All the way back in December of 2024, I made a very bold call…
At the time, Donald Trump had just secured his second term as President of the United States, and there was still plenty of uncertainty about how things might turn out.
But I told my subscribers not to worry, because Trump’s pro-business administration would drive stocks up at least 15% during his first year in office. As usual, I was doubted. “That’ll never happen!” Especially after the Liberation Day tariffs hit in April of last year, my hedge fund clients thought there was no way things could possibly work out so well.
But then December rolled around again, and we closed out 2025 with a 17.9% gain in the S&P 500 index — beating even my own bullish projections.
Then I ran it back…
I told my readers that 2025 would be another 15% gain.
Once again, I was doubted.
Once again, the market got off to a slow start.
And just like last year’s Liberation Day turnaround, we’ve now reached the critical turning point that will serve as the launchpad for a massive relief rally.
Hit this week’s video below for the full story:
Video transcript:
Hello, fellow Moneyball economists.
I’m Andrew Zatlin and it’s time to talk Moneyball Economics…
Have you looked out the window the past couple of days? Have you noticed that the stock and bond markets are suddenly raging?
Well, that’s because we’ve gotten some recent economic data that has cooled down the urgent need to raise interest rates. And if interest rates are now further out on the horizon, then we’re going to get a relief rally in both the stock and bond markets.
Let’s take a look at the recent economic data and try to figure out if this is indeed the new world, if the story has shifted. I believe it has. So let’s talk about the two things that drive up in interest rates.
One is inflation. The other is whether or not the economy is bubbly because we’ve got strong payrolls. Right off the bat, inflation’s come down and it’s going to come down even more. We had a conflict in Iran that raised fuel prices dramatically. Oil went way above $100 a barrel. As a result, the entire economy got inflated. Costs went up because it’s not just the price at the pump. It’s the fact that so much of our goods, food, clothing, furniture, whatever it is we’re buying, it has to be moved by truck and trucks are now paying a lot more for diesel and they pass those costs along.
Well, fast-forward, you know what’s changed? Last week, the price for oil plunged below $70 and it looks like it’s going down even lower. So we are looking at fuel prices back to the pre-iron levels.
Does that mean inflation’s going to go also back down to the pre-run levels? No, and not yet, but the mere fact that it’s heading down pulls back that urgent need to raise interest rates. Then the question is, can we absorb an interest rate hike?
Well, coming into last week when payrolls were released, it looked like we could because let’s face it, most of the past few months we’ve seen payrolls come in pretty strongly and expectations were that this month would be the same. The consensus was expecting 120,000 a tiny bit below the prior month, but still 120,000 signifies pretty strong payrolls.
And in fact, there were a lot of people out there who were higher. Let’s face it, that’s the median 120. That means out of all these expert forecasters like myself on Bloomberg, the expectations were it could be 150. It could be even one person suggested 200,000. I was looking for a much lower number. I was looking for a number of 79,000. Number came out of 57,000 so spitting distance. But understand you’re expecting 120,000. We only got half of that at 57,000.
That again, that taps the brakes.
It says, “Hey, wait a second. Inflation’s coming down and it’s going to keep coming down so there’s not as much urgency.”
And meanwhile, the economy may not be as strong as we expected because payrolls are looking a little wobbly. All right, that means that the Fed can sit there and again, take a wait and see attitude that the data’s gotten a little less uniform again, and so they’ll hold off an interest rate hike.
And frankly, I think we’re going to see the next couple of months continue to have mixed data. I think on the one hand, some of this data’s going to say raise interest rates. Jobles claims are going to head down 210,000 or even lower, signifying a strong labor market.
And at the same time, we’re going to start to see a little bit of inflation not tied to Iran kick in because for example, we just got some indications that the manufacturing sector is expanding even faster than we thought.
So got some data that says strong, strong, strong.
But then we also have, like I said, data that says maybe not so strong. If inflationary data comes down, if payrolls continue to hold down a little bit, not a clear signal, the Fed may kick the can. And as we get closer to the November election, the Fed is going to be even more reluctant to dive into these waters.
In fact, I think if we don’t see a strong inflationary signal, if we don’t see this signaling of a need to raise interest rates before September, we’re not going to see an interest rate hike until December at the earliest. Coming in September, October with a rate hike, that’s going to look a little bit too political. It’s too charged. Whereas the Fed could just say the data still isn’t there and it’s okay to kick the can one or two more months, buy them some breathing room, so to speak.
Factoring all this in, what it means is if an interest rate hike is now off the table and pushed further out, but at the same time the economy continues to grow and expand, then the stock market’s going to go up even further.
I told you the second half was going to be explosive because this economy’s unstoppable and I mean it.
That means that we’re going to see the stock market go up.
I’m loving every minute of it, folks, because we are in it to win it. Zatlin out.
Andrew Zatlin
Editor, Moneyball Economics