Capitalist Investor

Market Volatility and the Global Impact of Trump's Congressional Address, Ep. 312

• Strategic Wealth Partners

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In this week's episode of the Capitalist Investor, hosts Derek and Tony discuss the current state of the market amidst the latest volatility and explore whether the recent downturn is warranted. They discuss potential catalysts for economic movement, address concerns about an economic slowdown, and analyze the impact of driving unemployment and earnings growth. Additionally, they speculate on strategic maneuvers by Donald Trump to rattle the market and create opportunities for lower interest rates. The episode also covers Trump's recent speech to Congress, including reactions and key points on taxation and Social Security. 


  1. Market Volatility and Correction Worries: The episode kicks off with a discussion about recent market volatility and the potential for correction. The hosts note that the market is down about 5% from its all-time high, sparking concerns about whether this dip is a normal market fluctuation or signals a more significant downturn. The conversation emphasizes the importance of understanding market cycles and the potential catalysts that could drive future movements.
  2. Donald Trump's Economic Strategies: The discussion shifts to the "checkers versus chess" game that Donald Trump is perceived to be playing with the economy. Tony outlines a theory suggesting that Trump might be intentionally encouraging short-term market dips to lower interest rates, thereby refinancing national debt at a cheaper rate. This complex strategy is viewed as a potential maneuver to improve long-term economic conditions.
  3. Tariffs and Domestic Production: The implementation of tariffs and their role in encouraging domestic production is another major point of discussion. Tony and Derek explore how tariffs could potentially bring manufacturing back to the United States, even though they might initially cause some economic pain. This subject is underscored by the broader theme of reducing dependency on offshore production, which has been a longstanding issue.
  4. Active Portfolio Management in Trump's Era: With Trump frequently vocal on economic issues, the necessity for active portfolio management has never been more highlighted. The hosts stress that Trump's active presence and frequent comments on economic policies require investors to remain vigilant and responsive to potential market shifts.
  5. Trump's Speech to Congress: The episode concludes with a review of Trump's recent speech to Congress. This segment touches on Trump's direct and often controversial communication style, including calling out political opponents and addressing various economic issues. The hosts discuss the mixed reactions to his proposals, such as eliminating taxes on Social Security and tips, and highlight the broader implications of his administration's policies.

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Feel free to email us at info@swpconnect.com with your questions, comments, or show ideas!

Hello and welcome to this week's episode of the Capitalist Investor. As always, you have me, diamondhands D and running a two man crew today with Tony. What's going on, man? What's up baby? How you doing? You know, it's always exciting times here in the United States of America, I'll tell you that. We are, we are the center of the world right now. Yeah. So we got, got some volatile market days there in the last couple days. So we record this on Wednesday as always. So saw the volatile day on Tuesday. I don't think it's been Tuesday. It's been a good two weeks at least. At least. Right. So as things that we'll talk about is like the recent volatility, is it warranted? And then also, you know, we get to it, the grab your popcorn event of Donald Trump speaking to Congress last night. Yep. For sure, that was some funny things were mentioned. But to kind of bring this to, you know, the forefront, you know, a correction starts at, you know, 10, 10% from the last high. Right. And right now we're about 5% down from the high. So we're not even, you know, we're halfway to correction territory. Is this warranted? Should we be, should we be scared and should, you know, could things go lower? Yep. So one of our research firms sent out a piece yesterday on March 4, kind of explaining, you know, like, hey, if, if we're going to drop, there's a lot more to drop. So. But there's the catalysts out there that we'll talk about that can, you know, drive the market forward. But we need to understand that it's okay for the market to breathe. It's not a linear line straight up. It doesn't go from the left, you know, bottom left of the page to the top right of the page all the time. Right, right. So the market's down about 5% from its all time high, reached back on February 19th. So, you know, in the last three weeks we've lost 5%. Yep. I'd like to remind everybody that the market's up, you know, the s and P500 is up 20% the last two years. Right, right. And heck, we were