saying about

recession well yesterday you had BCA

research uh and they've kind of been a

little bit on the bearish side I I want

to just be clear about that I always

like suggesting what people's biases are

but they've been this way really since

kind of I've been a little bearish which

was last July so you know call us the

early Camp if you will they said quote

we are lifting our 12-month recession

probability from 65% to 75% following

Trump's Triumph at the polls the recent

rise in bond yields over the last 8 to

12 weeks uh and those in anticipation of

Trump's Victory C cannot be justified by

an increase in GDP growth uh rather uh

that uh the the reason we saw a move in

was potentially because of the pricing

in of

stagflation uh and as soon as that

flation uh trickles away and turns into

deflation basically you're stuck with

the stagnation uh which is very likely

at this point to be negative growth

that's their argument okay so that's

their research that's their piece

they're raising their odds to

75% uh and that is their 12 month Target

I think it's worth putting a time frame

on that because I think the odds of

recession in the next decade are like

100% right but they're saying 75% over

the next uh 12 months so uh

then we're going to go through Donald

Trump's speech but what I want to hit on

first is what's what he said

specifically about tariffs because that

matters very very U much here so first

Donald Trump told us that whatever

another country tariffs us we will

tariff them back this is sort of the

reciprocal reciprocal right so if we tax

the EU you know obviously not a country

here but if we tax the EU to equalize

the vat taxes value added taxes and then

they tax us back then we will tax them

again sort of this NeverEnding back and

forth tit fortat of a uncertainty and B

higher uh dead weight loss because

tariffs are an economically miserable

Tool uh but that's obviously what we're

seeing right now Donald Trump's take is

hey we're going to stabilize and then

we'll be able to grow better now Donald

Trump even suggested that there could be

some short-term

disruption now this was a really

interesting uh uh you know how should I

put it um admission if you will from

Donald Trump he basically says hey yeah

you know we might have a little bit of a

hiccup or a little bit of a short-term

oopsy doopsy but it's going to be worth

it because we'll be on better footing in

the future now this is a an argument

that has led to companies on Wall Street

like nura research suggesting oh my gosh

a recession could literally be what

Donald Trump wants now when I first read

that I go oh that's like the biggest

clickbait bull crap ever like who writes

this kind of stuff why would a president

want tariffs but then I looked at their

data and I'm like and their argument and

their argument was actually very

interesting see they said that Trump

wants an engineered recession because it

would finally allow uh GDP to slow down

enough to usher in lower interest rates

and lower prices and a weaker US dollar

a weaker US dollar drives more

investment into the US it's cheaper to

invest in US manufacturing it's cheaper

to grow and build in America and

basically a small recession that he

could blame on Biden could be seen as a

means to accomplishing what he wants and

frankly this is not entirely untrue it

it would be painful and it's not priced

in by Wall Street but think of it like

an economic hurricane a hurricane that

comes in and then it cuts and destroys a

lot of stuff it hurts a lot of stuff

that's totally fine but it also quote

unquote drains the swamp if you will it

removes all the weeds and the trash and

the dirt right so now not specifically

calling anything trash or dirt I'm just

more thinking econ environmentally what

happens I've lived through many

hurricanes I'm in Florida right now but

anyway so this is interesting because if

you think about

the after a recession period what do you

have well in order to to rev up those

engines again after a recession you're

probably going to be in a zero to maybe

even negative interest rate environment

you would have a you would have

substantially lower rates you'd have a

weaker US dollar uh you'd be able to

encourage more investment in the United

States you'd probably be coming out with

a smaller government easier to balance

the budget uh and you'd have

disinflation you would have lower prices

and so there's some people who are

arguing that Donald Trump right now is

in a position where he could blame Biden

for a recession in the next 6 12 months

and then be the hero that over the next

three years pulls us out of it okay this

is an interesting idea if you end up

having

a uneven Landing okay this is now what

namura is also talking about and it's

just driving me nuts but now all of a

sudden they're pricing in the

probability of the no Landing option at

like 5% the soft Landing option also at

like 5% the uneven landing at like 50%

and the hard landing at like

40% I'm tired of plain analogies so I'm

not going to go into them I'm on I'm I'm

homesick I'm sick of Florida I want to

go home to my Florida to my family

nobody knows homesick more than I do I'm

tired of it yes is it cool to learn how

to fly a jet yes but I want to go home

boom and make YouTube

videos anyway

so I told you I'm sick of this all right

so this is an interesting argument

though because it would create

substantial pain it would create stock

market pain in the short term it would

rally the bond market so you know bonds

up TMF up right uh rates would come down

like everything he wants would actually

be accomplished by a recession so if you

kind of think about it some people are

looking at that going damn that that

Evil Genius other people are like dude I

don't know about that man cuz here's the

thing you're playing with fire if you

throw us into a recession you know and

we go to 20 million unemployed in a 15%

