Trump Tariffs, the Fed, and Market Inflation
REO Speedwagon, Bob Marley, James Earl Jones (Field of Dreams)
What has Warren Buffett been doing lately?
Hoarding cash.
This despite the fact that he has said in the past:
Cash is always a bad investment. When people say ‘cash is king,' that's crazy… It was sure to go down in value over time.
Buffett compared it to oxygen…
You don't need to have excessive amounts of it around. Anytime we have surplus cash around, I'm unhappy. I would much rather have good businesses than cash.
Since November 2008, the U.S. national debt has risen by approximately $26.4 trillion.
For those playing at home on the board game, that’s $26,400,000,000,000.00
This reflects the cumulative impact of recession-era stimulus, wars, tax cuts, pandemic relief, and interest costs, compounded by policies like the 2025 universal tariffs.
We - via the Federal Reserve - have a massive debt financed economy. When interest rates are low, that can seem like a good thing.
Until rates go up.
Over the last two years, the Federal Reserve has LOST almost $200,000,000,000.00.
Lost. $200 BILLION.
See that in the news? No, you didn’t.
Why? The Fed waited until market disruptions/distractions began and then cowardly released the news on a Friday afternoon. No one releases GOOD news on Friday afternoon. That’s when you dump BAD news.
Here’s the WSJ headline from Friday March 21st:
The Fed couldn’t have written the headline any better.
Jamie Dimon, CEO of JP Morgan Chase, said in January in this CNBC article
(Dimon) called the U.S. stock market inflated and said he felt more cautious than others in the business world because of the risks from deficit spending, inflation and geopolitical upheaval.
In that same article, David Solomon, the CEO of Goldman Sachs, said:
It’s hard to dispute the fact that equity multiples are high. Markets look forward, and we are coming off of a very, very tough regulatory environment across all industries.
In sum, all the money printed for the last - *checks calendar* - SIXTEEN years has to go somewhere. Over time, it will end up being spent in the most efficient manner possible and will to end up going where?
…the stock markets. ALL of them.
When the leading financiers say the market is over priced or “inflated” AND Warren Buffett is hoarding cash, one has to conclude a market correction is in the offing.
To wit…
The last five days seem bloody awful and they have been.
Since Election Day, the DJIA is down about 3%.
Pull back even further and you see the impact of all that Quantitative Easing (printing money) that began in November of 2008.
Donald Trump ran on shaking things up and he is.
Normally, a newly elected president would push a legislative agenda through Congress. We would have a robust debate on issues like trade, deficits, debt, and economic growth.
Trump has one term and he’s on the Midterm Clock. It’s now or never.
That’s why he is moving so quickly to rip the Bandaid off this, what I call, False Economy. We have been living off of our children’s credit cards and they instinctively know it.
Young voters moved to Trump last year frustrated about the American economy and the lack of opportunity.
One conversation with our two oldest, Mary Kathryn (31) and William (29), highlighted it for me.
MK - “William, can you imagine Mom and Dad’s grocery bills when we were growing up??”
W - “Oh my God…I can’t.”
MK - “Dad! How did y’all do it??”
Sax - “Times were different.”
They both lamented that it’s too expensive to have children.
Imagine that. They can’t afford to PROCREATE. To continue the species.
So, when I watch all the “Sturm und Drang” (storm and stress) these days with people posting on the Great Market Collapse this week, I try to counsel - take a breath.
TRY. It’s no use with some people who live to hate on Trump and the others who live to love on him. Like they will ever see each other’s point of view. Nope. Not happenin’.
We’reover our skis to begin with due to all of the debt shoved out into the market for over a decade and a half.
In human history, we still have it MUCH better than over 99.99% of the 117,000,000,000 people who have ever existed.
We have problems for sure. Would never suggest otherwise.
First among them, I think, is the ability for us to have a rational conversation about what needs fixing.
And what doesn’t.
Until then…
We’re riding the storm out…
But - every little thing gonna be alright…
It’s always comes back to lesson from the ball field…
Me?
Tonight, I’m take our boys William (29) and John (22) to the Richmond Flying Squirrels’ home opener tonight.
Why? Because baseball, Ray…
It reminds us of all that once was good…and it could be again.
Cold beer, hot dogs, and time with the sons I used to coach.
Wouldn’t trade it for anything.
Take a breath, y’all.
Crack a cold one and watch the game.