up 20% last year with a major, you know, issue. Right. Like there was corrections and stuff. So it's a normal occurrence. You know, there's a correction in both those 20 year or those two 20%, those two 20% years. But you know, like I found this kind of fascinating. It's kind of hard to understand, but the average stock right now, so let's talk about some of the things that are moving and shaking and what our research firm looks at because they take a look at history to see where we might be pointed. So one of the things that they pointed out was the average Stock is down 17% from its 52 week high. That's the average, right? The average, the median is somewhere around 12 or 13. But I kind of looked at the chart that they provided and the last trade war was somewhere around what, 2016, plus or minus. We, we approached about the, the average stock was down about 25%. So we're 3% higher than the average and we're, you know, still quite a far away, you know, well over 8% away from, you know, the, I guess almost a two standard deviation and where we were with the last trade war. Yep. So if, if the concern and volatility continues, you know, and, and we still feel that there's some type of economic downturn or slowdown is what I'll, I'll call it too. There's still room for the market to fall, right. Unfortunately. And, and I think the Fed even came out and, and is already recasting numbers for GDP in Q1 of 25 of being negative. It takes 2/4 of negative to be a recession and I think we even did that in the Biden era. But no one really talked about it because it was so quick. It was such a blip because of how things are just moving in a shaking. And guess what? Donald Trump loves to rattle the cage. Right. But some of the, some again some of the tailwinds out there. Our earnings growth is still supposed to be above growth of over 10% this year. And historically unemployment is low and it's very difficult to have a true recession when unemployment is low and earnings growth is still above 10%. Can we enter to negative? Sure. But does it, does it really? The economy has been actually pretty good and hot the last few years even with all this inflation. But maybe the constant inflation is finally catching up. I think I saw something where, you know, the average consumer is out of their pre, you know, their pandemic money, their, you know, their war chest. Right. Everyone spend all their money. No one's got any money and they're borrowing credit now. Right. So there's a few things. Right. So I found something. Derek, so tell me what you think about this. So let me, let me kind of break this down. I found this a fascinating thing on. Does that say conspiracy at the time? It does, but it's not. But it's just somebody's view of the game. I'll call it, I'll call it a game. The game that Donald Trump is playing right now. Yep. So follow with me here and I call it a check check conspiracy. That's funny. It's not a conspiracy. All right. But moving on, it's a check a chess, you know, checkers versus chess type of mentality here. And it started off the topic on this Twitter, you know, slash X commentary was, you know, why Donald Trump actually wants the market to crash. And I'm like that's fascinating. And I'm going to sum this up. So we have $7 trillion of debt to refi and it's going to go from virtually zero between zero and 1% to 4 plus percent. It's a lot of money, just interest. And the article continues to talk about well if the, the market is quote unquote crashing, I don't want to say it's like going to drop 40% but like enters correction, you know, nears bear market territory. If the market shows weakness in the short term, interest rates could be lowered. The federal say hey we have a weakening economy. We're going to, you know, continue to lower, you know, and cut rates and with, and catalysts like tariffs rattle the cage, right? The doge coming in and saying hey we're, we're chopping jobs on the government level, right. Like it's a perception, right. The tariffs have been in force for not they, they just came into force and the market's down 5% leading into it. So in Donald Trump already came out like I think the commerce secretary came out and said like hey, like you know, I think, I know we just started this congressoff but Trump's open for negotiations. Like it's a tactic. It depends on the view that you look at. Like I think he did this last time and it was a short lived tariff game. Now again the catalyst of firing people, finding money tariffs, all this stuff and the federal come in and lower the interest rates. And with all of this volatility comes people that are concerned about the market. Where are they going to go? They're going to flood to bonds, the safe haven as people buy bonds. Theoretically the interest rate should come down. Right. And if the interest rates come down then we can refinance our debt at a lower level. Once we stamp that lower level of debt interest then we can ramp things back up, get rid of tariffs and get this party moving again. Right. So it could be a very short term problem for the