Looking Backwards …
LB #1
I recently read that Steph Curry, one of the greatest shooters in NBA history, struggled through his worst shooting night of his career. He is injured, getting older, and it is hard for him to maintain the form that he once possessed so effortlessly. He is having to realize that he isn’t what he used to be. I see the same affliction in the US, but unfortunately the country can’t retire. Greatness isn’t a birthright, it must be earned every day and like age on an NBA player carrying $36 trillion in debt makes it harder.
There is a lot of hopefulness coming to markets, businesses, and consumers with the arrival of Don Trump, but hope isn’t a strategy and hope don’t float. It needs solid ideas and execution. Trump has floated many ideas; will they work? We shall see. First, we have to examine a failure.
A bank failure that is. From the FDIC’s website, “On Friday, January 17, 2025, Pulaski Savings Bank was closed by the Illinois Department of Financial and Professional Regulation. The Federal Deposit Insurance Corporation (FDIC) was named Receiver. No advance notice is given to the public when a financial institution is closed. Millennium Bank, Des Plaines, IL assumed all deposit accounts and substantially all the assets.”
This took place before Trump took office, but it got very little coverage in the media. Let’s not acknowledge failure. Let’s not acknowledge that the real economy is struggling. The billionaires that control our media, social channels, and now politics are going to tell us all is well. The public is not on board with that. Trump is going to do some goodwill building with rolling back some social policies that will make him popular, but unless he rolls back the economy to a place where more people can participate in success, his popularity will wane.
LB #2
Trump is off to a great start in one area. This from ZeroHedge, “The Trump State Department on Friday halted spending on almost all foreign aid grants for 90 days, which also appears to apply to funding for military assistance to Ukraine, Politico reports. The guidance, issued by Secretary of State Marco Rubio, was sent to all diplomatic and consular posts, and orders all department staffers to issue “stop-work orders” on nearly all “existing foreign assistance awards. Rubio also outlined the Trump administration’s stance on spending, saying “Every dollar we spend, every program we fund, and every policy we pursue must be justified with the answer to three simple questions,” Rubio wrote. The questions: Does the action make America safer, stronger, and more prosperous? The new order reportedly shocked State Department officials.
“State just totally went nuclear on foreign assistance,” a State Department official told Politico.”
When our country is $36 trillion and counting in debt, this is a great spot to cut funding. Like an addict cut off from his supply, this won’t be without repercussions. The risk is that nations will run into the arms of someone else, like the BRICS, China, or even Russia. It’s probable that they are too smart to just give money away.
The problem with having a $36 trillion debt and adding another $1T every one hundred days is that every day we are adding $10 billion to the debt. Doge, or the Department of Government Efficiency, led by Elon Musk is supposed to stop that. Alice Tecotzy from Business Insider checks up on that goal, “The Department of Government Efficiency said it cancelled $420 million in contracts in 80 hours. If true, that puts DOGE on track to cut about $67 billion per year — 3% of Musk’s original goal. That would end up being about 3% of Musk’s original goal of slashing $2 trillion from the federal budget, or 7% of his pared-down goal of $1 trillion.” Yikes!
LB #3
Trump has started the deportations on illegal immigrants as well. However, as Anthony Orrico reports for the Mirror it isn’t without eyebrow raising, “As a part of his ongoing effort to carry out mass-deportations throughout the country, President Donald Trump has employed the use of Department of Defense resources to return many migrants to their home countries.
Publicly available data suggests that using U.S. Military planes to fly migrants out of the country may be significantly more expensive than flights chartered by the Department of Homeland Security. The DOD reported on Wednesday that they would be providing two C-17s and two C-130E planes to help with what are known as “migrant repatriation flights.”
According to the DOD comptroller, as of fall 2022, the average hourly cost of operating a C-17 was about $21,000 and the average hourly cost of operating a C-130E was between $68,000 and $71,000. Based on these figures it can be estimated that the C-17 flight on Thursday that carried 80 migrants from El Paso, Texas to Guatemala City would have cost roughly $252,000. For the same 12-hour flight using the C-130E, it would cost between $816,000 and $852,000.
