Listening In On Trump's "Behind Closed Doors" Deals...

Donald Trump’s radical policies have upended expectations, divided opinions, and created a massive amount of uncertainty across all markets.

With his promised Liberation Day now less than 24 hours away, I want to share a deep dive into what’s going on “behind the scenes” at the Trump White House, and show you why there’s actually a great deal of certainty in some of the things he’s doing.

Click on the image below to watch today’s episode:

Hi, I’m Andrew Zalin, and this is Moneyball economics.

Famous Victorian playwright and author, Oscar Wilde got a lot of bad publicity once, and he said, “the only thing worse than being talked about is not being talked about.” And frankly, that applies 100% to Donald Trump.

I cannot have a conversation with anybody these days without that dude’s name popping up. Today I’m talking to a portfolio manager. We are reviewing payroll forecasts, reviewing the economy, guy’s super gloomy, and I asked him, what’s going on? He said, I just don’t know how to invest in this environment that Donald Trump has created all this uncertainty, and that is true.

Not only has Donald Trump driven investors to the sidelines creating a 10 to 15% collapse in the stock markets, he’s created a lot of uncertainty. Well, today we want to talk about uncertainty. But really we want to talk about the fact that there is actually a lot of certainty out there, and I want to share with you the data that I’m seeing that is basically signifying where to invest and where not to invest.

Essentially, Donald Trump is reshaping the US economy, and it’s not just that he’s out there saying, “Come on fellas. Can’t we do it this way?” No, he’s out there with a lot of sticks in the form of tariffs and other things, but we don’t really see a lot of carrots. But folks, that’s exactly what is going on.

The carrots are being kept behind the scenes, outside of the public eye for a couple reasons, but I strongly believe (and I’ll bet dollars to donuts that it is going on) that he has some rewards to incent the behavior he wants, that he’s not just using that bully glove.

For example, I got two kids. I give them both chores, one of them, well, to motivate them a little bit more … maybe it’s a little harder. Maybe I just need it done sooner. I might say, “Hey, here’s 20 bucks. Go get it done.”

Well, if I did that publicly, then my other kid’s going to come to me and say, “Hey, since you’re handing out money, I want some too,” and that’s the challenge that Donald Trump faces. He’s trying to get people to do things and he doesn’t want to just look like he’s Santa Claus throwing out gifts in order to get stuff going, in order to get that great behavior from the little boys and girls, but behind the scenes, there are ongoing conversations.

I guarantee you that CEOs have approached him and his administration, and he has equally approached a lot of these CEOs.

That’s why you’re not having a lot of captains of industry out there badmouthing Trump. Not because they’re scared, but because there’s a lot of deals going down.

For example, case in point, Eli Lilly. Eli Lilly, premier pharmaceutical manufacturing company. Well, guess what? They just announced a manufacturing plan where they’re going to spend 27 billion in the United States over the next couple of years building factories, producing drugs here.

Now, why is that that remarkable?

Well, it’s not like you have the CEO of a major global company waking up one day going, “Hey, I got a great idea. Let’s take all of our profit and let’s sink it into factories in America, because I really believe in the United States.” I guarantee you that what happened is all the risk was taken away and mitigated that Donald Trump went to Eli Lilly and they were given certainty.

They were told to invest here and we will give you things. We will ensure, for example, that tariffs are raised on pharmaceutical imports, and so you’ve got the opportunity of a lifetime to be the first mover to build your factories here, make stuff cheaper than it will cost to import, and you get all that profit.

That’s an example of the carrot and stick approach, the stick, the tariffs … the carrots, going out and giving that advanced visibility.

That’s what we see in public. It’s a lot of companies now stepping up and saying, yeah, I’m going to invest in America. Well, they’re not just doing it. They’re not just saying they’re going to do it. It’s because they’re getting reassurances that it’s the smart way to go about doing business.

