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KISS THE RING….

So, if you were to ask…is the glass half empty or half full under Trump?

The answer truly depends on who you are asking. If you ask Wall Street, the answer is obviously, celebratory. The stock market and all its cohorts have increased significantly since President-elect Donald Trump won his re-election on November 5th.

If you ask countries like Mexico, Canada, and China, the answer is one of uncertainty, retaliation, and deep concern, as tariffs could have a devastating impact on their economies. 

The Trump Effect is already causing Wall Street leaders to line up with their billion-dollar purses and pledge their fealty as they kiss the ring. 

Countries across the world are racing to reassure their constituents not to worry, but obviously, there is real concern about the possibility of strained relations between the United States and what that looks like economically.

Depending on the country, sentiment swings wildly from left to right. Countries like Argentina, Venezuela, and Hungary, with little political skin in the game, are in celebration of a Trump win. 

Canada is suffering from political turmoil calling for Trudeau’s resignation after a spat with Trump, creating the abrupt departure of Chrystia Freeland, Canada’s finance minister.

World markets are all waiting with bated breath to see if they will be excluded from Trump’s “America First” agenda and if allowed—a seat at the negotiating table.

Trump’s Get Down or Lay Down approach is affecting our trading partners and allies, and it’s putting Washington, D.C., on notice. The Republicans now control both the Senate and the House, which means they can run the board.

Trump’s campaign promises have a real shot of coming to fruition. When checking the temperature of the Republican Party, a new Monmouth Poll found that 76% of Republicans were optimistic about Trump’s agenda, as opposed to 53% of Republicans during his first term in office. 

97% of Republicans were either somewhat or very optimistic about Trump’s agenda.

52% of liberals were somewhat optimistic and 10% of Democrats were somewhat optimistic, versus 18% in his first term. 

This speaks to the amount of control Trump now has and I highly doubt he will run into many roadblocks in his own party.

This opens the door for Lina Khan, the commissioner of the FTC—to exit, along with her scrutiny of Wall Street’s coveted free enterprise, as Trumptopia’s world of deregulation ignites the stock markets.

Corporations are already chomping at the bid at the thought of a 15% corporate tax rate. And it seems like a foregone conclusion that Trump’s 2017 Tax Cuts and Jobs Act will likely be extended.

Parents are sure to welcome a child tax credit of up to $5000 per child, which would be an increase over the current child tax credit of $2000 per child. 

Although there are many things on his agenda, like healthcare, electric vehicle tax credits being repealed, defense, and “Drill, baby, drill,” he also wants to end taxes on tips and social security income.

And, to wrap it up with a nice tidy, little bow, he is building his very own billionaire boys club with a total of 13 billionaires in his administration if confirmed, with Elon Musk headlining the show. 

This gives light to the thought process that, you are most like the people you frequently share space with, but the question is…can Trump’s billionaire band Make America Efficient Again?

Will they be able to cut the deficit, lower taxes, and build a clear path for how we pay for it without creating inflation?

Or, will this be another power grab—where the rich get richer, while simultaneously pointing their fingers away from the thief who stole the cookie from the cookie jar?

One thing is for certain…the stock market has a sweet tooth for Trump and Wall Street loves its candy! 

YOU ONLY LIVE ONCE ….

Contrary to popular belief, the stock market is not where you strike it rich—it’s where you build wealth. While it seems like a play on words, it’s actually a mentality shift. It’s as simple as the answer to the question, would you like to have money for a lifetime? Or would you like to have family money? 

While the answer may seem obvious, depending on the generation you were born into - the obvious is two different answers. 

If you go back to the silent generation, the period between 1928 and 1945—this was the period of The Great Depression and World War II. Growing up during this period you understood scarcity, family values, and community.

The man was expected to be the breadwinner, and the pressure to deliver was enormous, especially if you had mouths to feed. So, if you grew up during a period of deep unemployment and economic instability, building family wealth may have been an enterprising man’s first priority.

After World War ll, the mentally shifted away from a period of wartime rations and production to a peacetime economy. Businesses transitioned from wartime production (just as we did during the pandemic when businesses were building ventilators) to retooling to produce consumer goods and services once again.

If you were born between 1946 and 1964, you were classified as a Baby Boomer, and you were sold “The American Dream” hook, line, and sinker. The American dream was about upward mobility and wealth accumulation.