market, for the stock market, retirement money, things like that. And it's just, I don't know, like that, that was the theme of how it was broken down. This is why he's trying to rattle the cage, shake up the market, get it off its all time high, get everyone scared, move them to bonds. The Fed moves, lowers rates and lower rates, we finance debt cheaper. And you know, the housing market's dead essentially. Like it's just historically is not moving. Right, right, it's moving, but not really. And that's why, because a 30 year mortgage is what, six and a half, 7%? Right. If we can get that back till around five, you will see economic movement in house, Houses. Right. Like houses will start selling and create that and that's a huge catalyst, a big part of our economy. So. All right, what do you think, man? Yeah, you know, I think, I think that theory makes a lot of sense because if you just look at how they're going about doing things, you know, basically between Trump and Musk with, with the Doge, they're, they're just trying to, they're looking at it almost like from a pure business standpoint, like, hey, we, you know, we are way out of whack with what we're bringing in versus what we're spending. We need to write our budget, you know, and now interest, unfortunately, is a huge part of the, of the budget of this country just paying off our interest. So from that standpoint, it definitely does make sense. I think what, I think what you're seeing is really just a continuation of things that we've been talking about here for a long time. You know, there's going to be some pain to fix things. You know, you can either fix things or not. Right. So I actually got a couple phone calls, you know, had some good, good, good chats with clients yesterday. But all these problems aren't just going to get solved in like a week. Right. We've been offshoring all of our production since you and I were kids. Right? Right. This is a generation long problem that we're trying to fix because if it doesn't get fixed, I think this is the key point. If it doesn't get fixed, it may never get fixed. Right. If we just keep running astronomical deficits forever, it's eventually going to break. Well, like the trade deficit is crazy and I understand that like tariffs are inflationary, but it's usually going to be on like big items. Right. So it's going to force us to start creating things in America again. Built in America. When's the last time you saw that stamp on anything like Bring the cars back. Like they had somebody on TV yesterday, he was an auto dealer, right. And he looked terrified. He goes, this truck sitting here just went up 25%. It was 60 grand. Now it's seven, it's 75 or 80 grand. Now who's gonna buy that? And he goes, that's a good question. Probably nobody in the short term, but if things can be concessioned and then the tariffs stop, then the truck comes, it should come back down. Yeah. Yep. Right. But why isn't that truck, why isn't a Dodge Ram or a Ram truck built in the United States? Yeah. Or assembled here. Right. Something. Yeah. Or like, you know, but then you got the parts. You know, like there's this. I understand things need to be done economically. I think it would be hard to bring every job back to America because we overcompensate our workers. We're not cheap. Exactly. Right. But yeah, I think it's very simple to look at because Europe is just like five to 10 years ahead of where we were headed. Right. And that's, you know, the social aspect of things, and immigration, that's one thing. But when J.D. vance went to. I forgot where he went, but delivered that speech about, about free speech. Basically scolding Europe for, you know, restricting free speech. But what he also said in that speech was basically telling Germany that they don't produce anything in their country anymore. And if they just continue to, to offshore everything that they do, they're not going to have an identity left. You know, obviously you think of a couple of things when you think of Germany, but, you know, one of the first things you think of economically is, you know, just like over the top engineers, right? They, they build amazing cars and everything they do is, you know, engineered perfectly, basically. Right. And they're losing that because they don't build anything anymore. And, and that is what has happened to us already. So, yeah, you know, the, these tariffs are going to be painful, but we got to, we have to at least try. Yeah. You know that this is the. We can't tax our way out of, out of this spending. The only way to, to, to fix what we have going on here is to increase our production as a country. I mean, do our American cars drove in any country other than ours? No one buys our stuff because it's, it's tariffed. Right. They. We're blocked from selling our stuff. Yes, but they can sell, but they. Can sell it to us and not be like, so I get the game. I understand it. It is painful. I was considering getting a New car. And now I got to put on pause because I don't know what's going to happen. Right. But I'm, I'm thinking that this is for