This is the plan

Pete Tan
January 25, 2025

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Hi everyone,

It feels like a lot is happening right now with the economy and the US government, and it can be hard to keep track of it all. This newsletter breaks down the recent news into plain English, so you can understand what's going on and how it might affect you.

🥇 Trump's Plan: Is a "Golden Age" Coming?

President Trump recently spoke about his plans for the economy at Davos, saying that the US is about to enter a "golden age". Here's what he's aiming to do:

Fixing the Economy: Trump thinks the current economy is a mess because of the previous government. He says his team is working hard to sort things out quickly.

Tackling High Prices: He wants to bring down the cost of everyday things by cutting government spending and getting rid of some rules and regulations. He's also cancelled things like the "Green New Deal" and electric car mandates.

More American Energy: Trump wants the US to use more of its own oil and gas, which he thinks will lower prices and make the US a big manufacturing country.

Cutting Taxes: He wants to make big tax cuts for everyone, from workers to businesses. He also wants to keep the tax cuts he made before, which are about to expire.

Lowering Interest Rates: Trump has said he will "demand" that interest rates go down. He believes this should happen all over the world to fuel economic growth

✂️ What Do These Tax Cuts Mean for You?

Tax cuts might sound good, but here’s the lowdown:

Good News: During Trump’s first term, tax cuts benefited many Americans, particularly those earning between $30,000 and $150,000.
Better for the Wealthy: High earners benefited significantly in the past, and they’ll likely gain the most again.
The Downside: Lower taxes mean less government revenue, potentially worsening the national debt crisis.

Is Inflation Going Down?

Trump wants to lower inflation by cutting government spending, which is like me trying to spend less to save money. But some experts think that it might not be enough to make a big difference. The U.S. debt is so massive that even significant fiscal improvements may feel like “too little, too late.”

🏦 What About Interest Rates?

Trump has stated he wants interest rates to drop. However, the people in charge of interest rates (called the Federal Reserve) are independent, and Trump can't just tell them what to do. It’s like trying to get someone to agree with you; you can ask, but you can't force them. Plus, lowering interest rates could cause prices to go up even more.

A Two-Speed Economy

The latest earnings from American Express also show that wealthier people are spending a lot, while others may be struggling. This is what some call a "K-shaped economy," with some doing very well while others are lagging behind. For example, spending on flights and first-class tickets is way up.

Trump and Bitcoin

Trump has also created a Task Force to look into cryptocurrency, and the possibility of the government having its own digital money stockpile. This shows that cryptocurrency is gaining more mainstream attention.

🙊 What Does It Mean for You?

Good News, Maybe: Tax cuts could boost the economy, helping some businesses grow

Prices Could Go Up: Lower interest rates and more government spending (from tax cuts) could push prices up.

Things Could Change Quickly: There's a lot of uncertainty around these plans, so the markets could be up and down.

Look at Different Sectors: It might be worth looking at the energy sector, due to Trump’s plans, and also cryptocurrency, given his new working group.

Don't Put All Your Eggs in One Basket: With all these uncertainties, it’s important to have a diverse portfolio.

Keep an Eye on the Central Bank: Pay attention to what the Federal Reserve does in response to Trump’s demands.

Watch the Debt: Be mindful of how Trump’s policies might worsen the debt crisis.

Not Everyone Benefits Equally: Consider the effects of a K-shaped economy, where not everyone will benefit at the same rate.are

Like him or not, I think Trump has a good chance of changing the status quo but he has a tough job ahead of him.

We are standing at the beginning of a new era and change in policy which we have not seen in ages.

One sector that I’m particularly bullish is the Artificial Intelligence Sector. Some are calling it the Sixth Wave.

However, the opportunities are beyond the usual Semiconductor industry such as Nvidia. There are even better companies in the AI ecosystem that I will be investing in.

Why choose these companies? Because the big money has not found these hidden gems yet and I want to be in front of them! 😆

In particular, I shared one of my TOP pick in the recent livestream which you can watch it here.

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Happy Hunting!

Pete
Invest with Pete

🚨‼️ By the way, I’ll never PM anyone on telegram or any other social media platforms. If you receive any “Pete” messaging you, these are scammers impersonating me. Pls beware!

The information provided in this newsletter is for informational purposes only and does not constitute financial advice. Readers should seek their own independent financial advice before making any investment decisions. Please note that while Pete is a portfolio manager, the opinions expressed in this newsletter are his own and do not represent the views of any organization. Always perform your own research and due diligence before investing.

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