It’s Not Pretty Getting There but Trump’s Plan Is Coming Together – Top 3 Takeaways – April 11th, 2025 - Driven By Braman Motorcars
Takeaway #1: Back to where we started
We laughed, we cried, we were entertained...and all of it had to do with Trump. What a week right? Tariffs, historic stock market volatility, inflation reporting. And there’s still more to come before the week’s done. But as I’ve effectively turned my takeaways into various incarnations of entertaining tariff talk (or at least I hope it’s been entertaining...that’s part of what I go for around here...) over the past couple of weeks, I’ve emphasized a few important themes to keep in mind. My first rule of money. The bear market rule. Also, contrary to anything else you have heard or that you will hear, this series of events will prove to be deflationary in the end. Before diving into what’s happened over the past day – let's start by revisiting what I said to start the week. <<The bottom line is this and it’s my message to you to start the week. As much as some of my biggest calls and biggest decisions have happened through the application of the 180-degree theory at various flashpoints in modern American history, the decision to do so is remarkably easy. I’ll explain. Are you a believer in this country? Do you believe that this country will be better off by the time President Trump’s done with his presidency than it is today? If the answer to those two questions is yes – the rest is particularly easy to digest. Here’s a fact. Every major stock market selloff in American history has proven to be a historically good time to invest in American companies.>> Now, as Thursday’s stock market action proved, as about a third the gains from Wednesday evaporated, this cycle isn’t done. And that’s in large part because the trade war is far from being done. As I pointed out yesterday – Trump didn’t back track on Wednesday as was widely reported. That was fake news from people who don’t understand this stuff but pretend to professional report the news. He kept 10% universal tariffs in place, tariffs that didn’t exist on Tuesday, and China – which is our third largest trade partner – has become a full-fledged trade war with the Trump administration clarifying yesterday that the total Chinese tariff rate is now 145%! That’s a big deal. And for that reason, it’s possible that the worst we’ve seen in the stock market cycle isn’t behind us based upon what comes next with negotiations over the next 90 days with most countries but also and perhaps most especially at this point what does or doesn’t happen with China in the coming days. Regardless, what we’ve seen this week is how quickly things can change and the reminder about bear markets being historically great buying opportunities as opposed to moments when you should panic and sell. And about inflation I had this to say... First and foremost, nothing you’re buying today within the United States is impacted by any of last week’s tariffs announcements. Btw, in real-time that is still true. But anyway, I had this to say: Tariffs will prove to be deflationary. And why? What’s the biggest expense for almost all Americans? Housing, right? What’s the second biggest expense for almost all Americans? Transportation of course. So, what’s happened this week? The price of oil has now reached the lowest price in over four years below $60 per barrel. Gas prices below $3 per gallon are on the way (despite the recent move to the more expensive summer blend of fuel). Mortgage rates have declined again this week for a third week in a row and the expectation for interest rate cuts by the Federal Reserve have doubled meaning all costs of borrowing are likely to start to become cheaper over the next month plus. And about that...
Takeaway #2: Inflation is at four-year lows
Thursday’s inflation report, the Consumer Price Index, showed that the rate of inflation also hit four-year lows – reaching levels not seen since two months after Trump was previously president. The rate of inflation was 3% the day that Trump took office. In February it was 2.8%. In March it was 2.4%. The rate of inflation was already steadily coming down. With cost pressures easing for housing and driving, we’re well positioned for this. The inflation rate is at four-year lows, oil prices this week have hit four-year lows which will continue to bring down the inflation rate but also, consumer behavior is a factor in this. Are you more or less likely to make discretionary purchases compared to a couple of weeks ago? Less likely right? As the economy slows with consumer discretionary spending, pricing pressure won’t be there for retailers. Throughout the week I shared examples of how price increases for tariffed items were already going to be mostly absorbed. The recent shift in consumer behavior as people have started to take a wait-and-see approach to the economy due to stock market volatility will further add to my base case that on balance what’s happening will continue to be deflationary at least over the near term where there’s some visibility.
Takeaway #3: The rest of the story...
It doesn’t feel like it right now but the biggest news that’s of the greatest impact to you doesn’t have anything to do with tariffs or the stock market’s recent volatility. It’s what’s been going on behind the scenes in congress with President Trump’s agenda. Everything going on right now in the economy is temporary. President Trump’s agenda passing or not passing is what has the potential to have a permanent impact on all of our lives. Despite threats from many House Republicans about potentially sinking President Trump’s desired Big, Beautiful Bill – in the end they didn’t, and critical procedural votes went through that now will allow for the budget reconciliation process between the House and Senate to take place. The president’s tax cuts, border security, defense and deportation plans, all hang in the balance and in the end, it proved to be two Floridians who made the difference. The two newest members of the House – just elected Jimmy Patronis and Randy Fine were needed as previously the GOP could only lose one vote and still pass legislation. Yesterday’s vote to adopt the budget reconciliation process with the senate lost two. This week hasn’t been pretty, but it does have the appearance of a plan that’s coming together.