the better, you know, the greater good. Right. I believe that. And I, and the funny thing is I keep on seeing on Twitter and Facebook a lot of my Democratic friends, they keep on posting that one video from Ferris Bueller's Day Off, Right. Where you have Ben Stein, that's the actor's name. Right. But he's that boring teacher talking voodoo economics. Yeah, Bueller. Right. That, that whole, that whole scene. Right. But he's there in, during his conversation, he's like, you know, back in the Depression era, like the United States raised tariffs thinking that that would help hoist us out of a depression. And what it really did was put. Dig us into a deeper depression. Right. Well, but they were already in a depression. Right, Right. Yeah, I get it. You're trying something to make things better. But I don't think these tariffs that are being rolled out right now are meant to be long term. They're negotiating tactics. I hope that's what it is. They could already be over by the time this, this gets to it. Could, it could because they're already talking on Wednesday and Thursday where Ukraine's going to, you know, roll over and accept the mineral deal. And Mexico, maybe there's, maybe a war in Europe will be over. Maybe, maybe it'll escalate. Who knows, the tariff war could be, you know, over with Mexico and Canada. Who knows about China? But like, there's all this stuff and then you also have just other stuff outside of tariffs. Like, again, look how much air has come out of AI mega tech companies. And it's all about, you know, deep seek and doing something cheaper, more efficient and, you know, with less energy. I mean, a lot of things can disrupt what is happening right now. So again, when it comes to, like your portfolio management, things like that, active management today, now that Trump's back in office because things are going to move so quickly is very important. The dudes on the mic every day saying something. Yep. There was no volatility during the Biden administration because the dude was on vacation 65% of the time. Yep. Right. But this guy is finding the microphone nearly every day and it's hard to keep up. And you better, because something could be said and the next thing you know, your portfolio could be going in a different direction. Yep. And you know, that's. He doesn't have much of a choice. You know that that's what he has realized, Trump, that is that, you know, if, if this goes through the normal, you know, snails pace, you know, government process of changing things, he's going to be out of office before anything actually happens. So that this strategy of trying to do everything all at once is really the only play that he has to make an actual change in things. And yeah, we can shift maybe to, to the speech from last night, but. Yeah, so, so just to close out on happening right now, I believe it's just too early to tell. I think it's normal to, you know, go backwards, you know, from all time highs. Like it's, it's normal, like letting off steam in the market is normal. I don't think there's anything fundamentally broken yet, but nothing's making me, you know, it's, there's a lot of anxiety, but I'm not overly concerned at this moment. But like in the, in. Yeah, yeah, just to put a bow on it, a lot of the errors come, like you said, coming out of those, you know, magnificent seven stocks, like they were just, just pumped up just so, so, so much, you know, that this is kind of a natural part of things. So, you know, things pump up, the top gets blown off, as they say, and then prices get back to equilibrium. You know, that's what happens in the market anytime anyone rattles any cages, things like that. So like you said, active management is going to be important, but at the same point in time, you know, we don't want to be making any rash decisions, any panic selling, any timing the market, especially now, because I think panic selling now is one thing. Finding a spot for re entry, you know, that, that is the real tricky part. Right. So, you know, have a plan with your investments and stick to it because this is going to continue for a while, I would say until June probably. I'm thinking like the first half of the year, we're going to have some volatility like this. Agree. Mark Tepper here from SWP Investment Management. It's time to elevate your portfolio with the SWP Growth and Income etf, a diversified basket of high quality growth companies that pay dividends. SWP stands out from the pack because total returns matter. Don't just Invest. Thrive with SWP. Visit investswp.com for more information. Disclosures apply. Yeah, so let's, you know, with all that said, let's transition to the circus that we saw last night. Yeah, and this was just kind of his first speech and Trump's first speech in front of Congress last night. I don't I guess you can just call that anytime you want if you're the president. I don't know, but maybe they happened in the past. They just weren't as publicized because no one cared. I, I, I, Everyone cares. When this dude get, when this, when Trump gets on the mic, people stop what