I’m a happy person writing this month’s somewhat negative article… but someone’s gotta’ say it. This particular posting is much easier to read on your computer, rather than on your phone. It’s a bit long but still easy to understand, so just plod along one sentence at a time. You are offered a “print” function if you right click on your mouse. In this posting you get to hear me go on a MAD RANT!
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When you “foot the bill,” it means that you are left having to pay for something both unexpected and costly. This particular posting is about you..
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We have gradually moved into a “K” shaped economy. This has already happened and I see no easy fix, although the problem will eventually create its own cure. The top 20% of Americans, those that have high paying jobs OR those who maintain a continually funded INVESTMENT ACCOUNT will get richer. The middle class is getting squeezed to death and the poor are becoming even poorer.
Top 20% of the “K”… President Trump is doing all of those things that will create the scenario for massively increased corporate profits and since stocks represent partial ownership in a corporation, then investment accounts should be especially profitable. You have to combine this with the fact that ongoing stimulus is going to be coming into the markets from the Fed (effective December 12th, the Fed began a brand new QE program to the tune of an ongoing $40-Billion per month… money printing on steroids!), and from the Treasury, the Government, deregulation*, subsidies, kickbacks and from corporate stock buybacks. IMO, a highly profitable bubble will inflate over the next few years and then pop and crash over the following few years. Perhaps up until 2029 and then down until 2032?? For experienced investors, the market can be profitable in both directions… during bull markets and during the bigger bear markets (as in 2000 and 2008).
The bottom 80% of the “K”… A lot of money will be transferred to the rich and their corporations during good times and even more will be transferred to the rich during difficult times. The real problem is that the corporations are totally and completely taking over all control and ownership under our new de-regulated “K” regime… even our beloved public lands are about to be sold to corporations. Strong corporations send the stock market ever higher while the same conditions send the working class to new lows. The bottom 80% will work very hard to prop up and to grow the corporations.
Importantly, the taxpayer will totally bail out the corporations when times are especially bad. They (YOU) have done this repeatedly, as in 2000 and 2008 and during Covid, but the next time it will be at an entirely new and unexpected level. And I can already see “the next time” on the far horizon, several years out.
*DE-REGULATION occurs at the start of every financial bubble and a few years later, the newly created financial bubble leads to a crash. Deregulation was quietly announced on the morning of December 11, 2025:
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If the government just massively prints money (and money printing started again on December 12, 2025) to cover expenses and debt and crashes, then inflation will go sky high and the working person will pay incredibly high prices for literally all goods and services. Inflation is a “tax.” The higher the inflation, the higher the “tax.” I remember seeing home mortgage rates hitting 19% back in the very early 1980’s. Inflation comes in three waves; we’ve completed the first wave. The first wave was created by a panicked President Biden tossing endless dollars at a pandemic caused downturn that was “V” shaped and that lasted for a few weeks… and then by the Federal Reserve waiting way too long to raise interest rates in order to lower the inflation levels. In my opinion, we are just now slowly entering the bigger second (global) wave and this will be President Trump’s baby. The third wave (during the 2030’s?) might stagnate the entire developed markets economies (emerging markets might benefit from this third wave). Again, inflation is a “tax” that YOU end up paying. You foot the bill for all of the government’s activities. Just sending the small U.S. Navy fleet toward Venezuela is costing $200-Million per month and we aren’t even in an actual war, yet. Sending the National Guard into the beautiful city of Portland, Oregon (I used to live there) which Trump calls a “hell hole,” is costing $2-Million per month (for just this one city). Yes, you are paying for that and much, much more.
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The government doesn’t seem to understand that people actually work very hard for their hard-earned money; the government takes tax money out of your paycheck and they then spend it… but it is not FREE money for them to spend.
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So, this is an example of what I am talking about in this posting:
- On “Liberation Day*,” President Trump placed extremely high tariffs on agriculture (you pay the tariffs) and he immediately began deporting migrating farm workers (no, you do not want to pick lettuce all day long).
- A full 50% of all family farms in the U.S. went into bankruptcy in 2025!
- Corporations moved in to buy these family farms at a discounted price.
- Trump plans to send (taxpayer funded) checks out to cover 25% of the damage that his “Liberation Day” tariffs caused, but…
- Now the partial rebate, your rebate, goes to corporations instead of farmers.
- President Trump surrendered many of the tariffs, for instance, soybeans. China has now agreed to buy only 5% of what they purchased BEFORE the tariffs were placed on soybeans. They are on track to actually purchase only 1% of what they were purchasing each month. Going forward, YOU will have to bail out
farmerscorporations each and every year. - ALL of this will be paid for by you, the taxpayer… you will pay higher food costs plus you will bail out the
farmerscorporations. You (YOU!) lose twice and the corporations win twice. You will foot the bill.
*Liberation Day is when the government liberated more money from your wallet.
But you say that with tariffs, we are going to be able to eliminate the government’s gigantic deficit while closing down the IRS and eliminating all federal income tax. President Trump tells us that we are “bringing in trillions and trillions of dollars and we will end all Federal income tax.”
What are the actual facts?