unemployment rate you know that'd be

like 22 million unemployed well then

what do you have well now you got to get

those people jobs again at the end of

the recession well by then you're going

to lose midterms you'll lose

Congressional control because people

going to be pissed and you actually end

up increasing the risk of switching to

like a party of Nome not like the crazy

uh extreme side of the democratic party

although Newsome could probably fit over

into that basket uh but but I think

he'll probably modify himself into more

of appearing to be neutral although I

don't think he'll ever win because

people don't want to California Nome but

somebody somebody like that like not

like crazy although again people say

nome's crazy too I mean I I don't like

Nome I'm just I think my what my point

is we like we're not going to get

Elizabeth waren her AOC okay let's just

be blunt about that like we can I think

we can all agree that while we don't

like Nome uh he is less uh extreme than

the Warren or the aoc's okay that's my

point just saying somebody more of that

uh

so that is a risk to Trump because it's

hard to get out of a recession you know

if you have 15% unemployment and

midterms are coming and it's AI is

making it harder for people to get jobs

and now all of a sudden you go into a

lost decade in the stock market yes

Donald Trump's plans will work in the

long term but you're going to be talking

about you know 2032 by the time you

recover and that's a poop show because

2032 is when my target is that we're

going to have negative interest rates

who knows maybe it's all going to play

out that way I remember joking when

Donald Trump lost in 2020 I remember

joking wow wouldn't it be crazy if we

ended up having some insane surge of

inflation under the next Democratic

Administration now uh and then because

of all that inflation that President

doesn't get reelected and then Trump

comes back claiming it was all the other

guys's

fault damn that's

exactly you know and at the time that

was a joke right people like that'd be

crazy inflation's

transitory it's so crazy

anyway sorry so then you've got the

Trump Administration now talking about

revising how they Define GDP but you can

already

today figure out what GDP is less

government spending okay you you go to

the St Louis Fred website and you could

literally type in real value added by

industry private Industries and then

change it to percent year-over year boom

done 2.8% Q3 2024 done so we already

have that data so I I don't know how

much that would help it's also worth

noting that technically the government

directly contributes to GDP uh by about

17 % but the indirect contributions are

harder to figure out like when Donald

Trump gives certain companies yeah man

all right APPA y'all going to be

investing 500 bill over the next four

years we'll exempt you from tariffs

how's that sound you know like that

technically is a government contribution

towards GDP because it's a form of a

subsidy tax break or uh direct transfer

fiscal transfer

uh how do you calculate that so this is

why people say that government actions

can actually lead to affecting about 45%

maybe even 46% of GDP which is why when

people talk about Doge or the government

cutting as much as they do that we're

probably going to see more pain in the

short term uh there's a consensus that

there are basically two contractors laid

off for every single federal employee

there that there is and so uh you know

Doge apparently is expected to lead to

about 300,000 layoffs here in the near-

term so add two contractors for that

you're like almost a million workers

900k that's a lot now they got to enter

the workforce and find other other jobs

in in a not so great Labor Market it's

tough and that probably reiterates some

of this ADP data that we're getting

right now now on top of that you also

have really just other countries that

are pissed uh specifically I mean I

think on a daily basis you get Canadians

like uh you know uh LCBO store managers

the liquor control what is it Liquor

Control Board of Ontario something like

that uh you can't buy liquor in a

regular grocery store there you have to

go to like this government run uh store

LCBO I think it is anyway there you know

videos circulating on the internet of

people basically taking Jack Daniels

which is Tennessee whiskey uh and and

you know store owners or I should say

operators since the government run uh

you know runs the stuff uh store

managers essentially or employees taking

the American product off the shelf

putting them in carts and just getting

rid of it and people like cheering this

uh you have you know stores putting

little Canadian flags and all the

Canadian stuff to try to promote that

it's honestly it's if you have a

Canadian product it's it's great

business it's a great thing to do it's

like oh yeah I Canadian P you know

patriotism but yeah I mean that's going

to hit our American trade as well so

there are these KnockOn effects of okay

well wait a minute so we were going to

have tariffs and then uh Trudeau and

shine bomb said that they would increase

border work for the United States and

then you're like all right cool we'll

delay tariffs now you're like now we're

going to do tariffs again and now

they're technically in effect and

Trump's like I want more and they're

like okay let's try to figure this out

but it pisses people off in the meantime

because it's sort of like when when are

the requests going to stop right so what

we had yesterday was we had lutnick

suggest that Donald Trump is going to

announce anounced something today about

coming and meeting somewhere potentially

on The Middle on tariffs with Canada and

Mexico because right now the levels are

pretty extreme now it doesn't really

matter what they announce because

anything they announce is going to be

higher than where we were before which

is problematic because it continues that