This was the period society bought into the white house with the white picket fence, got married, and had two children and a dog named Spot.

This was a time of rapid economic expansion and growth in the U.S., which created gigantic opportunities for entrepreneurs and businesses. 

Soldiers were returning home from the war, and a growing middle class put a demand on consumer goods and services leading to a burst in entrepreneurial activity.

This was a period that taught building your last name is way more important than your first (family)—companies like Whirlpool, established by the Whirlpool brothers, Louis and Frederick. Whirlpool became a dominant player in the home appliances business between the 1940s to the 1950s, and they’re still around today. 

Johnson & Johnson—established in the 1960s, and founded by Robert Wood Johnson I, James Wood Johnson, and Edward Mead Johnson. They introduced the world’s first disposable diaper, and made a significant impact on baby care. 

The entrepreneurial spirit was everywhere, and technologies developed during the war helped fuel innovation. The growth opportunities were centered around kitchen appliances, which revolutionized cooking.

Dishwashers gained popularity, as well as home furnishings, and entertainment and leisure products. So, if you solved problems like Johnson & Johnson, Whirlpool, and companies like RCA (Radio Corporation of America), you built wealth for generations to come.

RCA became a major manufacturer of television sets. Between 1950 to 1955, 30% of American households owned a television.

This reshaped how America and the people in America saw themselves. It also became the workhouse that established pop culture and cemented the relationship between consumer and producer.

TV gave businesses a way to directly advertise—through celebrity endorsements, building brand recognition, and more importantly - controlling the messaging. 

Next, is Generation X between 1965 and 1980, a period of rising divorce rates—and skepticism for both business and the establishment.

The feminist movement grew—equal rights, reproductive rights, and workplace equality—at the forefront, and some believed women’s independence contributed to the rising divorce rates. In contrast, the marriage rate peaked at 8.5 per one thousand in the 60s.

This was also a period of economic uncertainty. Extremely high inflation and interest rates peaked at 20%. During this time, we experienced three recessions—the first was from 1969 to 1970, the second was from 1973 and 1975, and the last was in 1980—except for the recession between ‘73 to ‘75, which was fueled by the Oil Embargo oil crisis.

The recession between 1969 and 1980 resulted from high interest rates and inflation breaking the back of the consumer.

This was also a time of innovation, and companies like Nike, Starbucks, FedEx, Intel, Microsoft, Home Depot, Visa, and Apple were born - yet in the 70s, only 10%-15% of Americans invested in common stocks.

The infamous millennials born between 1981 and 1996 gave birth to fractured societal norms and broken traditions 

The millennials rebelled against the traditional 9 to 5 option for work-life balance, as they no longer believed in the baby boomer’s theoretical “30 years-to-retirement-with-the-gold-watch-attached.”

They were the generation that decided to be self-focused on careers, self-improvement, and education and pushed getting married ‘til later in life.

They were more likely to focus on entrepreneurship and creating their own economic paths, than following in the footsteps of their, perceived to be, conditioned and brainwashed parents. They even invested at a higher rate; 50% of all millennials are invested in the stock market. 

Last but not least, Generation Z…what some believe to be…the lost generation, born between 1997 and 2012. They are the byproduct of the fractured family, social media, and the epitome of rebellion against anything traditional. Generation Z marriage rates fall between 20% to 25%—resisting societal pressure, supporting alternative lifestyles, and for those who would like to get married—they feel raising a family is expensive and can’t afford it.

They were raised during a period of economic mobility, crypto investing, and financial literacy. Their hustle has become the stock market and their idea of being long-term lasts as long as a 30-second minute.

They are more likely to chase penny stocks, buy cryptocurrency, and take a conspiratorial stance against fiat currency—living by the theme, YOLO—You Only Live Once.

RISKY RANDY…RISKY TANDY…

If Risky Randy were a person, he or she would exist between the unqualified advice from message boards and the stock-picking ideas from social media. 

Their funds are just as limited as their stock picks, so they confuse price with value, finding themselves with an assortment of low-priced securities called penny stocks. 

A penny stock, technically, is any stock trading at or below five dollars a share.

To Risky Randy, these are the action-packed securities that give him the same thrill of winning a big bet in a casino; simultaneously aware, but unaware that his money has one foot in the grave. 