- The national debt is $39-Trillion. This does not include the $100-Trillion needed to continue to fund Social Security and Medicare for the next decade. The government has already collected this “entitlement” money from us, but they then spent it on other things. So it is fair to say that the national DEBT is actually $139-Trillion.
- Yearly Federal income tax receipts are $5-Trillion.
- Current interest on the Federal debt is $1-Trillion per year, 20% of the total budget. This cost is growing rapidly.
- Tariffs are only bringing in $250-Billion per year (not trillions and trillions!) and half of this is due to prior tariffs and half is from Trump’s new tariffs.
- Trump plans to send $2000 to each taxpayer (rather than responsibly paying down debt). This comes to a $600-Billion total cost which is 5x what his new tariffs actually brought in… so your partial rebate will be paid for by YOU and then you will get to pay taxes a second time on your rebate because your own rebate will be counted as new income.
- And down the road a bit, this is going to create another rating agency downgrade for the United States, possibly in late 2026 or early 2027 and this will cause a big bump in the road for the stock market.
As I’ve been writing, although we have several years left to this gigantic “roaring 20’s” style bull market, there will be the mother of all bear markets arriving when it finally ends (so please invest now!!!!!). This future bear market will clean out the system and reset prices, so some good will come out of it. But guess who will bail out the corporations when this future crash hits? Did you guess that it will be you, the taxpayer? (Just as it was you bailing out the corporations during the de-regulated “bubble pops” in 2000 and again in 2008.) You will foot the bill. YOU will foot the bill.
How do you escape or mitigate all of this? Other than (somehow) getting a high salaried job, there is only one answer. Fund an investment account now, stop wasting money, and just keep shoving money at your investment account. And fund your IRA or ROTH or SEP each and every year! If you are middle class but you have an investment account, then you are either already in or you are striving toward the “lucky” top 20%. I know that this posting sounds morose, but do you and your family honestly want to be struggling?
Investment accounts allow you to hedge your life. If gas prices go up, hitting your wallet, you will own some profitable gas stocks that will hedge the loss. If food goes up in price, hitting your wallet, you will own some profitable agriculture stocks. If your home utilities go up in price, hitting your wallet, you will own some utilities. If rents go up in price, you will own some REITs, receiving rental income. If the coming gigantic money printing debases your USD money, REALLY hitting your wallet, you will own some bitcoin. And gold is all powerful when it comes to mitigating any and all inflation.
We have to create our own financial security and we have to hedge our life going forward.
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Recent AI generated bitcoin (crypto-currency) prediction:
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Per the chart below, MarketCycle’s simplified (proprietary) inflation indicator started showing inflation rising again effective August 2025 (see purple circle below). One of the important things that MarketCycle has discovered is how to accelerate data. If the rise in inflation continues, the Fed may see inflation rising via their own in-house indicators sometime around February or March of 2026, unless…
What could alter this inflation thesis, turning the below (blue) line down again?
- The Supreme Court shooting down tariffs, and this just might happen. If they do so, then the money would have to be repaid to the U.S. corporations (again, via your hard-earned tax dollars). This would likely cause some ‘bumpiness’ to the first half of 2026 (made worse by President Trump gaining control of the independent Federal Reserve, a scenario that has never happened before).
- AI is, by its very nature, highly deflationary. AI will cause lower worker wages and it will cause a greater number of fired employees: both deflationary and unfortunate. AI says that artificial intelligence may eliminate/replace 30% of all jobs in the United States by 2030. A recent Senate study has just come to the same conclusion.
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During the next 10 years, these jobs are relatively safe from AI replacement:
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2026 end-of-year S&P-500 projections from leading institutions (Yardeni often nails it and Tom Lee has the same 7700 end-of-year target for 2026). I normally do not give end-of-year forecasts because it cannot be done, but if I had to give a price for December 31, 2026, I think that I would agree with the 7700 number… but, as always, it would not be gained without some zig-zagging volatility along the way.
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A (slightly altered) recent email to a client in response to his question:
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In late-October, MarketCycle saw risk levels increasing; the market fell in November. Then we saw risk abating and the market rose in the first half of December; it rose because of the super-strong seasonals of the normal “Santa Clause Rally.” We are watching risk levels closely as we enter 2026 because the improvement in indicators was less than was the December price gain. Our risk indicators are not based on emotions or “feelings,” they are mathematically calculated and based on certain conditions that occur before every single bigger market drop, and this requires decades of experience. Since most corrections going forward (for the next few years) will be very temporary and “V” shaped, we will have a higher threshold before we put any hedge on accounts.
The current buzz in the press & podcasts is that the AI trade and crypto are both now dead. This is a literally fantastical concept, like saying, back in the late 1990’s, that the Internet and computers weren’t going to last… and now, of course, you have a miniaturized computer with Internet in your hand.
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That’s it… thanks for reading!
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MarketCycle Wealth Management is in the business of navigating your account through rough waters. Money can be made in both bull markets and in the bigger bear markets and actually, bear markets can be even more profitable. I (almost) doubled my money during each of the past few bigger bear markets, and now I want to help you.
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