Trump Era 2025-2029 : Stock and Economic Comment

[Dona Ferentes]

Aussie wine if US hits European wine and champagne with tariffs

 

[Dona Ferentes]

Treasury Secretary Steve Bessent has argued that the economy is going through a stage of “detox” as the Trump administration tries to wean it off what he believes is unsustainable levels of fiscal largesse. US government spending has grown by 60 per cent over the past five years, powering a 50 per cent increase in nominal GDP and helping to push up the profitability and share prices of US companies.

“Could we be seeing that this economy that we inherited is starting to roll a bit? Sure. And look, there’s going to be a natural adjustment as we move away from public spending to private spending,” Bessent told CNBC in comments that reverberated around the market. “The market and the economy have just become hooked. We’ve become addicted to this government spending, and there’s going to be a detox period.”

 

[TimeISmoney]

Treasury Secretary Steve Bessent has argued that the economy is going through a stage of “detox” as the Trump administration tries to wean it off what he believes is unsustainable levels of fiscal largesse. US government spending has grown by 60 per cent over the past five years, powering a 50 per cent increase in nominal GDP and helping to push up the profitability and share prices of US companies.

“Could we be seeing that this economy that we inherited is starting to roll a bit? Sure. And look, there’s going to be a natural adjustment as we move away from public spending to private spending,” Bessent told CNBC in comments that reverberated around the market. “The market and the economy have just become hooked. We’ve become addicted to this government spending, and there’s going to be a detox period.”

Detoxing is the understatement of the year, Trump's going to crash the economy and already planned months ago.

 

[over9k]

Treasury Secretary Steve Bessent has argued that the economy is going through a stage of “detox” as the Trump administration tries to wean it off what he believes is unsustainable levels of fiscal largesse. US government spending has grown by 60 per cent over the past five years, powering a 50 per cent increase in nominal GDP and helping to push up the profitability and share prices of US companies.

“Could we be seeing that this economy that we inherited is starting to roll a bit? Sure. And look, there’s going to be a natural adjustment as we move away from public spending to private spending,” Bessent told CNBC in comments that reverberated around the market. “The market and the economy have just become hooked. We’ve become addicted to this government spending, and there’s going to be a detox period.”

Bingo:



I've been harping on about this for quite some time. Tariffs are the only tax increases the public will accept and they still need to feed the public some excuse to implement them.

They've needed a decent excuse for a tax increase for a very long time.

 

[Garpal Gumnut]

There is talk of Trump putting tariffs on capital inflows, also known as money.

There is a small rump of Trump supporters, some in the Republican and Democratic parties and also in the unions who have suggested this within the last 10 years. I’m not an economist and don’t understand it all but the idea is to decrease the US debt and lower the $USD.

I’ve got some $USD in an IBKR account and also as cash under the mattress in case they invade us. The latter was not the original intention, I mainly put it there for travel, but hey, who knows the world is such a crazy place.

So crazy that Trump might put a tariff on money.

gg

 

[Knobby22]

Bingo:

View attachment 195309

I've been harping on about this for quite some time. Tariffs are the only tax increases the public will accept and they still need to feed the public some excuse to implement them.

They've needed a decent excuse for a tax increase for a very long time.

or not give a tax cut they can't afford.

 

[over9k]

Government shutdown avoided so stocks rally. Green to end the week.

Let's see how long it lasts.

 

[TimeISmoney]

There is talk of Trump putting tariffs on capital inflows, also known as money.

There is a small rump of Trump supporters, some in the Republican and Democratic parties and also in the unions who have suggested this within the last 10 years. I’m not an economist and don’t understand it all but the idea is to decrease the US debt and lower the $USD.

I’ve got some $USD in an IBKR account and also as cash under the mattress in case they invade us. The latter was not the original intention, I mainly put it there for travel, but hey, who knows the world is such a crazy place.

So crazy that Trump might put a tariff on money.

gg

The high US dollar has made them uncompetitive for exporting over the years, but on the other hand they have the leading currency for trading globally. If it drops a lot, they lose the advantage there, and most likely cause lots of other mischief like no one wanting to hold it due to devaluing.

 

[TimeISmoney]

Government shutdown avoided so stocks rally. Green to end the week.

Let's see how long it lasts.

I'm thinking there are a few more dead cat bounces to go. They'll try to suck up all the money on the sidelines.

 

[waterbottle]

Agree RE: dead cat bounces. We haven't had an economic emergency yet, no black Swan, bo emergency cuts, no Lehman brother's moment for a sustained down trend.

 

[TimeISmoney]

"80% of those CEOs say "that they find themselves apologizing to our international partners for Trump's capriciousness," Sonnenfeld told NPR's Morning Edition on Thursday.

And, he added, "roughly 70% said the Trump administration is going to be bad for the economy.""

​

Why CEOs are calm about tariffs in public — but 'very discouraged' in private​

March 14, 20255:00 AM ET
By
Maria Aspan

Wall Street is panic-selling over President Trump's chaotic new tariffs. Business executives are reportedly making frantic calls to the White House. And on Tuesday, the country's top CEOs crowded into a closed-door meeting with Trump — setting a record for attendance.

Yet in public, corporate America's leaders are remaining calm — and even upbeat.

"The business community understands what the president is trying to do with tariffs," Goldman Sachs CEO David Solomon told Fox Business Network on Wednesday.

Solomon acknowledged that companies "always" want lower tariffs. But he was also careful to start his comments by praising Trump for being "engaged with the business community" — unlike, he added, the Biden administration.

The Goldman Sachs CEO was speaking a day after Trump met with him and other members of the Business Roundtable, an influential CEO group. The meeting followed two days of sharp losses in the U.S. stock market, in a $4 trillion (and ongoing) selloff, largely kindled by Trump's words and actions: Since early March, Trump has implemented a flurry of steep new tariffs, reversed some of them, and shrugged off concerns over their economic impact.

When asked about the possibility of a recession, Trump demurred — in a reply that sparked this week's market turmoil.

"There is a period of transition, because what we're doing is very big. We're bringing wealth back to America," the president told Fox News in an interview that aired Sunday.

By mid-week, a handful of the most powerful CEOs had started to express concern — but even then, only in very mild terms.

"Uncertainty is not a good thing," JPMorgan Chase CEO Jamie Dimon, who runs the country's largest bank, said Wednesday at a conference hosted by the publication Semafor.

And Larry Fink, who runs investment giant BlackRock, told CNN that "the economy is weakening as we speak."

Yet Fink was also quick to add that the Trump administration's policies "can be very productive for the United States" in the long run.

A White House spokesperson on Thursday reiterated his statement to NPR from earlier this week.

"President Trump delivered historic job, wage, and investment growth in his first term, and is set to do so again in his second term," White House spokesperson Kush Desai said by email.

Why America's business leaders engage in delicate diplomacy​

Corporate America's careful rhetoric — even as many big companies brace for the impact of the market volatility and the tariffs — illustrates the delicate diplomacy that business leaders are trying to engage in. They largely welcome Trump's other economic promises — including lower taxes and fewer regulations.

Business leaders also see limited benefits to criticizing the president in public, experts say. That's a marked contrast from Trump's first term, when some CEOs publicly resigned from White House advisory councils to protest the president's handling of racist violence in Charlottesville, Va.

But eight years later, corporate America is much less willing to wade into public conversations about politics — or "social" issues that companies don't see as directly related to their bottom lines.

Today, they're more focused on the potential financial upsides of Trump's new term. The president actively courted business interests during his campaign — and at first, corporate America seemed thrilled with the results of the election. CEO confidence soared to a three-year high last month, according to the Conference Board's quarterly survey of the CEOs of the largest companies.

Now Trump's stop-and-start tariff policies seem to be complicating many companies' economic outlook. But business leaders are trying to avoid adding to investors' financial panic, according to Anna Tavis, who chairs New York University's department of human-capital management and talks to executives across corporate America.