In poker, we call it dead money—and just like poker, they are to institutions - what a same day option trader is to market makers - a suckers bet. 

Risky Randy is famous for buying on rumor and getting stuck in the stock, after the news hit. 

Typically, penny stocks have a small trading float, so when an unusually large volume presents itself, Risky Randy rushes in to sell (not before the volume dries up) …and congratulations! Risky Randy is now the proud owner or latest bag holder.

Risky Randy types fail to realize there are two sides to the market (1) the long side and (2) the short side and money is made and played on both sides. 

Unfortunately, Risky Randy has a one-track mind and is far from sophisticated, so jumping before researching leads to a blown account and broken tailbone, almost…every…time.

Risky Randy owns every quantum computing stock, junk crypto coin, and backward, money-making strategy you can think of in the market. 

Risky Randy doesn’t understand that the market is not an all-you-can-eat buffet at Panda Express, and that sometimes building them tall is better than trying to own them all. 

This is the reason why Risky Randy has a low emotional IQ; he sells his winners and keeps his losers, and insecurely asks anyone for their opinion on social media who’s willing to listen—because fundamental analysis is beneath his skillset of losing money. 

On Wall Street we used to say, if you want to lose money send it to a stockbroker.

In this case, if you want to make money, avoid the Risky Randy in you at all costs! 

CUT THE BULLCRAP ALREADY!!!!!

So, there you have it. The Feds cut interest rates on December 18th by 25 basis points (from 4.75-4.5% to 4.25-4.50%) and sent the market spiraling down.

The Dow dropped 1132.85 points (or 2.6%), followed by the S&P falling 3% (or 175.49) and Nasdaq falling 3.5% or 722.29 points respectively.

The market selloff was due to the Feds’ outlook for rolling back the street’s anticipated rate cuts, from four rate cuts to two rate cuts, on a more hawkish stance than the market anticipated.

The Feds mentioned their dual mandate of low unemployment, stable pricing, and low inflation several times and used words like cautious and patience.

This slapped the taste of easy money out of Wall Street’s mouth as inflation and uncertainty tapered an already expected four cuts in 2025 to two cuts as Jay Powell and his merry men try to guide the economy into a smooth landing.

The Feds’ comments by the market’s reaction were a little more hawkish than anticipated, but if you paid attention to the seasonality of the markets, the current speculative state, and the fact that quadruple witching was approaching Friday, December 20th, the market was looking for any reason to take profits.

Ironically or not, The Chicago Fed president, Austan Goolsbee, stated on Friday December 20th that he expects shallow cuts in 2025 but the feds to cut by a judicial amount. Given the uncertainty in the economy, it makes it hard to estimate the neutral rate.

He also stated that if the stopping point is 3% the Feds must drop the fed fund rate by quite a bit over the next 12 to 18 months.

This sent the markets higher as the mixed signals gave Wall Street hope that Feds would ease a lot faster than stated by Jay Powell. The thoughts of easy money put the risk on trade back in focus as fund managers felt the coast was clear to chase for performance.

If one was to zoom out and look at the big picture besides the threat of inflation, the set up looks quite interesting for President-elect Trump. The markets are at all-time highs. The Feds are in a rate cutting cycle. The street is giddy over the thoughts of deregulation and lower corporate taxes.

The consumer will benefit from lower taxes in the form of higher wages since corporations can afford to raise wages.

The Tax Cuts and Jobs Act are almost guaranteed to be extended, and you have a party that is in control of two houses, filled with a presidential cabinet of billionaire advisors.

If that’s not a Christmas present, then what is?

IS BROADCOM THE NEXT NVIDIA CHIP KILLER?…

So, let me get this straight. Broadcom’s CEO states on their earnings conference call that AI’s Serviceable Addressable Market (SAM) in fiscal 2027, will be between 60 billion to 90 billion, based on the potential business from three undisclosed hyperscalers—which is not only three years away, but there is no guarantee.

On this news, the stock was catapulted up 39%, and Wall Street proclaimed, Broadcom the new NVDA chip Killer?

Well, if AMD couldn’t dethrone NVDA with a cheaper AI chip and software offering, what makes you think a custom chip is going to dominate the market and take market share away from NVDA?

