Tag: stock-market

Trump Playing Chess As Interest Rates Drop on Tariff Announcement, Bringing Costs Down (The Others Are Playing Checkers)

President Donald Trump shared a video on social media Friday indicating that he’s playing chess rather than checkers with his tariff policy, given one result has been that interest rates have dropped.

Trump reposted the video on Truth Social, which another user originally created for TikTok, showing that he’s not particularly upset about the stock market taking a major nosedive over the last two days since he announced his new tariff policy.

The president said that he would be charging countries essentially half what his administration calculates, on average, they are imposing on the United States.

Further, there will be a 10 percent baseline across the board.

According to the video Trump reposted, he is “crashing the stock market by 20 percent this month, but he’s doing it on purpose.”

“Why is he doing this? To push cash into Treasuries, which forces the Fed to slash interest rates in May, and those lower rates give the Fed the ability to refinance trillions of debt very inexpensively. It also weakens the dollar and drops mortgage rates,” the narrator of the video said.

Lower interest rates for the consumer mean credit card payments fall and mortgage payments do too, which all puts money in the pockets of Americans.

Many have noted on social media — including venture capitalist and co-host of the “All-In Podcast” Chamath Palihapitiya, a Trump supporter — that the yield for 10-year Treasury bonds dropped to under 4 percent after the president’s Wednesday tariff announcement.

The reason is that when investors flee from stocks, they tend to go to Treasury bonds as a safe haven. When many people want to buy bonds, the yield goes down because it becomes a seller’s market. Buyers are willing to take less yield in exchange for higher security.

The video Trump shared above stated that one benefit from this trend will be tens of billions in savings to the federal Treasury in interest payments.

The total interest payment on the nation’s over $35 trillion in national debt last year was $881 billion, surpassing the total defense budget.

Finance expert Tanvi Ratna argued on X that what Trump is engaging in is a “full spectrum reset.”

“Start with the debt: $9.2T must be refinanced in 2025. If rolled into 10-yr bonds, every 1 basis point drop in rates saves approx $1B/year; so a 0.5% drop would save $500B over a decade. Lower yields free up fiscal room—without them, core spending gets crowded out,” she wrote.

One basis point is 0.01% (1/100 of a percent) or 0.0001 in decimal form. Here is the further breakdown of her calculations.

more of this advanced math and Trump making moves instead of kicking the can down the road like every other president is found here

Druckenmiller Declares: U.S. Going From ‘The Most Anti-Business Administration In History To The Opposite’

Duquesne Family Office Chairman Stanley Druckenmiller stated Monday that “animal spirits” have returned to the market, fueled by “giddy” CEOs anticipating Trump’s return to the White House. Speaking to CNBC, the billionaire investor argued that the U.S. economy is shifting from “the most anti-business administration” in history to the most business-friendly administration. 

STANLEY DRUCKENMILLER: The economy is very interesting. We’re at a very low unemployment rate, essentially 4%, with 3% GDP growth. I’ve been doing this for 49 years, and we’re probably moving from the most anti-business administration to the opposite. We do a lot of talking to CEOs and companies on the ground, and I’d say CEOs are somewhere between relieved and giddy. We’re believers in animal spirits. Paul Ryan was on your show last week talking about a 32% increase in business confidence over the last 12 months, which is probably a record in terms of change.

So the economy looks very strong, at least for the next six months, which is about as far out as one can see with any degree of confidence.

In terms of the markets, I would say it’s complicated. Despite what I just said about all the wonderful things about the economy, we have an earnings yield to bond yield ratio that’s probably the most unattractive level in 30 years.

So you’ll have this push of a strong economy versus rising bond yields in response to that strong economy, and that makes it hard to have a strong opinion one way or the other on the market.

I will say this: in my business, every change creates change in security prices, and having this kind of radical shift from one administration to another, in addition to what’s going on in the private sector with innovation, then you’ve got deregulation from the government, disruption. I think there’s going to be plenty of chance, plenty for your viewers to do. I wouldn’t worry about the market, I would focus on individual stocks. 

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