She points out that part of a CEO's job is to project confidence — in their own companies, in the markets and in the broader economy.

"They have no control over what the government is going to do, regardless of how they feel," says Tavis.

And, she adds: "Obviously, they want to be on the winning side of whatever happens."

80% of CEOs are "apologizing to our international partners"​

Behind the scenes, the conversation is more candid. CEOs "are very discouraged," says Jeffrey Sonnenfeld, an associate dean at the Yale School of Management, who hosted a gathering of CEOs on Tuesday.

80% of those CEOs say "that they find themselves apologizing to our international partners for Trump's capriciousness," Sonnenfeld told NPR's Morning Edition on Thursday.

And, he added, "roughly 70% said the Trump administration is going to be bad for the economy."

Those numbers are a sharp contrast to the Conference Board's rosier findings last month. It regularly polls the heads of the largest U.S. companies, and it finished its latest survey on February 10 — after Trump had first announced, then first delayed, his new 25% tariffs against Mexico and Canada.

"I know people were surprised that we saw this increase in CEO confidence at the time that tariffs may [start to] have a negative impact on the economy," Stephanie Guichard, senior economist at the Conference Board, told NPR last week.

Many of the CEOs surveyed in late January and early February did tell the Conference Board that they're worried about tariffs, she added. But at the time, business leaders said they were more focused on Trump's other, business-friendlier promises, including deregulation and lower taxes.

Still, Guichard is curious to see what CEOs tell the Conference Board in two months, when it next polls America's business leaders.

"A lot can happen between now and May," she says.

 

[TimeISmoney]

Agree RE: dead cat bounces. We haven't had an economic emergency yet, no black Swan, bo emergency cuts, no Lehman brother's moment for a sustained down trend.

Stock markets are the speculation of future company performances, if they're swinging up and down like this, imagine what's in store for the US economy.

 

[IFocus]

Some of the numbers here are interesting

Inflation Is Over


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, 2022


Ed D’Agostino // Partner & COO, Mauldin Economics


Danielle DiMartino Booth // CEO & Chief Strategist, QI Research


Ed D'Agostino:


Danielle, it's always a pleasure to see you. You wrote a piece for your clients at QI Research way


back in February. It was one of the best pieces I've read all year, and you essentially talked


about how the narrative around inflation is disconnected from reality. Can you sort of set the


stage for us on your thinking and then we'll dive into some details?


Danielle DM Booth:


So at the basis of any great narrative I think is fear, and the funny thing about the FOMC


meeting that was at the very tail end, the 31st of July, is that on that same day, Ed, there was


the release. I don't think the Federal Reserve does anything by coincidence, especially not when


it's a five-year release schedule, but there was the release of the 2019 FOMC transcripts the day


the Fed met on January the 31st. Again, no coincidences.


What it walked through was the experience that policymakers had in the year 2019. A lot of


people have a hard time grasping that when the initial Trump tweet was sent out, this is April of


2018, basically announcing to the world, we're going to launch a trade war, we're going to


launch a tariff war, we're going after China, and in those words, right? This was a tweet, this


was not... I mean, there's nothing shy about the president, but from that time, April 2018 until


the end of April 2019, the CPI, the Consumer Price Index actually fell.


There'll be some charts in what your clients are going to be able to see that are very simple


demonstrations of this, and instead what the 2019 FOMC transcripts revealed to us is that


policymakers grappled much more with the slowdown in growth. We are a world that revolves


around trade. At the time, 24% of every US automobile, 24% of the pieces, the components, the


parts came directly from China, so slowing down global trade in the year 2019 ended up costing


jobs in the United States. As my mentor Lacy Hunt has told me for years, any year global trade


contracts, the US economy cannot and has not avoided recession.


That was exactly where the US economy was headed in November, December. The fall of 2019,


we were heading towards a recession predicated on the slowdown in global trade. $15 trillion


Global Macro Update is a free weekly interview hosted by Mauldin Economics Publisher &


COO, Ed D’Agostino. You can learn more and get a free subscription by visiting this page.March 14, 2025


of stimulus spending later, we've miraculously somehow avoided recession. Whee, yay,


wonderful.


But fast-forward to where we are today, the narrative, the inflationistas, the soft landing camp,


the individuals who maintain that it's going to be sticky inflation as far as the eye can see, that's


not what the data are saying. It's not what the data are saying at all.


Ed D'Agostino:


Yeah.


Danielle DM Booth:


It is without... Chair Powell has shifted his focus to something called market-based core PCE,


and I think that that's his and his chief lieutenant Christopher Waller, Governor Waller, I think


that's the recognition of the fact that if you look at market-based prices, they've come down


pretty darn fast. If you take one additional step and substitute into this market-based core PCE


a metric that the Cleveland Fed came up with called the new-tenant rent index.


They've spoken about this. They've spoken about new rents are market rent prices, new rents


should represent shelter. So if you substitute out of market-based core PCE, the very broken


metric we know to be owners’ equivalent rent—it's an imputation, it's a theory, it's a model,


but it doesn't represent what we're seeing on the ground. But if you substitute that in, year


over year, we're south of 1%, we're below the Fed's 2% inflation target and significantly below


that.


Ed D'Agostino:


Wow.


Danielle DM Booth:


So in data that we've seen subsequent to this, we've just learned from the census that in the


fourth quarter only 47% of record numbers of new apartments that were coming out of the


construction pipelines, only 47% within three months of coming onto market were rented, that


left 53% not rented. It really is a matter of supply and demand, and that is what is bringing the


largest input to inflation down at a fairly rapid pace now that the downside momentum is in


train, and yet if you question the average American, they're going to tell you that tariffs make


inflation rise.


, 2022


, 2022


, 2022


Global Macro Update is a free weekly interview hosted by Mauldin Economics Publisher &


COO, Ed D’Agostino. You can learn more and get a free subscription by visiting this page.March 14, 2025


Ed D'Agostino:


Absolutely. Yeah, and then if you look at the news, you hear about eggs, but nobody's


reporting, at least I haven't seen it, that... I mean, what was gas the last time you pulled up at


the pump? In Connecticut of all places it's below $3 a gallon at some places.


Danielle DM Booth:


Yep. I'm filling up for two bucks a gallon, because I'm a crazy... I used to actually clip paper


coupons, now I use my local grocery store. For every X number of dollars you spend with them,


you get an extra 10 cents off per gallon. So I'm getting 90 cents off of what is listed in Texas,


which is lower than Connecticut, but I'm filling up sometimes for just under $2 a gallon and I am


not alone, and yet there is this palpable fear that inflation's going to come roaring back. Why is


that? Why is that?


So, that's what I explored. When you consider the fact that in a post Dodd-Frank world, a lot of


fast money hedge funds control the narrative. They control where Treasuries are traded, they


take massive positions, and you know what? If you're short Treasuries, you want for those


prices to fall, you want for those yields to rise. That's exactly what we saw in 2024, is that we


saw yields rise based on a construct called the risk premium, even though inflation expectations


were not going up, because the most visible price, which you just pointed out, at the gas pump


was coming down.


Individuals know that if they can play hardball with their landlord and threaten to move, and if


they do so they're going to get either a cut to their rent or they're going to go through with


their threat and get a lower rent. So on the ground we've seen inflation come down, but so


many Americans continue to live with the latent shock of the price rises that occurred post-


2019, and those are not to be dismissed. I'm not trying to imply that, but at the rate we're


seeing prices right now, Jay Powell's got a disinflationary problem on his hands. That's a lot


harder for central banks to address.


Ed D'Agostino:


Last time we spoke, you were pretty focused on the labor market, which also factors into this,


how much people make and how much they can expect for an increase, how much they can


negotiate. Just like with their landlord negotiating their rent, you sit once a year and negotiate


your pay adjustment. What are you seeing there?


