by Shane Ormond
On May 10, 2019
Earlier this month, it seemed like the Chinese trade negotiations would come to an amicable end any day now. But after some unexpected pushback from Beijing, the U.S. is ratcheting up the pressure with tariffs of 25% on more than $200 billion of Chinese goods.
- President Trump serves up his budget proposal to the wolves
- The hottest sports league you’re not watching
- Wells Fargo CEO takes a bipartisan beating on the hill
- A mother’s day present from Putin’s hackers
The good, the bad, the potential government shutdown
President Trump must be spoiling for a fight.
Yesterday, he released his 2020 budget proposal. And it couldn’t have been a bigger middle finger to House Dems unless he sent them an actual photo of Mitch McConnell’s middle finger.
This is the first of Trump’s budget proposals that will have to run the gauntlet of a Democrat-controlled Congress — which may be why the budget is so inflated.
The proposal clocks in at a record $4.75 trillion, the largest in federal history. (It’s a Big, Beautiful Budget, folks.)
It’s a page taken straight out of The Art of the Deal. By asking for much more than you want, you move the negotiation window. It puts your rival on the back foot and forces them to negotiate down to the figure you actually want.
But you can already hear Pelosi’s numbers men sharpening their knives.
What’s proposed in Trump’s Budget for a Better America?
- Boost defense spending 5% in 2020 and by 8.9% in the next 10 years. Use the money to develop AI solutions, hypersonic weapons, and healthcare for vets.
- Slash non-defense spending 9% in 2020 and by 16.6% over the next 10 years. Emergency disaster aid, the departments of health, transportation, education, and the EPA will suffer substantial funding cuts.
- Set aside a further $8.6 billion for the wall at the southern border. This is in addition to the funding secured from the military budget with Trump’s national emergency declaration.
- Slash agriculture funding by 15%. Trump’s proposal called farmer subsidies too generous. This comes during a six-month slump in farm income and more bankruptcy filings than we’ve seen in decades. (Is it time to let the free market do its thing? Click here to send me an email and tell me what you think.)
Not everything in Trump’s budget will rub Dems the wrong way. Trump floated a few ideas that are sure to win some bipartisan support.
- A proposal to bring down prescription drug prices.
- Increase funding to HIV and AIDS programs.
- Increase spending on building and maintaining infrastructure.
- Increase spending for opioid addiction prevention and treatment.
- Increase funding to fight violent crime and cybercrime.
It’s worth noting that this budget ain’t set in stone. This is simply a proposal to act as a guideline on spending for the folks in Congress. Whether or not they want to stick to that guideline is up to Congress.
We should expect the Dems to hit back with their own budget bill in April. It would be beneficial for them to play nice and give into Trump on some of his demands. But it seems unlikely that Pelosi & Co. would approve the $8.6 billion for the Wall.
Which means we could be looking at another government shutdown at the end of the year.
Coca-Cola Joins the Fight!
ESPN’s hottest new sports league banks big name sponsors
There’s a new sports league in town, folks.
You can watch it eight times a week on ESPN. And boy, are folks watching it.
Despite only entering its second year of play, the league is expected to bring in $1.1 billion in 2019.
But this ain’t your granddaddy’s sports league. You ain’t seen nothing like this before.
Highly trained Athletes come from all over the United States, China, Canada, and Europe… to sit on their butts and play video games for a few hours.
To be honest, watching folks play video games just isn’t for me. But their target demographic is lapping it up. (What are we calling this generation of teens? How about “generation Y do you do the things you do?”)
We’re talking about Activision Blizzard’s (NASDAQ: ATVI) Overwatch League, also known as the OWL.
The OWL is a competitive video game league with all the trappings of a full-blown sports league: sports announcers, packed stadiums, crazy fans, and those sweet, sweet sponsorship deals.
And they don’t get any sweeter than the king of liquid sugar itself, Coca-Cola (NYSE: KO). Coke will be joining Toyota Motor, T-Mobile, Intel, HP, and State Farm as sponsors of this year’s league.
At the end of the first season of OWL, ESPN insiders claimed that the league’s revenue was four times greater than initially estimated. This was in part due to a streaming deal with Twitch and latecomer advertisers.
Anyone can see there’s serious money to be made with this new eSports trend. But our researchers have been banging their heads against the wall to find the best way to play this move.
Last week, one of my guys took me aside and told me they think they’ve cracked it.
Why Can’t I Hold All These Scandals?
House financial services committee grills Wells Fargo CEO
It might be a little early in the year to start grilling here on the East Coast.
But lawmakers on the House Financial Services Committee were cooking up a storm this morning as they held Wells Fargo CEO Tim Sloan’s feet to the fire.
Sloan was called up to the hill to report on Wells Fargo’s progress from a raging dumpster fire of bad business practices to a small burning trash-can of bad business practices.