they're doing, whether you like them or you hate them. Actually, yeah, everyone's listening because it's, it's either you like them or you don't. Or you don't. You're not like, in the middle, like, oh, yeah, you know, like, I kind of, I'm like, yeah, he's obnoxious over here. And I can understand what he's saying over there. Like, I, I get it. Right. But yeah, he too. So here's. All right. So he called what, Warren? Pocahontas? Yes. Jesus. People were getting kicked out, you know, other, you know, representatives were being kicked out. Yeah, like, hey, why were you, why were you, why, why did you start yelling and get kicked out? Well, because, you know, they're going to slash Medicare, Medicaid, and Social Security. I had to go, look, I'm like, where is this? Where? Didn't Trump say he wants to, like, like, make Social Security tax free? Yeah, he did. Yeah. Okay, Just checking. And, and then I looked up, I'm like, okay, was there something buried in Medicaid, right? Like, or Medicare, and they're gonna, they're gonna defund the poor people. And what I read, and I, again, it was hard to find something. So I can't tell if it's being, it's not being asked. So let's, what I saw was the pre pandemic or post, the immediate post pandemic Medicaid program where it was just an auto renewal is being stopped, right? So you gotta reapply again. It doesn't mean you're being shut off. If you are a needy person of need of Medicaid, guess what? And from what I read, you're not gonna lose it. It's just being reevaluated because again, we have people on Social Security that are 160 years old. Did you see that? Or Trump's like, hey, 130,000 people over 160 years old currently receiving that money. Where's them? I want to know. I'm dying to know where that money is being dropped. Where are those checks going? That is the real, that's my question. Yeah, but, but he, he turns over to Kenny and he's like, man, you just been in office for like, for like, you know, you just got appointed like two weeks ago, man. And we're healthier than we thought. Man. This is great. You know, just making, cracking jokes, but like, that's real. Where is this money going? Yeah, I mean, Trump and Elon were on Fox Business interview with, was it Hannity? Maybe. But they clearly stated their position, so if you want to call them liars, you know, that's fine. But they said, hey, we're not, we're looking at this stuff for fraud and waste and abuse. We're not looking to reduce anyone's benefits. Correct. And if you're a real person in real need, guess what? You're going to continue to get it. Yep. The Dems were completely quiet on nearly everything, except if they were standing up and yelling. Yeah. So the, the one thing that they did not applaud, there's many really bad things, but no tax on tips, no tax on Social Security. So you got a guy getting kicked out because he says Trump's going to eliminate all these entitlements, but you don't want to eliminate the taxes for everyone else. For, for Social Security. Right. What is it, 2/3 of people on Social Security, that's basically their only income. They need that. Yeah. And a, you know, eliminating taxes on Social Security is, it's, it's brilliant. It's eliminating tax, it's giving money to people who need it. Right. It's, it's, it's, it's a great idea. And if we eliminate the 100 and 100,000 people that are getting it, that aren't alive anymore, guess what? The trust fund doesn't get depleted as fast and maybe we can afford not to tax it. Yep. Right. Couple. Couple. You know, I'll talk about one other thing that I thought was funny. And then there was something that was actually, you know, that was rolled out that I thought was really cool. You know, but like the pre Trump speech by Warren and some of these other Democrats, like they all gave the same speech before, like on Twitter, like they videotaped themselves and if you watch them, they all said the same damn. They had the same speech. It's the same script like 22 times. In my, in my, in my opinion. I don't know who's really leading the Democratic Party right now. I don't know who their leader is. So who wrote that script for them? And, and, and passed it out and said, hey guys, why don't you get on social media? And who, who wrote that? Well, if you have the answer to that question, Elon Musk will buy you A cybertruck. That's the real thing I saw. Oh really? Oh, yeah. He asked the same question you did. Okay. He said he will buy you a site. Does that mean I'm like a genius? Yes, yes, that's exactly what I'm saying. Yeah. But yeah, it's. Yeah. And again, if you, if you don't know what we're referring to, it's like a pre recorded speech that the, the, you know, 24 Democratic leaders, they, they said the same exact thing word for word. Yeah. Hey, before Trump gets out there, I want to want you to keep in mind, blah, blah, blah, blah, blah. Right. Yeah, that's what that was. Right. I'm like, who gave them that message? Like who from what tower did that come from? Right. But that's how I, that's, I just blows my mind. Yeah. I think we've been pretty clear here