Danielle DM Booth:


So, it's fascinating. When we were at peak quiet quitting, when we were maxed out working


from home before return to the office became its own RTO acronym, the price increases, the


, 2022


, 2022


, 2022


Global Macro Update is a free weekly interview hosted by Mauldin Economics Publisher &


COO, Ed D’Agostino. You can learn more and get a free subscription by visiting this page.March 14, 2025


wage inflation for individuals who were job switchers according to the Atlanta Fed's wage


tracker, and they track this every month, they were making north of 8% to jump ship. The grass


really was greener.


Ed D'Agostino:


Wow.


Danielle DM Booth:


Job stayers, so to speak, their wage gains were closer to 5%, so you had this three-percentage-


point differential at the peak. This is 2022. 2022 also happens to be when full-time employment


in the United States peaked. We haven't seen a higher number of full-time employed


Americans since 2022, and that is when job switcher wage inflation peaked. Have a look at what


the Atlanta Fed is showing right now. You're seeing both job switchers and job stayers


commanding about 4.5% wage increases.


Ed D'Agostino:


Okay.


Danielle DM Booth:


So, you've seen a complete reversal in terms of wage gains all the way back to where we were


headed into the pandemic. It's a reflection of the things that are not a figment of our


imagination, it's a reflection of true job losses and layoffs.


Ed D'Agostino:


Do you think that continues? 'Cause you were early on this, you were pointing out the


anecdotes, gosh, nine months ago.


Danielle DM Booth:


Nine months ago we had a lot fewer Americans working as Uber drivers, working as Lyft drivers,


choosing logically, why am I taking $295 a week in unemployment benefits? Why would I even


bother applying for initial jobless claims if I can make $750 a week driving for Uber? So they


made this logical, rational decision. I've got a graph that's going to be included in what all of


your readers see that shows now we're seeing Uber driver pay fall, and if it's not falling for Lyft


drivers or for Amazon drivers, they're working a lot more hours to get that same weekly pay.


, 2022


, 2022


, 2022


Global Macro Update is a free weekly interview hosted by Mauldin Economics Publisher &


COO, Ed D’Agostino. You can learn more and get a free subscription by visiting this page.March 14, 2025


If you look at the latest nonfarm payrolls jobs data, you've seen two months in a row of a


workweek of 34.1. Outside of the initial shock of the pandemic, you've got to go back to 2009,


2010 before you see such a short workweek.


Ed D'Agostino:


Wow.


Danielle DM Booth:


Guess what, Jay Powell? It's not average hourly earnings, it's average weekly earnings that we


take home in our paychecks. For the first two months of 2025, that pay has been falling outright


given how short the work week is. That's reality.


Ed D'Agostino:


Wow. So incomes are falling, inflation is falling, there's…


Danielle DM Booth:


The rate of inflation is falling. So prices are not falling outright, but the rate of inflation is well


within the Fed's 2% ... below the Fed's 2% target.


Ed D'Agostino:


You brought up Truflation in that great piece that you wrote last month, and I'm a big fan of


Truflation's numbers, and I just want to look back at a couple with you, because back on June


17th of 2022, Truflation said that the real inflation we were experiencing here in this country


was 11.59%, which it makes a lot of sense, right? The official numbers were lower, people were


saying, that's just not what I'm experiencing.


Danielle DM Booth:


Mm-hmm. That's right.


Ed D'Agostino:


Now, it's below 1.4%.


Danielle DM Booth:


That's right, and that is 30 million real-time price points that are being tracked on a day-to-day


basis. Where are we seeing job losses right now? Where are we seeing prices fall right now?


Where are we seeing delinquencies rise right now? Well, according to Trepp, even though the


worst of the worst appears to be coming off for the office sector, for example, of course we've


, 2022


, 2022


, 2022


Global Macro Update is a free weekly interview hosted by Mauldin Economics Publisher &


COO, Ed D’Agostino. You can learn more and get a free subscription by visiting this page.March 14, 2025


got a lot of people returning to the office, but what we're seeing right now is lodging. We're


seeing hotel rates come down, we're seeing anecdotes of people saying, I went to Vegas, it was


a ghost town. We're seeing people in leisure and hospitality lose their jobs. They were one of


the biggest job losers in the month of February surpassed only by federal workers who had lost


their job.


Ed D'Agostino:


Wow.


Danielle DM Booth:


This was a timestamp of February the 15th. So that's when the survey week for nonfarm


payrolls cut off, so we haven't even seen the bulk of the layoffs that have followed since then,


but we are seeing something that I think really started to get market veterans' attention. A few


weeks ago when we got that personal income and spending report, everybody looked


immediately, oh, let's see what core PCE's doing, let's see what PCE’s... and they went, wait a


minute. On an inflation-adjusted basis spending fell 0.5%, declined, and service spending is flat


as a pancake? Wait, wait, wait, wait. We've been working on the inflation narrative that service


spending always goes up. What do you mean it flatlined and good spending cratered?


That's what we're seeing and that's why we're seeing it. Once the caboose starts to finally come


into the station, and that is services spending, which is flatline, the wheels officially start to


come off. What have we seen in the media outside of the media salivating that they can finally


declare a recession and blame it on Trump? Look, people believe what they read, they do, but


the disinflationary forces, the private sector job cuts.


We had MacroEdge, they've been doing a great job of tracking layoffs as they're announced.


I've been a bit of a critic of Challenger, Gray & Christmas, because in 2023 and throughout


2024, as best I could tell they were understating announced layoffs. How do you have some


major retailer in the United States announce that it's closing all of its locations and only


managed to tally 4,000 retail job losses in a month? I'm like, it's your job, Challenger, Gray &


Christmas to track layoff announcements, and you didn't even begin to capture half of the jobs


that were lost in retail in one month.


Lo and behold, now that we have the first clean month of Trump in office, Challenger, Gray &


Christmas pops up with 172,000 jobs lost in February, the sky is falling. They were playing catch-


up. They were playing catch-up to layoff announcements that they know had already occurred,


but what's more important here is that despite the fact that there were 62,000 layoffs that they


attached to federal workers…


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Global Macro Update is a free weekly interview hosted by Mauldin Economics Publisher &


COO, Ed D’Agostino. You can learn more and get a free subscription by visiting this page.March 14, 2025


Ed D'Agostino:


Okay.


Danielle DM Booth:


...well more than that were private sector. Here's the biggest problem, here is the reason that...


President Trump and Treasury Secretary Scott Bessent, they've started to mention that the


economy may pause. I think over the weekend Trump said that we may be in a time of


transition for the economy. People are using all kinds of lovely synonyms for recession, but not


actually using the R word itself.


Ed D'Agostino:


Right.


Danielle DM Booth:


Why is that? That's because economists recognize a phenomenon known as the adverse


feedback loop. So the private sector has been in layoff mode for some time, has been in cost-


cutting mode for some time. In fact, first-quarter CEO optimism rose, and that was one of the


few actual aspects that was like, here, look, here's a positive headline. Why did CEO optimism


rise? Well, because they announced that they were going to be imposing more hiring freezes


and firing more people, which is shareholder-friendly.


You please shareholders, you cut costs, you get a pop in your stock price, but why they're


optimistic, that's not necessarily a good thing. The reason I bring up the idea of an adverse


feedback loop is the more job losses we have in the public sector going forward.


Ed D'Agostino:


Yeah.


Danielle DM Booth:


By the way, not just direct federal employees. When you read a headline that says that certain


large consulting firms derive 98% of their revenues from federal government contracts, there


will be trickle-down effects, there will be ripples into the private sector based on the work that


they depend on coming from the federal government.