In comparison, a flight directly chartered by DHS’ Immigration and Customs Enforcement is $8,577, according to estimates posted by the agency.” Somebody get Musk and Doge on the phone. At a cost of over $10,000 per criminal, what the hell are we doing? Trump has targeted 11 million people for deportation so it is going to cost us $110 billion on airfare? Mexico did deny one flight to land but Trump has been unable to start sending the criminals home. That means we spent six figures to not deport anyone? As we have said many times here, campaigning is easy, but governing is hard. Governing and fulfilling campaign promises within your means is damn near impossible.
I was recording this when I got an update on the news. Colombia has denied two military planes the ability to land with deportees on Saturday. This from ZeroHedge, “In a social media post, Trump said he has ordered an emergency 25% tariff on all Colombian goods coming into the US, which will be raised to 50% in one week.
He has also called for a travel ban and immediate visa revocations on Colombian government officials “and all Allies and Supporters” as well as visa sanctions on party members, family members and supporters of the government of President Gustavo Petro.
“Petro’s denial of these flights has jeopardized the National Security and Public Safety of the United States,” Trump said.”
Treasury, banking and financial sanctions are to be imposed as well. Scorched earth.
In a related story but halfway across the world, Trump is going to have all the Palestinians taken out of Gaza and forced into Egypt and Jordan. This from Dov Lieber, Carrie Keller-Lynn, and Saleh-al Batati of the Wall Street Journal, “President Trump said he wants to “clean out” the Gaza Strip and urged Jordan and Egypt to take in refugees either temporarily or for the long term, a move that has been rejected by Arab countries since the war began.
The president said he told King Abdullah II of Jordan in a phone call on Saturday that he wants the monarch’s country to receive Palestinians. He said he expected to make a similar request of Egypt’s president, Abdel Fattah Al Sisi, in a coming phone call.” I wonder what will happen if they say no?
Folks, welcome to Trump’s my way or the highway. For those of you keeping score at home…Germany, France, Canada, Mexico, Colombia, Egypt, Jordan, Russia, China, Brazil, Panama, Venezuela, Greenland, and Denmark. Oops I almost forgot, Musk insulted the UK. If you want to be an isolationist, I couldn’t think of a better way to do it. Us vs them. Will it work? We will see.
Looking Forwards…
LF#1
Trump stopped in Las Vegas and assured them that he is progressing on legal changes to make tips 100% untaxable. This is a prelude to every CEO in the country being paid in stock option gratuities, I am sure. There was also no word on how this hole in the federal tax receipts was going to be plugged. Broadly speaking Trump believes tariffs are the answer.
This from Stephanie Lai at Bloomberg, “The proposal is one of many tax initiatives Trump campaigned on, setting the stage for a whirlwind legislative stretch. Trump has also pitched lowering the corporate rate, ending taxes on Social Security benefits, exempting overtime pay from taxation and raising the cap on state and local tax deductions — all on top of renewing expiring breaks from his landmark 2017 package. Trump argues that his tax changes would pay for themselves by stimulating US economic growth and that his pledge for sweeping tariffs on foreign goods would provide additional revenue. Still, Trump’s tax agenda comes with a steep price tag — extending expiring tax cuts alone carries a $4.6 trillion cost — and lawmakers will likely need to make tough choices as they look to approve a broad tax package. Trump’s pitch on tips has the potential to trim the tax bills of more than 6 million hospitality workers who reported a total of $38.3 billion in tipped income in 2018, averaging out to about $6,250 per tipped worker.”
That equates to about 15% of what Musk is projected to save at the current pace of optimization. But Nevada was blue and now it is red and all it cost was a promise to treat their income differently than other people’s income. Now tipped employees can join CEOs in paying little to no tax. No word on if they will get to visit him at Mar-a-lago though…
LF#2
That is a good thing for those tipped employees. They are going to need that money to afford home owner’s insurance, if they even own a home. This from Naveen Athrappully via ZeroHedge, “In 2024, insurers raised rates by 10.4 percent as of Dec. 27, which followed a 12.7 percent hike in the previous year, according to the Jan. 21 report from the company.
