There's a lot currently going on in the USA in terms of really shaking things up. While not everything is going into affect as a executive order does have it's limits and checks it still is shaking things up. This shake up is most likely going to have negative effects at first as with any large change. We are also coming into an already creeping up inflation number in the last few months of Biden's presidency.

You see what you have to understand about inflation and fed rates is it takes 6 -16 months for the changes you make today to show up in the economy. Remember when we drastically bumped up interest rates by the fed?

It took about 8 months to a year for that inflation rate to start to even come back down to somewhat close to 2%. It still really hovers around 4% which is clear why the fed is not ready to cut rates anymore.

Inflation right now is still showing at 3.2% down from 3.3% but still well above the 2% target. Plus we all know we are not getting 3.3% or higher raises each year lol

Trump Tax Cuts

One of the big changes is for the corporate tax rate from 20% down to 15% and to put that into comparison this tax rate was 36% back in 2016! Talk about why no one wanted to start a business anymore. Small business got screwed. Myself included lol

Tariffs, the idea behind this is to build production in the USA while generation of revenue from other products that are coming in. This in itself is small enough could have a drastic impact on revenue generation for the USA.

However it's also thought that other countries would also raise tariffs in return thus increasing the cost of goods so the tax money saved would just be sucked back up.

One of the cool ones though for your overtime workers and trust me I feel this one! When I worked a hourly job there was always a threshold that you kept in the back of your head. If you didn't work so many hours or worked well over too many hours the tax rate on that overtime pay would legit just suck away any extra income you where trying to earn it's a legit horrible system but I honestly don't think people that hammered out extra hours really understood what was going on. Well this recent change would mean there is no tax on overtime and tips and well that's a big one for people working hourly jobs. That's massive money back into their pockets and would really help out lower income class families I think as most of them work on overtime.

Another change would be no tax on social security. Which also is one of the dumbest things ever. You legit dump money into the social security system for all of your working life to get some money back out when your old as fuck and can't do shit no more. Only to you guessed it pay taxes on that social security you collect like WTF lol.

The Markets

Right now and we recently saw the case of this dump just a few days ago is that most of the profits in the S&P500 are coming from the "magic 8" those being Microsoft, Apple, Nvidia, Amazon, Meta, Google and Tesla. But all of these are now under fire. There's no longer going to be tax breaks for buying a tesla, AI out of china shook Nvidia, Microsoft, meta and google to it's core. Two huge hits quickly.

Now while most people think it's end of days because of this new AI I tend to lean on the side of this might actully pump these stocks to all new highs.

Why?

Well the USA doesn't want to fall behind in the AI race to the likes of China so we will most likely see government funds start to flow into these companies in order to boost production and improve AI here in the USA. Thus the stock prices of these companies will most likely skyrocket over the next few years because of a "AI race".

The Fed

Right now the fed is still holding on to only doing two .25 point rate cuts in 2025 but even that is pushing it. Higher prices, inflation and a wild ride is ahead of us for sure so if you're not into assets and building your wealth faster than inflation I hate to tell you this but you're falling further behind.

Posted Using INLEO