So, if the private sector's saying, well, wait a minute, we're going to have aggregate income


continue to fall, then going into the year, maybe I thought I was going to be able to tamp the


brakes and stop with the cost-cutting. But if the aggregate income between public sector and


, 2022


, 2022


, 2022


Global Macro Update is a free weekly interview hosted by Mauldin Economics Publisher &


COO, Ed D’Agostino. You can learn more and get a free subscription by visiting this page.March 14, 2025


private sector layoffs are going to continue to drag on income in an economy that is 70%


spending, well, I’ve got to cut more. I've got to reduce headcount even more to account for less


money that people can spend on my good or on my service so one sector feeds off of the other.


That's why you saw that the unemployment rate was 0.00111 shy of rounding up to 4.2% in


February.


Ed D'Agostino:


Oh, interesting.


Danielle DM Booth:


We came really close to rounding up to 4.2% from that 4.0%, which did not. The 4.0% in January


was a very real thing, and it wasn't even close to rounding up to 4.1%. But now you can see


going forward, they're going to adjust the birth-death adjustment beginning with March


payrolls that's going to look a lot more like the last few years of the United States, not some


crazy imputed level of business births that didn't occur and had to be revised away subsequent


to.


In March, we get a little bit of reality in the statisticians imputations, which is going to hurt,


because that's going to come right on top of the rest of the job losses that we know have been


announced, occurred. All of these massive multibillion-dollar bankruptcies that we're seeing in


2025... 2025 so far has been the year of the multibillion-dollar bankruptcy.


Ed D'Agostino:


Yeah.


Danielle DM Booth:


Mattel, a huge Canadian telecom company, they had to file 10 different times in the state of


Texas just for their subsidiaries here, but multibillion dollar bankruptcies are commonplace. On


top of that, I'll throw this figure out there. For all of 2024 in the United States, Ed, there were


7,400 retail closures announced, stores that closed. Just through the end of February, we've


had more than 4,000 announced…


Ed D'Agostino:


Wow.


Danielle DM Booth:


...in the United States alone.


, 2022


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Global Macro Update is a free weekly interview hosted by Mauldin Economics Publisher &


COO, Ed D’Agostino. You can learn more and get a free subscription by visiting this page.March 14, 2025


Ed D'Agostino:


Wow.


Danielle DM Booth:


Alone. So the momentum has continued to build, and that's something that someone as


rational as Scott Bessent can see and prepare for. And you know what? I'd rather move away


from being gaslit to being told the truth. So, if the people in Washington are going to be sober


and honest with the American people and say, look, there might be some short-term pain that


involves getting rid of the fiscal lunacy, I think the American people would rather be told the


truth than read headlines that don't match at all what they're experiencing on the ground.


Ed D'Agostino:


I hope so. I've had this conversation with other people, that the time to do this, the time to get


fiscal sanity back is really right now from the perspective of the president. Not just this


president, any president. You have to move quick, you have to move within the first year before


midterms, before the narratives start to get spun. Doesn't matter which party you're from, the


time to take bold action is now.


Danielle DM Booth:


It is, and Ronald Reagan did just that.


Ed D'Agostino:


Exactly.


Danielle DM Booth:


He did. There was a massive buildup in the federal workforce during the Carter administration


that he felt was just too much, and he came in and cut. Now defense spending rose, we're


talking about making ships at home. We're hearing some things that we'd like to hear, and we


don't look back to ... I mean, we forget, I mean, I should forget, I was in middle school, but we


forget that the 1980 recession lasted all of six months. It was ugly, it was dirty, it was


manufacturing-based, it was blue collar. People going into that election were angry as all get


out, but it only lasted six months.


The economy was coming out of it by July of 1980, and boom, Reagan got to office, and before


the Great Recession of '07 to '09, the double-dip recession that started in 1981 was the worst


recession since the Great Depression. They called it back then the Great Recession, but we


, 2022


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don't think about Ronald Reagan in those terms, even though he was in the White House during


a terrible period for US GDP, but we came out of it to your point.


Ed D'Agostino:


I think a lot of this is really hard for people to understand. The person that's not an analyst or


an economist like you, we've been dealing with supply issues ever since COVID, and so then we


hear about there's going to be tariffs added, automobile manufacturers are going to have to


start paying 25% more for things that they import. The narrative, to your point, is that new cars


are going to go from on average costing $50,000, which already is a ton of money, to $62,000.


What people are missing... and so that sounds inflationary, and what people aren't being told is


it's a demand issue, right? It's the demand side of the equation. Am I getting that right?


Danielle DM Booth:


You're getting it so, so right. I mean, hats off to Mary Barra. Maybe she should try Hollywood


after she's finished with Detroit, because according to car gurus in March, there was an 84-day


supply of cars, new cars. It's a lot of cars.


Ed D'Agostino:


Yes.


Danielle DM Booth:


There are a lot of cars because people cannot afford the cars. Fitch Ratings came out just a few


days ago and said that new car recovery rates are 32%. They're not getting a lot of money when


a car is taken by repossession or is traded in, because a 32% recovery rate is nothing. On top of


that, you've got auto delinquencies at the highest level since the early 1990s. Forget '08, '09,


'10, forget those years. Auto delinquencies with a 4.1, almost rounded up to 4.2%


unemployment rate are at the highest on record.


Imagine what they're going to be when we see a jump to 4.5% and 4.6% and 4.7% in the


unemployment rate in short order here what those delinquencies are going to look like,


because Americans, they're having to pay their obligations, they're having to pay their student


loans, and there's a lot of rude awakening that's going on right now with US households who


were operating under the assumption that they would never have to repay their student loans,


that they would forever be on ice.


So you're seeing people with some of the highest FICO scores see some of the biggest declines


in their FICO scores, because they didn't qualify for student loan forgiveness, they simply made


too much money, and now they're being reported to the Experians and the TransUnions of the


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world and their payments are large. They're like, "Why not be a dentist? I'll never have to pay


the student loan back. I'll just take out hundreds of thousands of dollars of student debt and


never worry about it." Well, now they're having to worry about it, their credit's getting


destroyed, and at the same time, they bought a house that they never realized what the cost


would be if their furnace went out…


Ed D'Agostino:


Yeah.


Danielle DM Booth:


...and what the cost to maintain a home was going to be when you were buying it at the very


peak of the post-pandemic exodus to the exurbs. So, there's a lot of rude awakening right now.


A lot of rude awakening for US households, and the last thing that they want to be told when


they're irritated is that they're imagining things.


Ed D'Agostino:


So, this all has me pretty concerned, right? I mean, I've gone from being in the soft landing


camp a few months ago to starting to really pay attention to what you were saying first about


jobs and then going deeper. Then this article came out a few weeks ago in The Wall Street


Journal saying that I think it was 48% of US GDP is attributed to the top 10% of wage earners.


So you factor that in, I mean, what is your prediction? Where are we going with this economy?


Danielle DM Booth:


So it's 49.7% according to Moody's, and that was a real eye-opening Wall Street Journal article.


The next decile, if you will, they're the ones I'm describing getting hit by big student loan


credits. They spend money too, and this is what I have to say about the top 10% who account


for 49.7% of US spending, they're fine as long as the stock market never goes down.


Ed D'Agostino:


Right. Got it.


Danielle DM Booth:


That's how it works. It's called the wealth effect, it works both ways. By the way, demographics


is destiny, and when 40% of the stock market is owned by individuals who are 70 years of age


or older, when 25% of US residential real estate is owned by individuals who are 70 years old or


older, that puts Jay Powell in a very tight spot, because he can need to lower interest rates, he


can want to lower interest rates, he can press forward with lowering interest rates.


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COO, Ed D’Agostino. You can learn more and get a free subscription by visiting this page.March 14, 2025


My guess, they're not going to lower interest rates at the March 19th meeting, and it's going to


be a replay of July of 2024. By the time we see March and April payrolls before they meet in


mid-May, there's going to be regret. It's going to be, why didn't we cut rates in July of 2024?


Here we come in September of 2024 with a 50 basis point jumbo rate cut.


