🗞 Trump’s Tough Choice: A Recession Now or Bigger Problems Later?

WHILE YOU POUR THE JOE… ☕️
Where Are Your Manners?

Did you watch the Trump and Zelensky meeting?

If you did, what was your favorite part? Because mine was when both Trump and Vance basically told him that he’s not thankful for all the help. 🤣 

They do have a point, but that’s just great entertainment.. Oh the memes that will come our way from this.

Anyway, looks like Trump will have some tough decisions to make here in the coming months.

Speaking of tough decisions, let’s get on with today’s email 📧…

DELEVERAGING CYCLES
Hard Times Create Good Markets

Have you ever been to a party, when the music starts slowing down to let everyone know it might be time to start packing up? ⌛️ 

But, here’s the thing.

Everyone is so drunk already to notice the change in music, so they only start walking out when the lights come on and it’s made clear that the time to leave is now.

Well, that’s sort of what’s happening in the stock market right now, and why Trump might actually be okay with a recession. 📉 

Let me explain.

Okay so consumer spending just went down for the first time in almost two years, and that means something.

But, it’s not what you think.

Noticed above how most of the people in the stock market are basically $100,000+ earners? Well, those aren’t responsible for the spike in savings rate. 💵 

What they are responsible for is most of the spending that was not affected by sub $100,000 earners, who really feel the burn of today’s economy.

Now, what I’m trying to say here is this: We need to get the wealthier people in the country to stop spending so much, so that we can finally get a push lower in inflation and get on with our business.

Since, you know, the real economy is already suffering and in recession. 📉 

How can you do this? With something called the Negative Wealth Effect.

There you see the average home price in blue, while the consumer spending index is in red. 🏘️ 

No need to state the obvious, but they kind of follow each other, and it makes all the sense in the world.

You know why?

When people (the $100,000+ earners who own homes) see their property values fall, they suddenly don’t feel so hot anymore. 📉 

Then they don’t want to spend at the same pace they were spending in the past because of this simple psychological effect.

With that in mind, I want you to save this post for when you’re done, because there are more bad news coming for the housing market.

And on that note, I’ll let you connect the dots on why Trump might want to let a recession happen, or at least admit that we’ve been in one so that Powell lowers interest rates as he’s already expressed hit intentions in making that happen.

Remember, the Fed only cuts after the fact, and only when the fact means a recessionary environment has developed. 🫰 

TRADE OF THE WEEK
Going Online

This is the chart for AppLovin stock, a company that literally loves making apps for businesses who are looking to go (or have recently gone) online. 💻️ 

And in case you haven’t noticed, this is one of the major themes developing right under our noises in the global economy.

Every business will eventually have to have an online presence, whether that is through social media exposure, or simply implementing technology for their every day processes.

If that’s a future you can wrap your head around, then here’s why AppLovin makes for a good pick today: ⬇️ 

After a short report accused AppLovin of faking their click and download counts, the stock plummeted by over 100 points, but then this happened. 📉 

Wall Street analysts quickly came in and said that there is basically no ground for these allegations, considering that there should also be discrepancies ni the business financials to follow along.

If the company was in fact faking the amount of clicks and downloads from its platform, that might be bypassed in the net income statement through creative accounting, but not the cash flow statement. 👀 

This is where we remain bullish, and probably why those from Wells Fargo decided to recently reiterate their Overweight rating on the stock while also placing a valuation target of $538. 🎯 

Based on the market/volume profile for AppLovin, it looks like today’s range has been the subject of some accumulation for the entirety of 2025 thus far.

What this means is that 85% of the volume has taken place here, where buyers also came in to support the stock after its short report selloff. So, grab your alerts and get ready for this stock.

We’ll start to work on posting more deep dives once this hectic first quarter is done with. ✅ 

GO AND MAKE IT HAPPEN
Timeless Classic

If the changing of market psychology is something that interests you, especially as we go from manic excitement on all-time highs down to the negative wealth effect. In that case, today’s book recommendation 📖 is for you.

A timeless classic, recommended and read by pretty much all traders, will show you what typically happens during these changing cycles.

To your success,

G. 🥃