Trump’s Trade Deal With The EU Is A HUGE WIN For America

0:28Hello, everyone. We've got a lot to discuss today. President Trump and his administration announced a significant trade deal with the European Union yesterday. It's such a big win for America that it's almost unbelievable what the EU agreed to. In fact, the Financial Times, a publication that would love to hate on anything representing America, capitalism, or Trump, they had to publish the following sentence in one of their articles. There's no hiding the fact the EU was rolled over by the Trump juggernaut, said one ambassador. Trump worked out exactly where our pain threshold is. That's crazy to read in the Financial Times.

0:59Now, it's just a brutal reality check for all the experts that predicted foreign countries wouldn't capitulate to the tariff pressure. Instead, the European Union basically gave America whatever we wanted as part of this deal. Now, here's a quick breakdown of what the exact highlights are. First, the EU agreed to a 15 % across-the-board tariff. Big. The EU agreed to buy hundreds of billions of dollars in U.S. military equipment. We're the best in the world at creating that. The EU agreed to make$600 billion in investments in the United States. And the EU also agreed to buy$750 billion of U.S. energy.

1:35$750 billion. Lastly, the EU agreed to open their markets to U.S. products. Finally. I don't care what you think about Donald Trump. Some people love him. Some people despise him. I personally am merely focused on the financial markets. And this deal is going to send asset prices much, much higher, in my opinion. Not only is the deal so lopsided that I had to read it multiple times to make sure I was reading it right, but a new trade deal with a major trading partner like the EU is going to bring highly anticipated clarity that is desired by the market. The more clarity we have, the more confidence investors have to put their capital back into financial assets.

2:10And this specific clarity is coming at the exact moment that investors were getting complacent. You can see that complacency perfectly in the VIX, which closed below 15 on Friday. That's the lowest VIX reading since February of this year. So you should buckle up now. A major trade deal is the type of catalyst that could send stocks, Bitcoin, and gold higher. If you add in the Fed's meeting this week, you could have an explosion in asset prices if the Fed was to cut interest rates. Now, of course, I personally don't think that we're going to get that interest rate cut. It's unfortunate. I think we should, but I don't want to count on it.

2:44It would be a welcome surprise, but you cannot count on it. However, I would continue to count on the U.S. government printing money. They've got no choice but to continue debasing the dollar in order to deal with the national debt. And it is now very clear that the expansion of global liquidity has driven the S &P 500 higher over the last six years. Just look at this chart. That is crazy. It's all money printing. So here's the big brain conclusion from this weekend's news. The EU and any other country entering into trade deals with the United States is going to have to agree to very large capital investments in America.

3:18It's good for Americans. Where are they gonna find that money though? Well, of course, they're going to print it. So each trade deal brings higher certainty that global liquidity will continue to expand, which means that stocks and other assets will go higher as other countries print more money. And if stocks are going higher, you know that Bitcoin is going to make sure that it goes even higher than the stocks. Bitcoin follows global M2 money supply like a glove. Just look at this chart right here. So don't get confused. We're in a bull market. Money printers are going to get turned on. Trade deals are going to be announced and asset prices are headed up and to the right.

3:54And we will eventually get the interest rate cut as well. Boom, bang, bada bing. Higher, higher, higher. That's the mantra for the second half of this year. Pessimists may not like it, but there's nothing that they can do about it. Liquid asset prices have a structural tailwind for the next decade or so. And trade deals, specifically with large trading partners, they're merely adding fuel to that fire. I went on CNBC's Squawk Box this morning, and all they wanted to do was talk about Bitcoin. Wall Street's full time and attention is now on the decentralized digital asset, and they can't get enough of it.

4:27On top of that, I explained why I believe that there's going to be a lot more critiquing of public companies holding so much cash and U.S. Treasuries on their balance sheet. Take a listen to what I had to say. Well, look, I think that Bitcoin has established itself as the king of the market. I don't think that's going to change anytime soon. And I actually think most of Wall Street's time and attention is on Bitcoin. There are other assets that from time to time start to get some capital flows. But if you look, things like Ethereum, Solana, et cetera, they still haven't set in new all-time highs this summer.

4:55And so I think that Bitcoin has kind of broken away. Doesn't mean that some of these other assets maybe in the future can't do that. But Bitcoin definitely continues to dominate the market, both in terms of actual dominance of market cap, but also, I think, just capital flows and time and attention. We've been having a lot of people on to talk about stablecoins. Yeah, well, the nice thing about stable coins is they don't go anywhere other than stay at$1. So, you know, they can grow in market cap size in terms of how many people are using them. But I don't think people really use stable coins as a comparison to Bitcoin or altcoins where they're looking to try to drive some sort of financial performance.

5:26What type of, I hesitate to call it derivatives, but there's a lot of different Bitcoin-based products coming out at this point. What do you think has staying power? Well, if you really just look at what's happened over the last five to seven years is Bitcoin essentially went from a contrarian trade to a consensus trade. Everyone now, for the most part, is convinced that this thing is going to be around for a long time. And now what you see is Wall Street, who really was kind of ignoring it or trying to stiff arm Bitcoin, has now said, wait a second, let's open up the doors and let's embrace this thing because they figured out how to make money.

6:01And so you're seeing Bitcoin put into the Wall Street wrappers. First, you saw it with the ETFs. Now you're seeing it with public companies. You also have heard people announce things like Bitcoin and real estate funds. I think you're going to continue to see Wall Street take Bitcoin and put it in every single corner of the traditional financial system because ultimately Bitcoin brings volatility. Bitcoin brings financial return in a way that they're not used to seeing. And so I think that Bitcoin is something that is going to bring more customers, more assets and more profits for these Wall Street institutions.