I think we're going to see a replay of that script, because once we see March and April payrolls,


it's going to be pretty apparent that the Fed made a mistake by not lowering interest rates at


the March 19th meeting... however, the Fed is trapped. 70-year-olds and older own 40% of the


US stock market, they're kind of okay. Fine, a year ago I was making 5.5% on my cash, now I'm


making 4.25%. I'm okay with that, but don't touch it.


Ed D'Agostino:


Right.


Danielle DM Booth:


If I'm making much less than 4% on my cash, that doesn't work. I'm retired. I'm 70 today, I'm


the median age of a US Baby Boomer. I'm 70 today. My mom is 78, she's at the very outer edge


of Baby Boomer. She's the oldest Baby Boomer, but I'm pretending right now... I'd look really


good if I were 70. I'm pretending right now that I'm 70 years of age, and here comes Jay Powell


and he's cutting into my interest expense.


Now, I as a 70-year-old spend 70 cents of every dollar of interest income I make. It's money, it's


cash income, and I'm happy to spend it. If my Nasdaq position portfolio goes up by a dollar, I'm


only spending two pennies of that. I don't liquidate, I don't monetize near as much of my paper


wealth as I spend of my interest income, but Jerome Hayden Powell up in the Eccles Building


needs to stop lowering my interest income now immediately. How's that going to work when


we're in recession, a recognized recession?


Because in 2001, me the theoretical 70-year-old, you know what? I was 20 years younger. So


what? I went to go work at Southwest Airlines, I went to go work at Walmart as a greeter, I


went back and got my old job. In 2007, there went my retirement savings again, but you know


what? 60 was the new 50. Young, sprightly, fine, great, wonderful, do not have to sell my


stocks. I'll go back to work again so I don't have to sell my stock.


Today what's that 70-year-old going to do if Jay Powell lowers the amount of income that


they're collecting in interest when they own 40% of the stock market? This is the catch-22 that


has got Jay Powell in a terrible trap. With inflation coming down as quickly as it is, he won't


have any choice but to lower interest rates in 2025, but the risk is the 70-year-olds and older


start to liquidate their stock holdings.


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I don't even know what that looks like, Ed. I couldn't pretend to tell you, but I will tell you that


that will test something that John Bogle is spinning in his grave concerned about being tested,


and that's passive.


Ed D'Agostino:


Okay.


Danielle DM Booth:


That will test passive. John Bogle before he died did an interview and said, "God help us if


passive is ever more than 50% of inflows to the market." It is, but it's never been tested.


Ed D'Agostino:


You ended your research note with one of the best lines in research that I think I've ever read.


You wrote, “trade the narrative, but own the truth.” So you just spoke a whole lot of truth, I


think people are going to be really interested to learn more about your work and where they


can find you, Danielle. Where should they go?


Danielle DM Booth:


So please come to dimartinobooth.substack.com, and if you run money, if you run your family's


money, if you run a small family office, we're also going to be offering an institutional entree, if


you will, just for you, and I've never done this before…


Ed D'Agostino:


Oh, cool.


Danielle DM Booth:


...at qiresearch.com. (Use code: QIFrontlinePro) So if that's something that you feel that you


have the appetite to take on, our institutional investors absolutely love the research, they love


my flagship weekly, you're going to get a sample of that. You have access to my Bloomberg chat


room, which is always on fire with all kinds of colorful commentary, as well as my private


Twitter (X) feed. But regardless, read the research, because I have no bias. I have no reason to


have a bias, I have no narrative. I just give you the data, and you make your decisions based on

 

[Garpal Gumnut]

I'm thinking there are a few more dead cat bounces to go. They'll try to suck up all the money on the sidelines.

I've experienced some dead cat bounces, last night if it was, was a very large one. It is not without possibility that the bull will continue although I agree unlikely.

I elected to stay on the side with a parcel of BKR purchased a little while ago.

gg

 

[Garpal Gumnut]

I started looking at market action and the world this morning and it is all too complicated. I think I'll leave it go until Monday.

gg

 

[Dona Ferentes]

I started looking at market action and the world this morning and it is all too complicated. I think I'll leave it go until Monday.

gg

twiddle thumbs : gif

 

[Dona Ferentes]

somewhere Ilast week, I said the decline was too orderly

from a newsletter received yesterday

..., how low will we go?”

I replied, “I don’t know.”

..In the meantime, markets are VERY oversold, and markets that are VERY oversold always bounce, unless a meteorite is heading towards our precious planet.

They bounce because the hedge funds, and other active traders, cover their shorts.

That is the main reason why they bounce off oversold levels.

I still think most fund managers are shell-shocked by the speed of the decline.

My understanding is that the big, long-only fund managers have sold very little.

If they start selling, we are in serious trouble, as it will set off a chain reaction, and a cascading effect, leading to levels some way beneath us.

We shall see.

We started the year with maximum investor confidence, and maximum investment manager complacency.

Fully invested and rearing to go.

.

 

[Dona Ferentes]

Some of the numbers here are interesting

Inflation Is Over


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, 2022


Ed D’Agostino // Partner & COO, Mauldin Economics


Danielle DiMartino Booth // CEO & Chief Strategist, QI Research


Ed D'Agostino:


Danielle, it's always a pleasure to see you. You wrote a piece for your clients at QI Research way


back in February. It was one of the best pieces I've read all year, and you essentially talked


about how the narrative around inflation is disconnected from reality. Can you sort of set the


stage for us on your thinking and then we'll dive into some details?


Danielle DM Booth:


So at the basis of any great narrative I think is fear, and the funny thing about the FOMC


meeting that was at the very tail end, the 31st of July, is that on that same day, Ed, there was


the release. I don't think the Federal Reserve does anything by coincidence, especially not when


it's a five-year release schedule, but there was the release of the 2019 FOMC transcripts the day


the Fed met on January the 31st. Again, no coincidences.


What it walked through was the experience that policymakers had in the year 2019. A lot of


people have a hard time grasping that when the initial Trump tweet was sent out, this is April of


2018, basically announcing to the world, we're going to launch a trade war, we're going to


launch a tariff war, we're going after China, and in those words, right? This was a tweet, this


was not... I mean, there's nothing shy about the president, but from that time, April 2018 until


the end of April 2019, the CPI, the Consumer Price Index actually fell.


There'll be some charts in what your clients are going to be able to see that are very simple


demonstrations of this, and instead what the 2019 FOMC transcripts revealed to us is that


policymakers grappled much more with the slowdown in growth. We are a world that revolves


around trade. At the time, 24% of every US automobile, 24% of the pieces, the components, the


parts came directly from China, so slowing down global trade in the year 2019 ended up costing


jobs in the United States. As my mentor Lacy Hunt has told me for years, any year global trade


contracts, the US economy cannot and has not avoided recession.


That was exactly where the US economy was headed in November, December. The fall of 2019,


we were heading towards a recession predicated on the slowdown in global trade. $15 trillion


Global Macro Update is a free weekly interview hosted by Mauldin Economics Publisher &


COO, Ed D’Agostino. You can learn more and get a free subscription by visiting this page.March 14, 2025


of stimulus spending later, we've miraculously somehow avoided recession. Whee, yay,


wonderful.


But fast-forward to where we are today, the narrative, the inflationistas, the soft landing camp,


the individuals who maintain that it's going to be sticky inflation as far as the eye can see, that's


not what the data are saying. It's not what the data are saying at all.


Ed D'Agostino:


Yeah.


Danielle DM Booth:


It is without... Chair Powell has shifted his focus to something called market-based core PCE,


and I think that that's his and his chief lieutenant Christopher Waller, Governor Waller, I think


that's the recognition of the fact that if you look at market-based prices, they've come down


pretty darn fast. If you take one additional step and substitute into this market-based core PCE


a metric that the Cleveland Fed came up with called the new-tenant rent index.


