The Economy Is Re-Accelerating and Prices Are FALLING

0:00Hello, everyone. The U.S. tariffs are working and I got the data to prove it. Elon Musk is combining SpaceX and XAI to build data centers in space, and the SBA, they just made a decision about U.S. citizenship and loans that I think is going way too far. We're live today from the desk of Anthony Pompliano.

0:27Before we get into today's episode, I need your help. My goal is to get to 1 million subscribers on this channel. We currently have 42 ,511 subscribers. Hit the button, help us out. Let's get into today's show. All right, ladies and gentlemen, the tariffs are being used to do two things. One is increased domestic manufacturing. The second is to hit the economy with a deflationary force that will bring down prices. Now we have proof that both things are happening. And I know that this is highly debated. I know people get all worked up about it, but I'm just going to show you the facts. On manufacturing, Peter St.

1:00Onge published great research recently, and he shows that the tariffs are delivering a manufacturing boom. He says that factory orders are up 5.5 percent. American steel just exceeded Japan for the first time in 30 years. We now have the first American aluminum factory in 40 years. And John Deere, Whirlpool, Jeep and Apple, they're all coming home. Take a listen to Peter here. So as driving it, tariffs are the biggest. Trump's been very clear that his goal is to get other countries to remove their barriers against American goods while reshoring factories here. A survey found 75 % of manufacturers cite the tariffs as the reason to move.

1:38Of course, you can't reshore unless you make it attractive to build in America. Otherwise, the tariffs are just a tax. So that means two things, cutting taxes and cutting red tape. On taxes, the big, beautiful bill contained a huge boost to investment where you can immediately write off the cost of a new factory. That makes the factory tax-free for years. We get to keep the jobs for free. And it contrasts with Europe or China, who taxed 25 % or more. The other is red tape. Europe especially is driving out industry with green mandates and an empire of regulation that costs two to three times more than the ridiculous regulations we have.

2:17To give a flavor, the National Association of Manufacturers estimates regulatory costs are higher than wages in manufacturing. Multiply that by two to three times and Europe is handing us their economy on a silver platter as is Canada. Last year was the most deregulatory in American history, with Trump removing over 100 regulations for every new one. And given it takes time to repeal regulations, we've got potentially thousands of additional deregulations in the pipeline. Now, on top of these anecdotes, we can also see that the manufacturing PMI rocketing higher. As Felix from Blockworks put it, the economy is obviously re-accelerating.

2:57And we know that various estimates of GDP growth for Q4 are now hovering around 5 % annualized. That's a big, big number, and it's especially big given that inflation has been rapidly falling at the same time. But tariffs are not just driving manufacturing. They're also driving prices lower across the economy. People keep getting mad when I say that housing, gas, and food prices are coming down. They'll say something like, but my grocery bill, which I am sympathetic to. I understand that you have a bill that is higher than you used to pay, but both things can be true at the same time. You can feel like your grocery bill is high, yet prices of food are starting to come down.

3:33The latest example comes from today's Wall Street Journal, which reports that PepsiCo is cutting the prices of some of their food by 15 % in an effort to juice more sales. Laura Cooper and Jesse Newman in at the Wall Street Journal write, new packaging will advertise that the snacks are the same size, but at a lower price. The move comes after PepsiCo in December structured an agreement with activist investor Elliott Investment Management, a deal in which it pledged to improve the performance of its roughly$27 billion North American food business. The company said that the affordability push is just one part of a strategy to accelerate growth.

4:08PepsiCo recently relaunched its Lays brand without artificial colors and flavors. Now, people are going to say, oh, the hedge fund made them do it. And yeah, that's a part of it. But you don't cut your prices if it makes your economics not work anymore. The only way that you can cut prices is if your expenses are going down as well. And you have to keep a healthy margin. That's what a hedge fund wants. They want you to make profit. Now, rather than us spend a bunch of time debating whether PepsiCo is actually going to cut their costs or not, or whether they're going to cut their prices or not, we can also just zoom out for a second and look at the aggregate.