resentment and it continues that dead

weight loss of government taxation

especially on cars you know some cars uh

that have a lot of parts made in Canada

are seeing their prices rise as much as

$122,000 on like an adk car you know

that's just some of the viral stuff

that's circulating right now a lot of

that will probably get wound down but

letnik suggested yesterday that Goods

covered by NAFTA the old agreement

before the usmca uh may be exempt as

soon as Wednesday between the US Mexico

and Canada but remember it's not just

that we still have to deal with that

taxes on Europe taxes on China counter

tariffs on our agricultural industry

from China counter tariffs from

Canada and Mexico to whatever agreement

we do come up with which will include

some form of counterterrorist really

you've got

essentially a strong arm from Trump

right now and even though the tariffs

could get scaled back today it's still

like it still feels like we're doing two

steps back one step forward two steps

back one step forward that's a lot of

what it feels like at the moment so that

leads to uncertainty in the economy

right the Wall Street Journal editorial

board says it's a bad time to add

tariffs the economy is too weak best ENT

says the stock market isn't the Focus

right now getting yields down is the

focus all right well a recession would

do exactly that Canadian Premier Doug

Ford urges people to stop buying

American just cancel the deal with

Starling I don't think musk really cares

though because he's basically getting

more deals with Starling with the US

government nothing to see there uh and

uh and so we'll see we'll see what

happens but of course uncertainty is

increasing at the moment because of all

of this now uh some other things to

think about or pay attention to is right

now tariffs are on track to be at their

highest level since World War II uh we

still have to deal with uh tariffs on

Autos coming semis pharmas the

reciprocal tariffs you know the European

Union vat tariffs we got to worry about

that and so my take is that even if the

trade War stabilizes within the next few

months what you really need is the

economy to hold up through them for

things to be okay I do think the trade

war will stabilize just like it did in

2018 but our eon was stronger in 2018 we

had a job market and lower inflation

that was capable of absorbing some level

of shock the question now is Will new

orders consumption retail sales

discretionarily saying that as a way to

try to manipulate the Trump

Administration to go oh no breast bu is

advertising that they're raising prices

because of us yeah we don't

care that's part of kind of how I think

the reaction goes I honestly don't think

they pay attention to this because they

have their they have their long-term

game plan and it is possible that no

more research is right in their

long-term game plan includes a recession

Target was down 3% on basically a flat

forecast they did try to suggest that

cold weather could affect them Al though

you know also say that consumers are

strapped under uh Financial pressures

now the consumer is an interesting thing

to keep an eye on because consumer

sentiment is obviously rolling over and

month over Monon uh consumer spending

has plummeted but there's more than that

the top 10% of Americans are responsible

for 90% of spending so if you now all of

a sudden have an extended period of a

stock market downturn then the last

group of Americans who are still

spending money they're going to start

cutting that's when you trigger the

recession because that's how you get the

play offs it's not great bottom 90% are

expected to have already exhausted most

of their savings now the 5year break

even is actually still pretty high right

now so markets are still pricing in

pretty dang High inflation again if we

have a recession that inflation

evaporates really fast you want to

destroy inflation instantly have a

recession uh now rate cut expectations

we're looking at now three price Cuts

being priced in between now and January

2028 uh and when it comes to uh this

this potential growth scare remember

once people are bitten they're Twice Shy

it's really hard for them to go from oh

okay all right trade War's over cool

I'll go back to spending once people

start cutting it's a really hard uh uh

you know it's really hard to transition

from people back to

spending now China China had the party

meeting yesterday inflation Target 2%

GDP Target 5% fine they want a lower

rate over time they want to encourage

local municipalities to acquire homes

they want to lower down payments for

home buyers even more uh they want to

open up to other

countries China I listened to their

party meeting yesterday before the uh uh

you know Trump joined session of

Congress

speech they are doing everything they

can to grow that economy now I think if

the United States goes into recession

China is going to have big problems as

well but until then you actually have a

lot of deep seek momentum pushing

Chinese stocks up I mean look at Baba's

up 52% year to date 10 Cent's up 19%

year to date and and a lot of Chinese

stocks are doing really well because

you've got a Chinese party that's

basically like no we don't want tariffs

we want to we want to take all the trade

we can with open arms we will set up all

the Partnerships we can we're going to

stay out of Russia Ukraine as much as we

can and we're just going to focus on our

economy and cranking it's kind of smart

yeah I got to hand it to the Chinese

right now they are they are being pretty

damn smart

on the flip side we still have the risk

of a government shutdown on March 14th

the Senate technically needs 60 votes to

prevent a government shutdown Democrats

are demanding limits on uh Elon musk's

power uh you know Democrats also have

other demands like limiting uh Donald

Trump's ability to cut from the federal

government and as we saw yesterday Al