Are you forgetting that both Amazon and Google launched their own AI chips in 2019 and 2016, respectively, with several successor versions? Yet, NVDA has won almost all their AI business to this day. 

Number 1…NVDA’s CUDA software is deeply entrenched with over five million developers, which has created a hugely, dynamic moat.

Number 2…It’s about compute; so, understand this, if AMD’s fastest AI chip, the MI325X, is still being compared to the H200, and they are still a few product cycles behind NVDAs Blackwell, which is said to be 30 times faster than the competition—what’s their answer for Ruben? 

And…Tell me how an indication of 60 billion to 90 billion dollars of revenue, three years from now, won’t render the compute proposition of a custom chip obsolete compared to NVDA? The Ruben Ultra is scheduled to make its debut in 2027, which is going to be significantly faster than its predecessors, the Blackwell and Ruben.

I’ll WAIT!!!

And since when did Total Addressable Market (TAM) and a three-year expectancy Serviceable Addressable Market ever move a stock? And if that’s the case, riddle me this. Which is bigger…60 billion to 90 billion potential in fiscal 2027 for Broadcom OR a trillion-dollar TAM for NVDA, as in a major upgrade cycle that’s already producing fruit of $115 billion current state? 

It’s almost as if the entire street missed the NVDA run, so they keep throwing these 30-second bums in the ring with the Mike Tyson of Artificial intelligence. 

If you listen to their conference call, their organic growth compared to NVDA is anemic. The hype behind Broadcom is based on a thing that may or may not happen in the future.

Broadcom’s fiscal revenue grew to 51.6 billion (up 44%), but if you strip out VMware, their organic growth was a mere 9%.

Here is the reality of the last four years.

Question…does this look like rock ‘em sock ‘em growth?

Now, keep in mind…Broadcom has a growth-by-acquisition strategy, so expect most of their increased revenue over the next four quarters due to the acquisition of VMware.

Based on my experience, I look for managers or leaders who can squeeze their own lemons and make lemonade. I don’t expect them to throw in the towel and go out and buy more lemons. 

Now I am not saying acquiring companies that are a great fit is a poor strategy. I am looking at Broadcom’s history and 39 acquisitions later, since being a public company with only a 5-year CAGR of 11.4%. This tells me that the leadership team is not adept at growing their current verticals let alone adding more.

Now, let’s talk about the Wall Street hypocrites. They are quick to say NVDA revenues are slowing down, and rightly so. What do you expect from a company that went from 26 billion annually, two years ago, to a projected 130 billion this year? It’s called the Law of Large Numbers, bozos.

Of course, as the base grows the percentage of growth slows.

But shouldn’t you be looking at the rate at which they are growing their free cash flow and the superiority of their product? Plus, they exceeded analysts’ expectations every single quarter consistently for the last six quarters.

And if we are honest, their data center revenue alone is more revenue than Broadcom’s, setting aside the VMware acquisition.

Now here is the rub…NVDA has 59 analysts following them for their fiscal year 2026, and the range of revenue goes from 195.41 billion to the highest estimate of 269 billion.

This tells me they are expecting between 50% and 106% growth. 

This also tells me that there is some manipulation afoot.

There is no way, at least with a straight face, you can tell me that Broadcom has a better moat and deserves a higher PE multiple than a company expected to grow by at least 52% a year, for the next five years.

I get it. You need a little extra Christmas income, and the lie feels so much better than the truth.

So, you pumped what your Wall Street buddies could get behind, in a concerted effort to pump and dump the stock, so you could make your profit and loss (P&L) look good for the quarter.

This is nothing but a little shadow window dressing to Make the Numbers Look Great Again!!! 

Quick Links… 

The real reason the Feds have to continue to lower rates is….

The reason mortgage rates aren’t going down is….

Here is what happened to the PCE…

Trumps threatens to take back the…??

Books of the Week

The Money Trap: Lost Illusions Inside the Tech Bubble, by Alok Sama

Lords of Easy Money by Christopher Leonard

QUESTIONS OF THE WEEK…..?

How are you enjoying The C.R.E.A.M. Report—on a scale of 1 to 10? Reply back with your vote……

What topics can I help you with?

What are your pain points?

Thank you for reading; please share and send your feedback.

Kevin Davis, Founder of Investment Dojo, and Author of The C.R.E.A.M. Report

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