Here’s another example…

As you know, I track hiring in different ways. One of the ways is I track hiring at individual company level, so for example, I’m looking at Cisco, I’m looking at Disney, you name it. I’m across the board looking at s and p 500 companies individually seeing what they’re doing. I have a 15-year database.

Well, something remarkable just happened this month in March. All of a sudden, I’m seeing hiring taking off in certain sectors, and I’m seeing it collapse in other sectors, and this is telling me that there is some certainty being given.

For example, we know tariffs are going up and we don’t know how much we don’t know when, but we know that the tariff stick is going to be out there. Nucor, major steel producer, US steel, major steel producer, Alcoa, major aluminum producer, all three are increasing their hiring.

Well, they’re not going to make that investment. They’re not going to bring on people unless they’re confident their factories are going to be running it full blast. Why are they confident?

Maybe it’s just because the face of these tariffs, a lot of their possible customers are lining up, increasing their orders. Maybe some new customers are coming in, or maybe it’s because of Donald Trump went to them and said, “Guys, girls get ready. Tariffs are going up. Business is going to flow your way, and I will guarantee that I don’t have to give you a gift. I’m creating tariff walls. You will benefit from this and I expect you to act accordingly.”

This is the kind of backroom stuff that’s going on.

I’ll bet dollars to donuts.

On the other hand, those are the companies where Donald Trump wants to see growth and he’s willing to do a tap on the shoulder and say, “This is how you’re going to make money.” But there are other that are threatened.

Would you be surprised if I said the following companies are shrinking their hiring Booz Allen, Accenture, and Cognizant. Now, what do they have in common? Well, they are major support, service support IT support companies to the federal government as you know, the federal government’s cutting contracts left, right and center, but I don’t think it stops there. I think their problem is they’re not just losing American money and federal contracts. Most of the resources are offshore.

Oh, they’ve got some strategic consulting services here, but the bulk of what they’re doing, all that IT support, that’s in India and elsewhere. And as a result, they’re now losing a lot of money.

Well, I bet there’s a conversation being had where they’re being told, “look, at some point in time we’re going to put out to bid contracts. We would love to give you the opportunity to bid on these contracts, but we really are going to favor American homegrown services, not bodies in Bangalore, India.”

This is the kind of certainty that I’m seeing.

I’m starting to see traction like commodity sectors like healthcare. I’m seeing certain sectors starting to struggle, like management consulting or like other support entities.

There’s one other sector that I thought was interesting, and that’s gold.

I’m seeing gold miners take off. This has nothing to do with anything except the certainty of uncertainty. All this uncertainty has a flight to risk assets, oh, excuse away from assets and to the risk averse assets, which are gold and gold miners are responding.

I believe the economy is stable.

I believe this Friday we’re going to have payroll data that points to an underlying strength that’s going to surprise everyone.

I also believe that Trump is going to be a lot more flexible on tariffs that a lot of this, well, he’s going to start coming out and saying, my good friends in Canada and Mexico, we’ve reached some agreements or we’re on our way to agreements. He’s not going to remove that Sword of Damocles quite yet. It’s still going to be hanging over everyone’s head, but I think he’s going to let up and I’ll tell you why.

Because in about 30 to 60 days, the US middle income and upper income households will be in revolt. If their 401(k)s remain at 10 to 15% below where they were recently, they will start yelling at Trump because quite frankly, this is all about Trump. It has nothing to do with Biden and he cannot shift the blame, and I know he’s aware of that.

That’s why I’m limping in a little bit this week. I think we’re going to see some positive economic data. I think jobless claims are going to be decent.

I think payroll is going to be decent. I think all of these manufacturing soft survey data that’s coming out, it’s going to be good, and then we kick off earning season and I think here again, companies are going to remain uncertain. Uncertain, not sure, but they’re not going to be saying, my profits aren’t collapsing, and that’s the good news that the market’s going to latch onto.

We are in it to win it folks.

Zatlin out.