Green got removed for disrupting Trump's

speech because you've got some of some

more protests than I've ever seen before

inside of session of Congress I mean I

don't think I've ever I think

historically nobody's actually been

ejected out of a joint session of

Congress but I don't know because

history gets a little murkier the

further you go back but I certainly have

never seen or heard of in history

somebody getting booted I remember when

uh somebody heckled uh Obama with you li

you know they ended up getting

sanctioned which sucks for them it's

like a big slap in the face uh but um Al

Green got kicked out by the sergeant of

arms and staff that's that's rare you

don't really see that Democrats also now

holding up signs that on one side say

false when Trump talks and on the other

side say musk

steals this is crazy which is where you

also have to now the divisiveness is

crazy right now you also have to look at

and go so what are the effects of Tesla

or or uh you know the effects of musk on

Tesla well now Bloomberg is reporting

that Tesla sales are down 76% in Germany

uh among you know after um uh musk's

involvement sort of in German politics

and this is where I started thinking to

myself my gosh you know it's not

actually just because I feel this it's

not actually just the people who are

upset by musk's politics it's that if

you don't go if you now go byy a Tesla

you have to be worried about somebody

keying your car because you own a Tesla

so you know if somebody Keys your your

wrapped car it could cost you four grand

to fix it that sucks

so now you have to be worried about

crazy Vandal damaging your property

because of mosque so you could be a

Tesla supporter but actually be

negatively affected uh as already an

owner that sucks anyway uh okay

continuing on here so some of the I'm

just going to go through some of the

more Curious things obviously Elon Musk

was there there were some emotional

parts of the speech great uh Trump

blamed Biden for uh the prices of eggs

getting out of the out of hand inflation

getting out of hand all right the prices

of eggs were Rising while Biden was

still uh in office and a lot of this has

to do with sort of bird flu and Aven you

know issues but they've continued to

rise after Donald Trump took office uh

we let's say he says we want to balance

the federal budget let me just look for

some of the really big favorites here oh

yeah uh tax cuts on every for everyone

are on standby I'm doing you a big favor

by saying if you don't vote for tax cuts

people may never votee for you again

that was an interesting line so anyway

he's trying to push that through but

remember that's probably going to come

later this year we got to Kick the Can

on the budget down the road first uh it

talks about the gold card going on sale

soon $5 million to buy yourself

citizenship basically if you create jobs

that's an interesting idea I actually I

don't mind that so much I think maybe

you could have different tiers of cards

like you know get people in who want to

bring in 500k you know and just maybe

their processing time's a little longer

I don't know uh it's it's an interest

it's it's interesting I I don't I don't

mind that that as

much uh let's see here uh interest on

cars made in America to be tax

deductible so interesting because after

the

usmca so many car manufacturers started

Manufacturing in Mexico and

Canada and a lot of cars are

manufactured in many different places

the New York Times did a great piece on

this where they're like so what actually

constitutes a car made in America

because there's like the Pieces come

from all over you know a lot of American

cars are like 30% American

that would actually obviously be a win

for Tesla though because you know we got

the free mod in Austin Factory uh

doubles down on tariff says they'll be a

little disturbance but you're okay with

that it won't be much well that's where

I dispute that once you knock into a

recession it's going to be hard says

Ukraine reiterates that it's ready to

sign a mineral deal basically he read

off a letter uh that uh that that that

they were going to work on a deal and

that Russia is open to peace based on

signals that Donald Trump is seeing this

is all good I mean if we could actually

end the disaster in Ukraine and with

Russia and and now hopefully things can

settle down with Israel although there

are concerns that things might actually

worsen because of um what you're seeing

with Israel and Syria let's not even go

there right now hey yeah maybe things

can get better but right now I'll tell

you uncertainties are running really

really high data continues to worsen I

hope it starts getting better and we

don't know and because we don't no I

just Advocate to my community because I

think you know rather than people just

just looking for like crazy one-sided uh

political videos I I actually think

y'all are smart people and you're

looking for real data and real

information and the everything that

we've said here is real data real

information where we differ might be on

our opinion of what is going to come of

all of this I'll be very clear the odds

of a recession are rising I don't think

I'm as bearish as BCA research but it

certainly seems like it's more than a

coin toss at the moment that we're going

to go into a recession and so with that

I I always encourage everyone make sure

you're doing whatever you can to

maximize the cash that you have and

Investments that yield you

cash obviously that'll be a plug for

house hack it's not ready yet unless

you're going accredited investor that's

ready you could email us at staff at

sorry IR house act.com but if you're

non- accredited we're going to have that

5% yield coming as well for house

investment hopefully within the next uh

week and a half now it I I'm told we're

very close but we're waiting for

attorneys attorneys attorneys anyway

thanks so much folks we'll see youall

soon goodbye good luck