In total, 33 states saw premiums climb by double digits last year, with the largest spike seen in Nebraska at 22.7 percent. Premiums in Iowa, Minnesota, Montana, Utah, and Washington jumped by more than 20 percent. JoAnne Murray, president of Allan Block Insurance in Tarrytown, New York, said that “in the 40 years that I’ve been doing this, I have never seen it this bad.”
One property worth $2 million in Long Island was quoted an insurance of $48,000 per year, up from $6,000, she said. Another property in Florida valued at $7 million had a premium quoted at $340,000. In 2023, around 7 percent of realtors saw deals fall through due to insurance issues, with the share jumping to 13 percent last year as of October, according to the California Association of Realtors. Even prior to the pandemic, insurers were struggling to remain profitable as rising costs made this challenging, the organization noted. In 2023, insurers paid out almost $1.11 in claims and expenses for every dollar they took in.
“Insurers play a vital role in the economy, protecting against financial losses due to unforeseen events such as natural disasters,” said Insurance Information Institute CEO, Sean Kevelighan. “However, if insurance companies were to become unprofitable and unable to meet their financial obligations, it leaves policyholders without coverage when they need it most.”
Jordan Levine, senior vice president of the association, said nearly a third of realtors were aware their buyers were finding it difficult to secure insurance for properties.”
It seems that we just learned that lesson with the fires in Malibu. I hear that the Federal Reserve’s preferred metric for measuring inflation is the supercore inflation metric which omits food, energy, and housing. When will the new metric exclude home insurance as well? It already excludes almost everything that people have to buy and good luck getting a mortgage without buying home insurance.
Meanwhile our government is spending a trillion dollars every 100 days, sending deportees home first class at a cost of $10,000 per person, and allowing your neighborhood barista to not pay taxes on their income. If you can’t understand why this is all inflationary, I can’t help you. I’m not meaning to be flippant, but Musk is picking up pennies in front of a steam roller.
LF#3
Trump did not end the war in Ukraine on day one as he said he would, but he also hasn’t instituted tariffs on day one either. It turns out that February 1 might be the date for Mexico and Canada with China being pushed back a little further. Canada is preparing to counter with tariffs of their own it seems. This from Carolina Avenado at the Epoch Times via ZeroHedge, “Saskatchewan Premier Scott Moe says he supports targeted counter-tariffs in response to potential U.S. tariffs, but firmly opposes retaliatory export taxes on Canadian goods. His comments come as more premiers are taking issue with different aspects of the “Team Canada” tariff response. Moe said he shares Alberta Premier Danielle Smith’s concerns on the negative impacts of export taxes on their provinces’ economies.
Smith has been a vocal opponent of retaliation, particularly export tariffs on Canadian oil and gas, saying they would have devastating impacts on her oil-producing province, whose main trading partner is the United States. Instead, she has advocated for a diplomatic approach, arguing the current U.S. administration is unlikely to respond favourably to threats.”
Alberta is all about oil. They know that despite claims that the US is energy independent, the US has to import their heavy sour crude to export the refined products that make us in an equation energy independent. Over 50% of the 8 million barrels per day that we import comes from Canada and Mexico is over 10% as well. It’s funny that this is where the tariffs are starting isn’t it. Everything is about energy. The war in Europe, tariffs, and drill baby drill. The only thing that I see that Don Trump is committed to is lower energy prices. What I don’t see is why an oil producer would want that, whether they be OPEC, Exxon, or Alberta. We shall see…
Sincerely Yours,
C Thomas Printer
The Dow Jones finished trading …at 44,424.
The 10-year Treasury bond is at …4.617%
The price of Brent Crude is … at $78.50 per barrel.
The price of gold is … at $2,777/oz.
The price of silver is … at $31.04/oz.
I leave you with this from the information superhighway, What is the opposite of a croissant? A happy uncle.
Thank you for listening today and you can find all of our articles and more on our website cthomasprinter.com.