4:42Stephen Moore, one of the economic advisors, he was recently on TV and he made a great point. Real media and family income is up. Jobs are plentiful. The deficit is falling and inflation is cooling. Take a listen. We saw over the weekend another big Republican loss in Texas. So Republicans keep losing these special elections all over the country. And it is troubling. I mean, this was a district that flipped 20 points towards Democrats over where they were in 2024 when Trump won the election. So voters are angry right now. They're angry at Republicans. Why that is, you know, partly that is the kind of turmoil that's going on in Minneapolis.

5:21But but I also think that Kevin Hassett is also right that, you know, you have the reality of the economy, which is over here and people's perceptions, which are over here. And at some point, those have to converge. In other words, I think you're going to start to see public approval of the economy improving because the numbers are really good. People's real median family income is up. You've got the deficit is falling. You've got a lot of job creation out there, a lot of job openings in the economy. You've got inflation, I think, is headed back to the 2 % range. So I think you're going to see over the course of the next six months, people starting to feel better about things.

6:07But but the price of beef and the price of health care and the price of housing is is something that makes people pretty angry. Now, what I took away from Stephen's appearance is they said perception and reality are set to converge in the next six months, whether it takes three months, six months, nine months or 12 months. What I do know is that when I am looking at the data, data that I trust, data that is real time, data that is verifiable, what we can see is that the GDP growth and manufacturing is booming. We are seeing real growth in the economy. We also are seeing prices come down, food, gas, housing, et cetera.

6:44It's not like all of a sudden housing prices are going to go down 25%. Instead, what you're seeing is that they're not continuing to go up and they're starting to turn over and start to come down. That is much needed relief for every single American. Making things more affordable is important. And obviously, we want to get prices down as much as possible. But if you have the deficit falling, if you have jobs being created, if you have real median family income going up and inflation cooling, these are all the ingredients that are needed for you and your pocketbook and your investment portfolio to be in a much better position than you were just a couple of years ago.

7:23Elon Musk, the greatest entrepreneur of our generation, he announced yesterday some big news. SpaceX has acquired XAI in an all-stock deal. Now, this is an important one because it creates the world's most valuable private company, and it marks the largest merger and acquisition in business history, the largest ever. This is like the Super Bowl for business and investing nerds. The merger unifies Elon's ambitions in space exploration and AI. It combines SpaceX's rocket and satellite expertise with XAI's Grok chatbot and AI development capabilities. Again, it's like the Super Bowl. This move comes ahead of SpaceX's planned IPO later this year, and that IPO could value this combined entity at over$1.5 trillion.

8:05That's trillion with a T. The details of the transaction are interesting, and they reveal a lot about how Elon is viewing the future. The deal values SpaceX at$1 trillion, and it's up from its previous valuation of approximately$800 billion back in December. Now, XAI is valued at$250 billion, and that's an increase from the$230 billion back in November. So why is Elon doing this? And why the hell are the shareholders and the board of directors at each company agreeing to it? Well, it seems that Elon wants to bolster SpaceX's AI-driven data center ambitions. He wants to leverage Starlink for AI service distribution, and he wants to provide XAI with much-needed capital for infrastructure, things like chips and energy-intensive computing.

8:43Musk envisions future orbital data centers with two to three years where space-based AI compute could become the lowest cost option. Now, his general view is that Earth is running out of resources, specifically around energy and infrastructure, and he wants to fuel the AI boom. So rather than be limited by the earthly constraints, Elon is going towards the stars. He wants to use the sun to power 1 million satellites that will act as AI data centers circling around the world and beaming synthetic intelligence down to us. I'm not sure how anyone could hear this vision and not get excited about the future.

9:14But Elon obviously has other companies, and this is a really hard task that he's tackling. And there's rumors that he actually may put these companies together. I think that'd be a great idea. For example, I just personally purchased a million dollars of Tesla stock. And there's four reasons why I did it. First, never ever bet against Elon Musk. He's the greatest entrepreneur of our generation. The second thing is that I think self-driving is gonna become the standard. Tesla has the data advantage and the best technology. And we know self-driving cars are safer and cheaper. The third thing is that robotics and AI is a massive tan.