for a very long time now. We're not like at, you know, and if you are, that's fine, but we're not like MAGA Republicans, you know, like, we're just. Me personally, I'm really just for small government. That's really all I want. That's really been my main point for my entire adult life. But, and you see it every day on CNN with that guy Scott. I forgot his last name, but he basically said the other day is like, like you guys are not going to convince me that this is not one of the most popular presidents that we've ever seen. And you saw that last night with the numbers. A CBS poll had basically a 76% favorability rating on that speech. Yeah, 7. So that's just mainstream news. 76%. The CNN poll was 67% positive. People like what he had to say of the speech. Yeah. You know, like we're not going to like, there's a lot of like 80, 20 issues that these Democrats are digging their heels in on. And you saw that last night. You saw them, you know, sitting on their hands when everyone else was cheering. But it's, it's going to be a problem for them because they're, they don't make, they're not making sense and people are starting to call them out. It's, it's just unfortunate that it's so divided. Yep. It's just, it's really unfortunate. I don't know. It's so one of the positive things. We'll end on this now. One of the positive things, I think like Trump, you know, gave an honorary Secret Service to that, that little boy who, who had cancer and like that was really warm. Like, I was like, awesome. You know, the look on that little boy's face. He's already dressed up like a secret. He named his ID or whatever. Yeah. You know, like when I was sick when I was younger, man, like, like, stuff like that, like, can really, you know, make a negative situation positive, you know, even if it's a little bit on the short term side. Right. But that was, that's a heck of a. That was awesome. I really, I just really, I thought that was like, really special. So. And then, you know, a random thing. It wasn't last night, but then I also saw, like, there's this barbershop in Philadelphia that's paying children, you know, I think like seven or eight on, you know, under the ages of seven and eight to come in. They're going to pay them $3 to read the barber a book while they get their haircut. Yeah, I saw that. Like, I, like, those are the things I wish we can focus on, but they get lost in the weeds because there's just so much, like, twisted, you know? You know, like everyone's just so. It's divided, man. It's just, it stinks. Well, I think it's becoming less divided, honestly. I was trying to find something there on the timeline, but I just saw Bernie Sanders basically ranting about how there actually isn't anyone who's 160 receiving Social Security. It's like, yeah, I think that's kind of the point. Someone else is getting that money. Correct. Like, that's what we all want to know. It doesn't matter if you're a Democrat or Republican. The Social Security system supposed to be bankrupt by what, 2035, 2036. Now, like, we don't want that to happen. So it's a pretty, pretty simple thing. Like if you're against finding fraud in the Social Security, like, how are you, how is anyone supporting that? You know, how. How are you getting support? By rallying support for taxing Social Security. Taxing tips. Like the, the, the other presidential candidate copied Trump on those topics and now we're not. Now we're not. I just hope that, like, the so scary thing isn't just some, some random statement that has no merit. Like, I, I hope it's not true. But the fact that they brought it up and said it's happening. I hope it is true. Yeah. So that it can be fixed. Because if they do fix it, man, all the money that can be saved, like, again, in the fraud that could be happening. I hope, I hope it's real. But I'm pissed that it happened, but I. You know, like, I hope that that's not made up. Yep, that's that. You know, again, that's me saying, like, I'm afraid to understand. I'm afraid to believe everything I hear, see and read. Right. But that dude's on us. Like, Elon Musk is on a serious pedestal, speaking with the microphone to everybody. Yep. So I can't. I don't know how. I can't see him just making shit up, you know? Yeah. I don't know how he has time to do anything else besides tweet, man. Guy tweets all day long about everything. I know, and he's launching rockets, making cars and tweeting all day. I just. Crazy. I get it, man. I get it. All right. Did he clone himself yet? That's one explanation, I guess. Yeah, it's something. All right, let's close it down. All right, well, thanks for listening this week. If you guys have any questions, comments, show ideas, hit us up@info wp connect.com and we'll talk to you next week. The opinions expressed in the podcast are for general informational purposes only and are not intended to provide specific advice or recommendations for any investment, legal, financial or tax strategy. It is only intended to provide education about the financial industry. Please consult a qualified professional about your individual needs.