Everyone’s Watching the Fed. But Trump Just Made the Real Move

Topics Discussed in today’s article

1. The Mar-O-Lago accord

2. The U.S. government’s deficit and the only solution (Inflation)

3. Bitcoin and Gold’s Supercycle

4. Just as cash is trash, so are Bonds

5. Technical Analysis

The Mar-a-Lago accord

The Mar-a-Lago accord is Trump’s plan to devalue the U.S. dollar to restore American dominance strategically. The primary goal is to protect domestic industries, make exporting more attractive, and address the debt that the U.S. has incurred. Trump is attempting to achieve this goal through tariffs, a weaker dollar, lower interest rates, and the renegotiation of trade deals. Furthermore, he has gone out of his way to create the Department of Government Efficiency (DOGE) to reduce unnecessary government spending. This regime, along with the significant tax bill, has profound implications for which asset classes are expected to outperform or underperform over the next three to four years.

The U.S. government’s deficit and the only solution (Inflation)

The Fiscal Deficit isn’t a newfound problem; it is at historic levels, and quoting Federal Reserve Chairman Jerome Powell, “On an unsustainable path, and it’s on Congress to figure out how to get us back on a sustainable path.” Also, recently, Moody’s downgraded the U.S. sovereign credit rating by one notch from Aaa to Aa1. It’s no secret that the U.S. Treasury has to deal with the deficit somehow, and there’s only one viable option for them to bring it down. That is to inflate away the debt.

Bitcoin and Gold’s Supercycle

Trump’s plan is already coming to fruition. Just look at the dollar index ($DXY) since his inauguration. It has fallen as much as 9.35%. The weakening dollar creates an environment that allows Gold and Bitcoin to thrive. If you look at the dollar index alongside Gold and Bitcoin, they usually move inversely. As the dollar weakens, Bitcoin and Gold strengthen. Thus, Bitcoin and Gold are extremely bullish and a must-hold asset, assuming Trump continues to roll out the Mar-a-Lago accord.

Based on the charts, it appears that a discount on Bitcoin and Gold may be forthcoming. Bitcoin broke out from a medium-term trendline but remains bullish on a longer-term basis. As for Gold, it is currently stalling and has made lower highs and lower lows, indicating a bearish structure.

Just as cash is trash, so are Bonds

Okay, Bitcoin and Gold may overperform, but which assets will underperform? As a “Weakening dollar” implies, cash is not the asset to hold, nor are Treasury bonds. As the deficit widens, the dollar becomes weaker, tariffs cut into corporate margins and stagnate growth, creating an environment conducive to stagflation. During stagflationary periods, bonds tend to underperform as the future of the economy is uncertain and inflation and slower growth demand higher risk premiums. As U.S. investors get more anxious, Credit Default Swaps (CDS) will increase in value as well. This is why the U.S. 30-year Bond has seen rates above 5%. It’s all in the Mar-O-Lago accord.

Disclaimer: This content is for informational and educational purposes only. It does not constitute financial, investment, or trading advice. The views expressed are solely those of the author and do not represent any financial institution or investment firm. Always do your own research and consult with a licensed financial advisor before making any investment decisions.