9:45Humanoid robots are likely going to be the largest market a company could go after. And I think Tesla is going to be a leader here. And then fourth is that there's option value on Elon Inc. Increasingly, it looks like he's going to take SpaceX, XAI, and Tesla and put them all together. Now, so much of investing comes down to finding the best people and just giving them money. And I think Elon is that person. Now, if we go back and look at Tesla stock performance, interestingly, I don't think that the stock has kept up with the company's progress, in my opinion. You can see on public.com with these charts that we have here, the stock is up 40 % in the last six months, but it's only up about 44 % in the last five years.

10:20And so if you look at where the company was five years ago to where it is now, obviously there has been material progress. No one had seen a humanoid robot five years ago. There was no self-driving taxis that were on the road five years ago, but now that's what they have. And so I believe that there is going to be some sort of convergence between what the company is worth and what the stock price is. I could be wrong, but I'm wagering my own money in the market. That's the beauty of capitalism. If I'm right, I'll make money. If I'm wrong, I'll lose money. But it's my money and it's my opinion.

10:51So we're going to see what happens here. All right. I recently saw some news that I just disagree with. I think that we're going way too far on this one. The Small Business Administration, the SBA, they have significantly tightened the eligibility to take specific types of loans. And that tightening of eligibility is all around citizenship status. Now, here's the key things that you need to understand. This is considered a 100 % citizenship rule. Previously, a U.S. citizen could own 51 % of a business and still get a loan. Now that no longer is allowed. 100 % of the business must be owned by U.S.

11:26citizens. The second thing is that green card holders are now excluded. So even lawful permanent residents are ineligible for SBA loans. On top of that, it goes a step further and there's a key employee restriction. So this policy means that if you have key employees who are not owners, but they're just managers or key people, those people, if they are not citizens, you may get disqualified from being able to get an SBA loan. And then on top of that, the ineligible persons cannot have been owners or key employees in the six months prior to your application. And so obviously this is going to have a profound impact in the market on small businesses.

12:01So here's why I think that this goes too far. There's two things that I think are important. The first is that in every single situation in business, we ask, who is the controlling business owner? If somebody owns 51 % or more, they're the controlling business owner. And so in this case, if there's a small business where an American citizen owns 51 % or more, they could actually be penalized because there are people who own a part of their business who are not citizens. Now, the second thing that I think is a little bit too far is that we are saying, if you are here legally, you waited in line, You applied for all the right things.

12:33We gave you a green card. We are not going to afford you the opportunities that America is built on. I don't like that. I think that we should be trying to punish and go and enforce the law on people who are doing things illegally. But if people are doing things legally, things that are supposed to be constructive and productive for the US economy, like build a business, create jobs, solve a problem, provide a product or a service, then obviously we should be trying to encourage that. And this isn't some sort of handout. This is a loan that gets paid back with an interest rate. And so we're not even giving away government money.

13:05What we're actually doing is we're helping them start the business and they're paying us to be able to do that. And so I think, again, we're just going a little too far. We shouldn't be punishing U.S. citizens and preventing their ability to use the SBA process. I don't like the fact that we are saying to people who are here lawfully, who are doing all the right things and are trying to be productive citizens, hey, you're going to be punished as well. And then lastly, we are even going as far and we're saying, well, if you're a key employee, but not a shareholder, you get included in part of the analysis.

13:35See, the reason why I don't like that is because if somebody is here legally, we should want to encourage that. If people are coming to this country and they are doing everything the right way, and they are saying, I am going to risk my capital. I'm going to risk my time. I'm going to bring my talents and I'm going to bring my energy. I'm going to work hard and I'm going to try to do something that is nearly impossible. If you look at the failure rate of small businesses, it is an incredibly high number. If you look at the job creation in America, 50 % of jobs or more come from small businesses.

14:07We should want to have more small businesses in America. And if people are coming here and saying, I want to go after the American dream and I want to be able to build a business, provide for people in my community and create jobs, those are the things we should be encouraging. I think instead what we should say is if a company is being run by an illegal immigrant, they should get no resources or support from the U.S. government. I think that we should say, if you're here and you're lawful, we're helping you. We want to see you actually be successful in America. We want to see you be productive in your economy.

14:35That's it for today's show. Thank you guys so much for paying attention. We've got 42 ,500 different subscribers on YouTube. Please hit the button. Help us get to our goal of 1 million. And I'll see you guys live tomorrow from the desk of Anthony Poppliano.