- Insanity is doing the same thing over and over and expecting a different outcome.
- Albert Einstein
His Edicts
President Trump is correct to change course on imports. Warren Buffett is wrong to say that trade is being weaponized by tariffs. Trump is using Einstein logic. We suffer $1,000,000,000 in deficits through trade. Obviously, there is something wrong. We are not the Washington Generals playing the global, Globetrotters. The global community, especially China is using our economy to save theirs. We will suffer like an addict under withdrawals. We need to return to self-sufficiency or we are doomed. With our opinion stated, we turn to two reports. One is from a conference by leading professionals. The other is from the brokerage firm, Morgan Stanley.
Conference
They offered four points. The first is debatable. They pointed out the aspect that the stock market can predict the future. The market is in a downtrend. This leads to a recession call. Their second feeling is the recent stock losses with many in bear territory sets a vibe for recession even if Trump says that he does not follow the market. The third centers on the Federal Reserve. Trump has called for Powell to lower interest rates. If you recall, Trump appointed Powell. Now, in heated moments, he calls for Powell to resign or be fired. Trump wants cheap money. It will help with mortgages and housing, but at the same time, it will create inflation. Lastly, the group suggested to watch the dollar. We agree on this point. It has been weakening. A weak dollar makes imports more expensive. This is a tough, Catch 22 situation. The conference did not address the college funding politics. We, at Evolution feel that the government should end all funding to traditional colleges. We feel the money should go to vocational schooling. We need robot technicians, solar and wind who can design, build and repair. We need more tech people and jobs so they can apply their knowledge.
Morgan Stanley
The group reminded us that us that President Trump signed 130 Executive Orders in his first 95 days. They reasoned that Trump comes at you from many different ways, but he only seeks a few of his edicts. The question is what policies will stick? The biggest is his tariffs. The percentage changes from week-to-week. They feel the 10% will be the final number. This will relate to what deregulation that Trump seeks. The president wants domestic manufacturing, but it will take time. The struggle will be when the imports cause shortages and the courage of the president to stay on course. Keep in mind that July 9th is the 90 day amnesty period. Dear Reader, there are two more deadline dates. One is the 31st of December 2025. The original tax cuts end. If Trump uses the tariff revenue for the tax cuts for his rich friends, we are doomed as well as $King Dollar. The second concerns the debt ceiling. It is due again and will be a big debate this summer. The group feels inflation will return with the possibility of stagflation. As you know, we, at Evolution have told you that we have been in stagflation since the end of 2022. Of course, this firm is part of the staus quo. By the way, the Fed meets today. We think that their will be no interest rate change, but Powell will appease Trump by saying the possibility is on the table.
Meanwhile,
The Israeli cabinet has voted to occupy Gaza. The government is Ben Netanyahu. He uses any excuse to do what I fear, the annexation of all Gaza or a big chunk of it. If he does this, he will embolded Israel's enemies. It is no wonder that he does not want to recognize the Palestines. He wants their land. This is a sad day for the remaining hostages and peace in the Middle East.
The market has returned to the rally mode. However, the price level is either reaching or is at resistance. The Dow's price point is 41,500. The SPX is 5800 and the Transports is 16,000. Pay attention! The tariff effect will not be felt or noticed until late May and June. Peace.
