Since the November 2024 election, the market has been in an absolute roar. There was a moment last summer when the markets were uncertain of which way the election would go. Trump was in the lead but uncertainty is always priced in.

However, once victory became clear and the Trump Administration was solidified, the markets simply waited for the election to be over. The Administration's new team consist of the following executives:

Of course, some positions have changed but President Trump's network is strong. He even has David Sacks, who is the czar of crypto & A.I. I wrote about Sacks' initiative to create the Strategic Bitcoin Reserve for the U.S. last week.

Elon is the most notable because of his involvement with D.O.G.E. Yesterday I highlighted the details on how D.O.G.E. will American taxpayers billions. The D.O.G.E. team is doing wonderful work when it comes to government spending. I understand that almost none of the Treasury payments were ever labeled or tracked. The Treasury had infinite spending power and no checks or balances. Simply labeling payments would save $50 billion of waste estimated by Treasury employees itself.

If you want to learn more about Scott Bessent, I recommend watching his latest interview with the All-In Podcast.

​

Bessent is a fantastic money manager who specialized in macro trades. Very people in finance are better than him at managing money.

The Fed Rate Cuts

The Trump Administration, along with D.O.G.E. and the Treasury, are keen on cutting government spending aggressively this year. Right now they are hyper focused on saving U.S. taxpayers $4 billion per day. According to the DOGE tracker, they've achieved $115 billion in savings so far in the first <60 days.

Reducing our deficit by $1 trillion will unlock a significant amount of capital. You see, today most of that capital is stuck in unproductive spending within government organizations and programs. When that money goes back to the U.S. economy (maybe as ad DOGE dividend to taxpayers?), then $1 trillion will fuel growth in GDP. It will be amazing.

If growth is the primary reason to cut the deficit, the reducing our borrowing base is the secondary reason. Right now America is paying too much in interest expense to maintain our standard of living. The Trump Administration wants to reduce spending to reduce the burden from a higher interest expense. So by reducing the deficit, the U.S. has less of need to raise more capital from the markets. It is President Trump's way of indirectly reducing rates. He doesn't need to wait for the Federal Reserve to make the decision for him.

So today the Fed held their meeting and will keep its key borrowing rate targeted in a range between 4.25%-4.5%.

From my perspective, it looks like rates will remain steady but the economic outlook will be poor for the next 6-9 months. The primary driver for an economic downgrade is that the government will cut spending. This action is deflationary in nature. And investors cannot fight gravity.