Political Stimulus

Economic Authorities are trying to keep their jobs, which leads to more spending. Who can SPEND MORE!?

Joe Biden and Donald Trump are competing for the American vote. Despite social, environmental, or geopolitical issues, they understand that the sweet spot for voters is the illusion of prosperity. Expectations for spending are tailwinds for markets.

I CAN LOWER GAS PRICES!

Joe Biden will keep the economy running at all costs! Any sign of weakness leads to more government spending. If there is any sign of inflation, Biden will use his authority to influence the oil supply.

I CAN SPEND MORE

Donald Trump will once again promise a stronger stock market driven by record tax cuts, deregulation, and better trade deficits. More government spending.

I WILL FIND THE MONEY

Janet Yellen wants to keep her job. She is responsible for making sure the U.S. government has money to spend. She must convince the market to buy more debt. The debt will pay a nice premium to the holders.

She did her job—she sold hundreds of billions of dollars of U.S. Bonds to the market! The U.S. Treasury account is ready to spend.

I WILL PRINT MONEY

The Fed is in the process of purchasing the debt created by the U.S. Treasury and basically turning the money printer back on June 1st.

INTEREST PAYMENTS

There is only one problem: The U.S. Interest Payments are too big.

I WILL CUT RATES

Such large payments will eat into government spending, so Yellen and Biden must beg Powell to cut Rates!

Bank Failure

Luckily for Yellen and Biden, regional banks holding commercial real estate are ready to go belly up! A banking crisis is exactly what Powell needs to cut rates.

Here's how the 2024 story ends

While everyone is focused on the risk of inflation, the market will be focused on more stimulus. Stocks and Crypto will fly as long as the inflation rate doesn't rise. Let's say PCE needs to remain below 2.8%

Over $6 trillion of cash is on the sidelines, waiting for the Fed to cut rates. If they do, it will be because employment has weakened or inflation has made enough progress. Even if the Fed doesn't cut rates, the cash generated from the 5.5% yield will keep wealthy consumers spending on services. Companies with large amounts of cash can use the 5.5% yield to finance their debt.