They've spoken about this. They've spoken about new rents are market rent prices, new rents


should represent shelter. So if you substitute out of market-based core PCE, the very broken


metric we know to be owners’ equivalent rent—it's an imputation, it's a theory, it's a model,


but it doesn't represent what we're seeing on the ground. But if you substitute that in, year


over year, we're south of 1%, we're below the Fed's 2% inflation target and significantly below


that.


Ed D'Agostino:


Wow.


Danielle DM Booth:


So in data that we've seen subsequent to this, we've just learned from the census that in the


fourth quarter only 47% of record numbers of new apartments that were coming out of the


construction pipelines, only 47% within three months of coming onto market were rented, that


left 53% not rented. It really is a matter of supply and demand, and that is what is bringing the


largest input to inflation down at a fairly rapid pace now that the downside momentum is in


train, and yet if you question the average American, they're going to tell you that tariffs make


inflation rise.


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COO, Ed D’Agostino. You can learn more and get a free subscription by visiting this page.March 14, 2025


Ed D'Agostino:


Absolutely. Yeah, and then if you look at the news, you hear about eggs, but nobody's


reporting, at least I haven't seen it, that... I mean, what was gas the last time you pulled up at


the pump? In Connecticut of all places it's below $3 a gallon at some places.


Danielle DM Booth:


Yep. I'm filling up for two bucks a gallon, because I'm a crazy... I used to actually clip paper


coupons, now I use my local grocery store. For every X number of dollars you spend with them,


you get an extra 10 cents off per gallon. So I'm getting 90 cents off of what is listed in Texas,


which is lower than Connecticut, but I'm filling up sometimes for just under $2 a gallon and I am


not alone, and yet there is this palpable fear that inflation's going to come roaring back. Why is


that? Why is that?


So, that's what I explored. When you consider the fact that in a post Dodd-Frank world, a lot of


fast money hedge funds control the narrative. They control where Treasuries are traded, they


take massive positions, and you know what? If you're short Treasuries, you want for those


prices to fall, you want for those yields to rise. That's exactly what we saw in 2024, is that we


saw yields rise based on a construct called the risk premium, even though inflation expectations


were not going up, because the most visible price, which you just pointed out, at the gas pump


was coming down.


Individuals know that if they can play hardball with their landlord and threaten to move, and if


they do so they're going to get either a cut to their rent or they're going to go through with


their threat and get a lower rent. So on the ground we've seen inflation come down, but so


many Americans continue to live with the latent shock of the price rises that occurred post-


2019, and those are not to be dismissed. I'm not trying to imply that, but at the rate we're


seeing prices right now, Jay Powell's got a disinflationary problem on his hands. That's a lot


harder for central banks to address.


Ed D'Agostino:


Last time we spoke, you were pretty focused on the labor market, which also factors into this,


how much people make and how much they can expect for an increase, how much they can


negotiate. Just like with their landlord negotiating their rent, you sit once a year and negotiate


your pay adjustment. What are you seeing there?


Danielle DM Booth:


So, it's fascinating. When we were at peak quiet quitting, when we were maxed out working


from home before return to the office became its own RTO acronym, the price increases, the


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wage inflation for individuals who were job switchers according to the Atlanta Fed's wage


tracker, and they track this every month, they were making north of 8% to jump ship. The grass


really was greener.


Ed D'Agostino:


Wow.


Danielle DM Booth:


Job stayers, so to speak, their wage gains were closer to 5%, so you had this three-percentage-


point differential at the peak. This is 2022. 2022 also happens to be when full-time employment


in the United States peaked. We haven't seen a higher number of full-time employed


Americans since 2022, and that is when job switcher wage inflation peaked. Have a look at what


the Atlanta Fed is showing right now. You're seeing both job switchers and job stayers


commanding about 4.5% wage increases.


Ed D'Agostino:


Okay.


Danielle DM Booth:


So, you've seen a complete reversal in terms of wage gains all the way back to where we were


headed into the pandemic. It's a reflection of the things that are not a figment of our


imagination, it's a reflection of true job losses and layoffs.


Ed D'Agostino:


Do you think that continues? 'Cause you were early on this, you were pointing out the


anecdotes, gosh, nine months ago.


Danielle DM Booth:


Nine months ago we had a lot fewer Americans working as Uber drivers, working as Lyft drivers,


choosing logically, why am I taking $295 a week in unemployment benefits? Why would I even


bother applying for initial jobless claims if I can make $750 a week driving for Uber? So they


made this logical, rational decision. I've got a graph that's going to be included in what all of


your readers see that shows now we're seeing Uber driver pay fall, and if it's not falling for Lyft


drivers or for Amazon drivers, they're working a lot more hours to get that same weekly pay.


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Global Macro Update is a free weekly interview hosted by Mauldin Economics Publisher &


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If you look at the latest nonfarm payrolls jobs data, you've seen two months in a row of a


workweek of 34.1. Outside of the initial shock of the pandemic, you've got to go back to 2009,


2010 before you see such a short workweek.


Ed D'Agostino:


Wow.


Danielle DM Booth:


Guess what, Jay Powell? It's not average hourly earnings, it's average weekly earnings that we


take home in our paychecks. For the first two months of 2025, that pay has been falling outright


given how short the work week is. That's reality.


Ed D'Agostino:


Wow. So incomes are falling, inflation is falling, there's…


Danielle DM Booth:


The rate of inflation is falling. So prices are not falling outright, but the rate of inflation is well


within the Fed's 2% ... below the Fed's 2% target.


Ed D'Agostino:


You brought up Truflation in that great piece that you wrote last month, and I'm a big fan of


Truflation's numbers, and I just want to look back at a couple with you, because back on June


17th of 2022, Truflation said that the real inflation we were experiencing here in this country


was 11.59%, which it makes a lot of sense, right? The official numbers were lower, people were


saying, that's just not what I'm experiencing.


Danielle DM Booth:


Mm-hmm. That's right.


Ed D'Agostino:


Now, it's below 1.4%.


Danielle DM Booth:


That's right, and that is 30 million real-time price points that are being tracked on a day-to-day


basis. Where are we seeing job losses right now? Where are we seeing prices fall right now?


Where are we seeing delinquencies rise right now? Well, according to Trepp, even though the


worst of the worst appears to be coming off for the office sector, for example, of course we've


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Global Macro Update is a free weekly interview hosted by Mauldin Economics Publisher &


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got a lot of people returning to the office, but what we're seeing right now is lodging. We're


seeing hotel rates come down, we're seeing anecdotes of people saying, I went to Vegas, it was


a ghost town. We're seeing people in leisure and hospitality lose their jobs. They were one of


the biggest job losers in the month of February surpassed only by federal workers who had lost


their job.


Ed D'Agostino:


Wow.


Danielle DM Booth:


This was a timestamp of February the 15th. So that's when the survey week for nonfarm


payrolls cut off, so we haven't even seen the bulk of the layoffs that have followed since then,


but we are seeing something that I think really started to get market veterans' attention. A few


weeks ago when we got that personal income and spending report, everybody looked


immediately, oh, let's see what core PCE's doing, let's see what PCE’s... and they went, wait a


minute. On an inflation-adjusted basis spending fell 0.5%, declined, and service spending is flat


as a pancake? Wait, wait, wait, wait. We've been working on the inflation narrative that service


spending always goes up. What do you mean it flatlined and good spending cratered?


That's what we're seeing and that's why we're seeing it. Once the caboose starts to finally come


into the station, and that is services spending, which is flatline, the wheels officially start to


come off. What have we seen in the media outside of the media salivating that they can finally


declare a recession and blame it on Trump? Look, people believe what they read, they do, but


the disinflationary forces, the private sector job cuts.


We had MacroEdge, they've been doing a great job of tracking layoffs as they're announced.


