The Trump TACO, Rate Hikes, and Fed DRAMA

Key Concepts

• Taco Trading: A colloquial term used to describe market enthusiasm and potential for gains, often linked to Donald Trump’s commentary.
• Lines (617 & 627): Specific price levels on the NASDAQ 100 and Qs (QQQ ETF) acting as resistance, repeatedly tested but not broken.
• House Hack AI: A real estate investment venture funded by viewers, focused on utilizing AI for property acquisition and management.
• Disinflationary Thesis: The idea that decreasing inflation rates, particularly in housing, are a positive economic signal.
• Owners Equivalent Rent (OER): A component of the Consumer Price Index (CPI) measuring the cost of housing.
• Supply and Demand (in Housing): The fundamental economic principle driving housing prices, particularly impacted by overbuilding and regulatory constraints.
• AI Human-in-the-Loop: The practice of using AI systems that require human oversight and validation, highlighting potential limitations in fully automated AI applications.
• Powell 2028: A speculative discussion regarding Jerome Powell’s potential reappointment as Federal Reserve Chair.

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Market Overview & Technical Analysis

The speaker begins by noting market hesitation following commentary from Donald Trump, specifically referencing “taco trading.” The QQQ ETF is struggling to break through resistance at the 627 level, mirroring a pattern observed with the NASDAQ 100 at 617. This is described as a “lineto line” trend, emphasizing the importance of these price levels. JP Morgan’s pre-market fluctuations (down 2%, then 1%, then back to 2%) are highlighted as indicative of market uncertainty regarding future interest rate policy. JP Morgan is signaling a potential lack of need for rate cuts in 2026, even suggesting potential rate hikes in 2027.

House Hack AI Funding Update

Significant progress has been made in funding for the House Hack AI venture. Recent deposits totaling approximately $80,000 (including $25k, $60k, $268.5k, $303.5k, and $74k) bring the total raised for December to $12 million. This allows House Hack to hold over $20.5 million in liquid assets for investment opportunities. The speaker emphasizes the ongoing funding process for applications submitted on December 31st.

Macroeconomic & Earnings Landscape

Bank earnings reports are anticipated this week, with JP Morgan’s outlook being particularly noteworthy. The speaker discusses Michael Sailor’s recent Bitcoin purchase, noting the potential for another buying opportunity below $90,000. The discussion touches on a subpoena issued to the Federal Reserve at the behest of Bill Pe, though the speaker views this as a relatively minor event. Upcoming economic data releases include CPI (tomorrow), PPI (Wednesday), import prices (Thursday), and industrial production (Friday).

Housing Market Analysis: Phoenix as a Case Study

A significant portion of the discussion focuses on the housing market, specifically highlighting the situation in Phoenix, Arizona. Phoenix is experiencing a glut of high-end apartments, leading to landlords offering substantial concessions – up to three months of free rent, along with perks like Amazon gift cards and moving assistance. Approximately 54% of rentals in Phoenix offer at least one month of free rent, the highest percentage in the US. This is attributed to overbuilding during the pandemic-era influx of remote workers. Despite this, the CPI’s Owners Equivalent Rent (OER) component remains positive, suggesting a lag in the impact of these discounts on official inflation figures. Rents in Phoenix have fallen 4% annually, compared to a 1.3% nationwide decline, indicating a disinflationary trend. The speaker contrasts this with the limitations of building in areas like Newport Beach, California, where supply is constrained by zoning and geographical limitations. He argues that capitalism doesn’t guarantee affordable housing where someone wants to live, only that affordable housing exists somewhere.

Regulatory & Political Influences

The speaker addresses concerns about government regulation hindering housing supply and the potential for unintended consequences. He notes a proposed 10% cap on credit card interest rates, estimating potential savings of $100 billion annually for consumers, but also acknowledging the risk of reduced credit availability (potentially impacting 90% of consumers). He also discusses political influence peddling, citing examples of funding for Donald Trump’s campaigns from marijuana industry PACs and a planned influencer campaign by Israel. The speaker also mentions a potential billionaire tax in California and its potential to drive entrepreneurs out of the state.

Technology & AI Concerns

The discussion touches on the limitations of AI, referencing Motive, a company using AI-powered dash cams in trucking, which relies on 400 Pakistani workers to vet the AI results. This is presented as a cautionary tale about the “human-in-the-loop” nature of many AI applications. The speaker also briefly mentions SoundHound AI, a $5 billion company currently losing money despite revenue growth.

Poll Results & Concluding Remarks

A poll was conducted regarding Jerome Powell’s potential reappointment as Federal Reserve Chair in 2028, resulting in a close outcome of 51% in favor and 49% opposed. The speaker expresses surprise at the divided result, noting Powell’s willingness to challenge Trump’s policies. The speaker concludes by mentioning ongoing work with House Hack and ending the broadcast.

Quote: “You have to trust the lines. It's always the lines.” – referring to the importance of technical analysis and price levels.

Quote: “Capitalism doesn't care about your feelings. Capitalism cares about supply and demand.” – emphasizing the fundamental principles of a free market.