When Sloan ascended to CEO of Wells Fargo in 2016, the company was engulfed in a series of high profile scandals.
Burning the Scandal at Both Ends
Back in 2016, Wells Fargo was caught:
- Opening fake accounts for customers to meet sales goals
- Charging customers illegal fees
- Charging customers for unnecessary automobile insurance payments.
Nearly every one of the bank’s business lines is currently under investigation by a government agency. And last year, the Federal Reserve imposed a cap on how much the bank can grow its assets to curb the bank’s bad habits. (Like picking its nose and creating phantom bank accounts.)
Sloan was tasked with getting Wells Fargo on the right track. But in today’s hearing, the representatives of the House Financial Services Committee were clearly unimpressed with his progress.
Sloan took a bipartisan beating as both Democrats and Republican representatives went on the attack. (Isn’t it nice when we can all come together and hate someone else for a while?)
Rep. Patrick McHenry (R, N.C.) scolded the 59-year-old CEO like a rebellious teen who just can’t stay out of trouble:
Each time a new scandal breaks, Wells Fargo promises to get to the bottom of it. It promises to make sure it doesn’t happen again, but then a few months later, we hear about another case of dishonest sales practices or gross mismanagement.
While Chairwoman Maxine Waters (D, C.A.) questioned if the bank was too large to manage for Sloan:
With all of this experience, and the length of time that you’ve been there, the roles that you have played, you have not been able to keep Wells Fargo out of trouble.
When asked if Wells Fargo had any more scandals coming down the pipeline, Sloan answered that there wasn’t any that he “was aware of.”
Translated from CEO-speak that means: “Yes. Definitely. We got a whole bunch of scandals in the works.”
Well Fargo can’t seem to keep its dirty little nose out of trouble. It was only last year when the big bank was forced to hand over $2.1 billion for the part it played in the 2008 crisis.
And we could be heading into a fresh crisis right now. Our geopolitical expert Jim Rickards is hosting an urgent conference call just a few days from now. He’ll reveal why he thinks we’re in a bubble right now and what you should do to protect you and your family from financial ruin.
ONE LAST THING
A Mother’s Day present from Putin
In yesterday’s issue of One Last Thing, we put on our three-quarter-length leather jackets, indoor sunglasses, and jacked into the world of Russian hackers.
These elite, government-trained nerds cause billions of damages globally with a virus known as ransomware.
We’ve discussed what ransomware is and where these Russian lackey hackers come from in earlier issues. But today I want to talk about when these attacks hit and how a savvy investor could use that to bank some quick and easy gains.
Mark Your Calendar
Hackers can infect your computer with ransomware with a simple email. If you open that email and click the link — you’re infected. They have your data and you’re not getting it back unless you pay them.
Hackers entice folks to click these links with promises of money, gifts, and magic erectile dysfunction cures. (This is the hard truth.)
Now, most folks know not to click links in strange emails. But, through a little trial and error, hackers have found there are certain times of year when people are more likely to click a dodgy link. Times of years when your wife or girlfriend might be expecting a surprise gift in their email…
WannaCry: A worldwide ransomware attack that infected more than 200,000 computers in 150 countries, causing billions of dollars in damages.
Date of attack? Mother’s day.
GandCrab: A ransomware capable of identifying Russian users and ignoring them.
Date of worst attack? Valentine’s Day.
I’m sure you see where I’m going with this. Most of the worst ransomware attacks over the past few years have happened on or close to gift-giving holidays when people are more likely to open emails they might otherwise be suspicious of.
So, what has this got to do with investing?
Well, anytime one of these major attacks happens, investors pile into certain cyber-security stocks, causing them to pop almost overnight.
If you bought one of those stocks before an upcoming holiday… say the upcoming Mother’s Day… you could bank yourself a quick and easy profit when the inevitable ransomware attack occurred. (Thanks mom!)
For now, my team is currently researching the best way to play this. Keep an eye on this space.
Closing Data for 3/11/19:
|S&P Index 500||2,783.30||↑ 1.474%|
- Airline stocks fall across the board after Trump says “airplanes far too complex to fly” after Boeing crash.
- Volkswagen announces 25% of its new vehicles will be electric powered by 2025. Keep an eye on your rear-view mirror, Tesla.
Click here to send us your comments and tell us what you think. Do you agree with us? Do you think our ideas are stupid? Bring it on. We can take it.
Warren is coming out strong to woo the hard left. Once she gets those in her camp, they’ll move more center. She’s actually learned something from Trump, and she probably read The Art of the Deal: You don’t start out asking what you really want, you start out with an impossible position to give yourself room to move closer to the opposition, so they can move from their extreme position and neither side comes out with nothing.
— Nancy Jones
Who would have ever thought we’d see Trump and Warren on the same side of an argument, especially so close to an election? We could be looking at a 2020 presidential race decided by who hates Jeff Bezos more.
Editor, One Last Thing