I've been a bit of a critic of Challenger, Gray & Christmas, because in 2023 and throughout


2024, as best I could tell they were understating announced layoffs. How do you have some


major retailer in the United States announce that it's closing all of its locations and only


managed to tally 4,000 retail job losses in a month? I'm like, it's your job, Challenger, Gray &


Christmas to track layoff announcements, and you didn't even begin to capture half of the jobs


that were lost in retail in one month.


Lo and behold, now that we have the first clean month of Trump in office, Challenger, Gray &


Christmas pops up with 172,000 jobs lost in February, the sky is falling. They were playing catch-


up. They were playing catch-up to layoff announcements that they know had already occurred,


but what's more important here is that despite the fact that there were 62,000 layoffs that they


attached to federal workers…


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COO, Ed D’Agostino. You can learn more and get a free subscription by visiting this page.March 14, 2025


Ed D'Agostino:


Okay.


Danielle DM Booth:


...well more than that were private sector. Here's the biggest problem, here is the reason that...


President Trump and Treasury Secretary Scott Bessent, they've started to mention that the


economy may pause. I think over the weekend Trump said that we may be in a time of


transition for the economy. People are using all kinds of lovely synonyms for recession, but not


actually using the R word itself.


Ed D'Agostino:


Right.


Danielle DM Booth:


Why is that? That's because economists recognize a phenomenon known as the adverse


feedback loop. So the private sector has been in layoff mode for some time, has been in cost-


cutting mode for some time. In fact, first-quarter CEO optimism rose, and that was one of the


few actual aspects that was like, here, look, here's a positive headline. Why did CEO optimism


rise? Well, because they announced that they were going to be imposing more hiring freezes


and firing more people, which is shareholder-friendly.


You please shareholders, you cut costs, you get a pop in your stock price, but why they're


optimistic, that's not necessarily a good thing. The reason I bring up the idea of an adverse


feedback loop is the more job losses we have in the public sector going forward.


Ed D'Agostino:


Yeah.


Danielle DM Booth:


By the way, not just direct federal employees. When you read a headline that says that certain


large consulting firms derive 98% of their revenues from federal government contracts, there


will be trickle-down effects, there will be ripples into the private sector based on the work that


they depend on coming from the federal government.


So, if the private sector's saying, well, wait a minute, we're going to have aggregate income


continue to fall, then going into the year, maybe I thought I was going to be able to tamp the


brakes and stop with the cost-cutting. But if the aggregate income between public sector and


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COO, Ed D’Agostino. You can learn more and get a free subscription by visiting this page.March 14, 2025


private sector layoffs are going to continue to drag on income in an economy that is 70%


spending, well, I’ve got to cut more. I've got to reduce headcount even more to account for less


money that people can spend on my good or on my service so one sector feeds off of the other.


That's why you saw that the unemployment rate was 0.00111 shy of rounding up to 4.2% in


February.


Ed D'Agostino:


Oh, interesting.


Danielle DM Booth:


We came really close to rounding up to 4.2% from that 4.0%, which did not. The 4.0% in January


was a very real thing, and it wasn't even close to rounding up to 4.1%. But now you can see


going forward, they're going to adjust the birth-death adjustment beginning with March


payrolls that's going to look a lot more like the last few years of the United States, not some


crazy imputed level of business births that didn't occur and had to be revised away subsequent


to.


In March, we get a little bit of reality in the statisticians imputations, which is going to hurt,


because that's going to come right on top of the rest of the job losses that we know have been


announced, occurred. All of these massive multibillion-dollar bankruptcies that we're seeing in


2025... 2025 so far has been the year of the multibillion-dollar bankruptcy.


Ed D'Agostino:


Yeah.


Danielle DM Booth:


Mattel, a huge Canadian telecom company, they had to file 10 different times in the state of


Texas just for their subsidiaries here, but multibillion dollar bankruptcies are commonplace. On


top of that, I'll throw this figure out there. For all of 2024 in the United States, Ed, there were


7,400 retail closures announced, stores that closed. Just through the end of February, we've


had more than 4,000 announced…


Ed D'Agostino:


Wow.


Danielle DM Booth:


...in the United States alone.


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COO, Ed D’Agostino. You can learn more and get a free subscription by visiting this page.March 14, 2025


Ed D'Agostino:


Wow.


Danielle DM Booth:


Alone. So the momentum has continued to build, and that's something that someone as


rational as Scott Bessent can see and prepare for. And you know what? I'd rather move away


from being gaslit to being told the truth. So, if the people in Washington are going to be sober


and honest with the American people and say, look, there might be some short-term pain that


involves getting rid of the fiscal lunacy, I think the American people would rather be told the


truth than read headlines that don't match at all what they're experiencing on the ground.


Ed D'Agostino:


I hope so. I've had this conversation with other people, that the time to do this, the time to get


fiscal sanity back is really right now from the perspective of the president. Not just this


president, any president. You have to move quick, you have to move within the first year before


midterms, before the narratives start to get spun. Doesn't matter which party you're from, the


time to take bold action is now.


Danielle DM Booth:


It is, and Ronald Reagan did just that.


Ed D'Agostino:


Exactly.


Danielle DM Booth:


He did. There was a massive buildup in the federal workforce during the Carter administration


that he felt was just too much, and he came in and cut. Now defense spending rose, we're


talking about making ships at home. We're hearing some things that we'd like to hear, and we


don't look back to ... I mean, we forget, I mean, I should forget, I was in middle school, but we


forget that the 1980 recession lasted all of six months. It was ugly, it was dirty, it was


manufacturing-based, it was blue collar. People going into that election were angry as all get


out, but it only lasted six months.


The economy was coming out of it by July of 1980, and boom, Reagan got to office, and before


the Great Recession of '07 to '09, the double-dip recession that started in 1981 was the worst


recession since the Great Depression. They called it back then the Great Recession, but we


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Global Macro Update is a free weekly interview hosted by Mauldin Economics Publisher &


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don't think about Ronald Reagan in those terms, even though he was in the White House during


a terrible period for US GDP, but we came out of it to your point.


Ed D'Agostino:


I think a lot of this is really hard for people to understand. The person that's not an analyst or


an economist like you, we've been dealing with supply issues ever since COVID, and so then we


hear about there's going to be tariffs added, automobile manufacturers are going to have to


start paying 25% more for things that they import. The narrative, to your point, is that new cars


are going to go from on average costing $50,000, which already is a ton of money, to $62,000.


What people are missing... and so that sounds inflationary, and what people aren't being told is


it's a demand issue, right? It's the demand side of the equation. Am I getting that right?


Danielle DM Booth:


You're getting it so, so right. I mean, hats off to Mary Barra. Maybe she should try Hollywood


after she's finished with Detroit, because according to car gurus in March, there was an 84-day


supply of cars, new cars. It's a lot of cars.


Ed D'Agostino:


Yes.


Danielle DM Booth:


There are a lot of cars because people cannot afford the cars. Fitch Ratings came out just a few


days ago and said that new car recovery rates are 32%. They're not getting a lot of money when


a car is taken by repossession or is traded in, because a 32% recovery rate is nothing. On top of


that, you've got auto delinquencies at the highest level since the early 1990s. Forget '08, '09,


'10, forget those years. Auto delinquencies with a 4.1, almost rounded up to 4.2%


unemployment rate are at the highest on record.


Imagine what they're going to be when we see a jump to 4.5% and 4.6% and 4.7% in the


unemployment rate in short order here what those delinquencies are going to look like,


because Americans, they're having to pay their obligations, they're having to pay their student


loans, and there's a lot of rude awakening that's going on right now with US households who


were operating under the assumption that they would never have to repay their student loans,


that they would forever be on ice.


So you're seeing people with some of the highest FICO scores see some of the biggest declines


in their FICO scores, because they didn't qualify for student loan forgiveness, they simply made


too much money, and now they're being reported to the Experians and the TransUnions of the


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world and their payments are large. They're like, "Why not be a dentist? I'll never have to pay


the student loan back. I'll just take out hundreds of thousands of dollars of student debt and


never worry about it." Well, now they're having to worry about it, their credit's getting


destroyed, and at the same time, they bought a house that they never realized what the cost


would be if their furnace went out…


Ed D'Agostino:


Yeah.