6:30And that's their job is to go figure out how to grow their business and Bitcoin can help them do that. I mean, what's the next big thing for move Bitcoin higher? Because it seems like you've gotten everything you wanted, haven't you, at this point? Oh, there's still a lot more than we're looking for. I think there's really three things that people are kind of paying attention to. The first is the United States government at some point is going to announce that they're buying Bitcoin. Creating the initial Bitcoin kind of strategic reserve and sitting the Bitcoin that we already had there was good.

6:56But that's kind of the, you know, not the main dish. The main dish is when they start buying. And I think that will happen at some point. The second thing I think you're going to see is you're going to see some of the last standing people on Wall Street capitulate. And so there's a couple of firms that continue to say, hey, we think that this is speculative. We think this isn't good enough for our clients. I think that they'll kind of eventually give up and wave the white flag. Now, of course, whether you agree with me or not, it's very clear that Bitcoin has gone from contrarian trade to a consensus trade.

7:22I believe that putting Bitcoin on your balance sheet in the public markets, the same thing's going to happen there. Only time's going to tell whether I'm right or not. I sat down this weekend with Jordy Visser. He's a 30-year veteran of Wall Street. He's somebody who intimately understands the global economy and U.S. financial markets. During the conversation, Jordy said something that was very interesting. He said that the United States economy is going through a massive shift. We're shifting from such a big focus on software to much more focus on hardware. And the ramifications of that shift are not quite understood by the market yet.

7:55Take a listen to how Jordy described this. what we've been having for a long time. And this has really been, and this is my thesis, we have not had a PMI that's gone up because of industrialization since before the great financial crisis. So we came out of that. The housing market obviously was horrible for the next seven, eight years. We've gotten a little bump in housing, but nothing dramatic. Commercial real estate is not moving right now. And the auto production side has been hurt both by the tariffs, but also by kids are less likely to buy them. And once interest rates went up in 2022, you kind of knocked everything out because those groups are very sensitive to interest rates.

8:36For the last 18 years, this economy has been driven by software. It's been driven by the MAG-7. They've dominated stock market performance. Everyone who has a pension fund has benefited from the software side. But everyone in the middle part of the country that's been based on the manufacturing, they've seen it be hurt partly by the globalization and China labor. But China labor has now normalized to some degree. But the discontent from many people, whether it's students in cities who are discontent because they have loans and they can't get affordable housing, or the manufacturing side of the economy has suffered by us not having a true manufacturing cycle.

9:13I believe, and I wrote a paper that that is changing. And for the next decade, investors at the institutional side and hedge funds and asset allocators need to be focused more on a re-industrialization, which is happening. It's happening because now for AI, we've exited the software time, which was about the LLMs, which are still software. But now we've reached the point where we're getting into the embodiment side, putting the brain, the software into physical hardware. And the easiest way for people to think about this is drones, which are fighting in wars right now. But eventually, humanoids, which you've heard a lot of stories on, robo-taxis, which are now spreading across the country.

9:52All of these things obviously need hardware, but the biggest need is the data centers and then the power to supply it. So without those things being built up, there's an issue. And this has been a long... Normally, I don't try to talk for this long into one of your questions, but I think you asked me to to describe the PMI. I'm trying to give people not only the importance of it across the country, but also just kind of to think about where this fits in. So from a geopolitical basis on the tariffs, there was clearly a recognition by the administration when they ramped up the tariffs on China. And then after about six weeks, not only reverse course, but you don't hear any negative conversation, negative rhetoric from the US around China the way it was before.

10:36And part of the reason was we recognized the dependence that the country has on rare earth minerals and that China is responsible for processing 90 percent. Without going through the wonky details of that, the way people should think about it is we are at the mercy right now from a manufacturing basis from China in terms of critical components that go into everything that we use today that has semiconductors, which is almost everything from washing machines to refrigerators to your car, but also from a military basis, from an AI basis. We need Rare Earth, and they need chips. And so that's where the truce came in.

11:18We talked about it on here way before people on Wall Street did, in my opinion. And now I think it's become a focus, and you're seeing more and more deals between the Department of Defense and Rare Earth, both in the U.S. There's only one real company. If people want to go to look at it, it's MP Materials. You can go see the DoD did a deal with them this month as an investor now, and Apple did a major deal with them as well. So the PMI is really critical to, let's say, getting the tide to lift all boats. So far, the only boats that have been lifted over the last 18 years have been software companies.

11:52We're about to get into the energy, materials, mining, power, everything. Now, it's pretty cool to see somebody who spent his entire career in the finance industry acknowledge how important it is for hardware, real companies, real technology, and real employees. Remember, building an economy means that you're actually building real things. You're driving sales. You're driving earnings for companies. And hardware seems to be the ticket to doing a lot of that moving forward. It also was cool to see Jordy talking about the US and China relations. Everyone wants to constantly pit those two countries against each other, but it is very important that you now recognize how it is going to play into our ability to build the future we all want to see happen.

12:32China, whether we like it or not, is going to be a part of that story for the foreseeable future. Hope you guys are enjoying today's show. I'm having a blast putting it together. Please make sure that you're following us on X and please, please, please make sure you subscribe on YouTube. I'll see you guys tomorrow, live from the desk of Anthony Pompliano.