Danielle DM Booth:


...and what the cost to maintain a home was going to be when you were buying it at the very


peak of the post-pandemic exodus to the exurbs. So, there's a lot of rude awakening right now.


A lot of rude awakening for US households, and the last thing that they want to be told when


they're irritated is that they're imagining things.


Ed D'Agostino:


So, this all has me pretty concerned, right? I mean, I've gone from being in the soft landing


camp a few months ago to starting to really pay attention to what you were saying first about


jobs and then going deeper. Then this article came out a few weeks ago in The Wall Street


Journal saying that I think it was 48% of US GDP is attributed to the top 10% of wage earners.


So you factor that in, I mean, what is your prediction? Where are we going with this economy?


Danielle DM Booth:


So it's 49.7% according to Moody's, and that was a real eye-opening Wall Street Journal article.


The next decile, if you will, they're the ones I'm describing getting hit by big student loan


credits. They spend money too, and this is what I have to say about the top 10% who account


for 49.7% of US spending, they're fine as long as the stock market never goes down.


Ed D'Agostino:


Right. Got it.


Danielle DM Booth:


That's how it works. It's called the wealth effect, it works both ways. By the way, demographics


is destiny, and when 40% of the stock market is owned by individuals who are 70 years of age


or older, when 25% of US residential real estate is owned by individuals who are 70 years old or


older, that puts Jay Powell in a very tight spot, because he can need to lower interest rates, he


can want to lower interest rates, he can press forward with lowering interest rates.


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COO, Ed D’Agostino. You can learn more and get a free subscription by visiting this page.March 14, 2025


My guess, they're not going to lower interest rates at the March 19th meeting, and it's going to


be a replay of July of 2024. By the time we see March and April payrolls before they meet in


mid-May, there's going to be regret. It's going to be, why didn't we cut rates in July of 2024?


Here we come in September of 2024 with a 50 basis point jumbo rate cut.


I think we're going to see a replay of that script, because once we see March and April payrolls,


it's going to be pretty apparent that the Fed made a mistake by not lowering interest rates at


the March 19th meeting... however, the Fed is trapped. 70-year-olds and older own 40% of the


US stock market, they're kind of okay. Fine, a year ago I was making 5.5% on my cash, now I'm


making 4.25%. I'm okay with that, but don't touch it.


Ed D'Agostino:


Right.


Danielle DM Booth:


If I'm making much less than 4% on my cash, that doesn't work. I'm retired. I'm 70 today, I'm


the median age of a US Baby Boomer. I'm 70 today. My mom is 78, she's at the very outer edge


of Baby Boomer. She's the oldest Baby Boomer, but I'm pretending right now... I'd look really


good if I were 70. I'm pretending right now that I'm 70 years of age, and here comes Jay Powell


and he's cutting into my interest expense.


Now, I as a 70-year-old spend 70 cents of every dollar of interest income I make. It's money, it's


cash income, and I'm happy to spend it. If my Nasdaq position portfolio goes up by a dollar, I'm


only spending two pennies of that. I don't liquidate, I don't monetize near as much of my paper


wealth as I spend of my interest income, but Jerome Hayden Powell up in the Eccles Building


needs to stop lowering my interest income now immediately. How's that going to work when


we're in recession, a recognized recession?


Because in 2001, me the theoretical 70-year-old, you know what? I was 20 years younger. So


what? I went to go work at Southwest Airlines, I went to go work at Walmart as a greeter, I


went back and got my old job. In 2007, there went my retirement savings again, but you know


what? 60 was the new 50. Young, sprightly, fine, great, wonderful, do not have to sell my


stocks. I'll go back to work again so I don't have to sell my stock.


Today what's that 70-year-old going to do if Jay Powell lowers the amount of income that


they're collecting in interest when they own 40% of the stock market? This is the catch-22 that


has got Jay Powell in a terrible trap. With inflation coming down as quickly as it is, he won't


have any choice but to lower interest rates in 2025, but the risk is the 70-year-olds and older


start to liquidate their stock holdings.


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I don't even know what that looks like, Ed. I couldn't pretend to tell you, but I will tell you that


that will test something that John Bogle is spinning in his grave concerned about being tested,


and that's passive.


Ed D'Agostino:


Okay.


Danielle DM Booth:


That will test passive. John Bogle before he died did an interview and said, "God help us if


passive is ever more than 50% of inflows to the market." It is, but it's never been tested.


Ed D'Agostino:


You ended your research note with one of the best lines in research that I think I've ever read.


You wrote, “trade the narrative, but own the truth.” So you just spoke a whole lot of truth, I


think people are going to be really interested to learn more about your work and where they


can find you, Danielle. Where should they go?


Danielle DM Booth:


So please come to dimartinobooth.substack.com, and if you run money, if you run your family's


money, if you run a small family office, we're also going to be offering an institutional entree, if


you will, just for you, and I've never done this before…


Ed D'Agostino:


Oh, cool.


Danielle DM Booth:


...at qiresearch.com. (Use code: QIFrontlinePro) So if that's something that you feel that you


have the appetite to take on, our institutional investors absolutely love the research, they love


my flagship weekly, you're going to get a sample of that. You have access to my Bloomberg chat


room, which is always on fire with all kinds of colorful commentary, as well as my private


Twitter (X) feed. But regardless, read the research, because I have no bias. I have no reason to


have a bias, I have no narrative. I just give you the data, and you make your decisions based on

thanks .. I get this newsletter in my email box. I like the way the interview's both a talking head and transcript.

I don't want to point the finger

but a bit of editing wouldn't go astray

 

[Garpal Gumnut]

Thanks @IFocus . . Beautiful as your post was I decided to summarise it. You owe me. You owe me big time. Let me know if it is a fair summary. I didn't read your original. I do hope nobody with epilepsy tries to read it. cc. @Dona Ferentes


Danielle Booth argues that the narrative of persistent inflation is disconnected from reality, citing the 2019 FOMC transcripts and current data. She points to falling market-based prices, a slowdown in rent increases, and a decrease in wage inflation as evidence of disinflation. Booth believes that the fear of inflation is perpetuated by fast money hedge funds and latent shock from past price increases.

Inflation is falling, with average weekly earnings decreasing due to shorter workweeks. Job losses are occurring in the lodging sector, with service spending flatlining and personal income declining. This disinflationary pressure, coupled with private sector job cuts and bankruptcies, suggests a potential economic slowdown or recession.

The US economy is facing challenges, including high inflation and a potential recession. While some argue for bold action to address these issues, others caution against potential risks, such as a decline in the stock market and increased unemployment. Ultimately, the Federal Reserve faces a difficult decision regarding interest rates, balancing the needs of different economic groups and the potential impact on the overall economy.

Danielle DM Booth invites listeners to her Substack and Qiresearch.com for her research and institutional entree. She emphasises her unbiased approach, providing data for listeners to make informed decisions.

gg

 

[investtrader]

Treasury Secretary Steve Bessent has argued that the economy is going through a stage of “detox” as the Trump administration tries to wean it off what he believes is unsustainable levels of fiscal largesse. US government spending has grown by 60 per cent over the past five years, powering a 50 per cent increase in nominal GDP and helping to push up the profitability and share prices of US companies.

“Could we be seeing that this economy that we inherited is starting to roll a bit? Sure. And look, there’s going to be a natural adjustment as we move away from public spending to private spending,” Bessent told CNBC in comments that reverberated around the market. “The market and the economy have just become hooked. We’ve become addicted to this government spending, and there’s going to be a detox period.”

Trump increased the US national debt by 39% last time in 4 yrs. Why would you believe anything he says.