r/stocks

Trump promised a $5,000 "Trump Dividend" at the Dallas midterm convention, but only if GOP wins House and Senate. Is anyone actually trying to figure out how to trade this if it actually happens?

He explicitly made it conditional on the election, saying, “Here is my promise: if the Republicans win the House of Representatives and the United States Senate, both of them… because of our tremendous strength and success economically, I will issue a dividend to every adult citizen in the United States of America for $5,000.”

He claims we can afford it because “our country is making so much money,” but with the national debt past $40 trillion, a $1.35 trillion cash drop sounds like a hyper inflation bomb. The wildest part for the markets is his domestic restriction: “The only caveat I have is that the dividend that we're making must be spent in the United States of America. We don’t want you going to Canada to spend the money… We don’t want you going to China, to Germany.” If that money is locked inside the US, it's an instant revenue cheat code for domestic retail giants WMT, TGT, COST. On the other hand, the Fed would probably have to hike interest rates immediately to fight off the inflation spike, which would absolutely crush tech P/E multiples. How do you even hedge against a $1.3T domestic cash drop?

Exploiting The Market Noise:

Through a market lens, you don't need a bill to become law to trade the momentum—the implied volatility (IV) and retail sentiment shifts happening now. Obviously, the policy framework doesn't actually exist.

The House/Senate sweep requirement is a cop-out so Trump can say, "I wanted to do it, but Congress wouldn't let me." And basically, smart money doesn't care if the check is real—they only care that the market's reaction to it is real. If you're trading, you play the immediate sentiment distortion, not banking on a campaign promise(s).

Source:

Walk into a gym, coffee shop, airport, college campus, or basically anywhere with people under 40 and tell me how many people are wearing Nike.

Meanwhile, you’ve got people walking around in Lululemon, Alo, Athleta, Vuori, On, Hoka, New Balance, etc.

Nike used to be the default. You didn’t even have to think about it. Shoes? Nike. Workout clothes? Nike. Hoodie? Nike.

Nike still seems to think the solution is more Nike.

More collabs. More limited drops. More expensive sneakers. More “innovation.” Meanwhile, the average person is like” Nah, I’m good. These Lululemon pants make my ass look incredible.”

That’s the real problem.

Nike lost the customer while obsessing over hype and sneaker culture. The competitors figured out people don’t just want athletic clothing anymore . they want clothes they can wear to the gym, brunch, work, the airport, and then sit on the couch for 6 hours.

I don’t see Nike rebounding anytime soon, the financials are poor in the pain will most likely continue.

With treasury yields ticking back up today - getting close to essentially a 25 year high - at what point does it become hard to turn down bonds or preferred stock. That is, put your next investment dollar into bonds or preferred stock instead of equities.

In particular, Bank of America preferred stock BACPRQ is now yielding 6.75% as of today and has a 60% upside relative to its $25 call value (which likely needs fed interest rates to go back down to 2% or lower to get to the point where they would actually be called).

In essence, you're getting paid 6.75% in qualified dividends to simply sit and wait for a 60% upside. Notably, if it took 10 years for interest rates to get cut so it goes back up around $25, you're still looking at something like an 11% compound annual return for that annual return - around the historical annual return of the S&P 500. And, it's preferred stock for the second largest bank (JP Morgan is the first) with a credit rating just below that of JP Morgan. That is, you're getting that return for essentially a top tier credit rating implicating less risk and volatility than the S&P 500.

In my mind that's pretty hard to turn down. Taking a step further, if treasury yields went a bit further up and yield on BACPRQ went up to 7%, translating to a 65% stock price appreciation upside, I think most people would be jumping at the opportunity to buy that instead of stocks.

Thus, my question generally is, at what point do you think the next investment dollar is better off being put into bonds/preferred stock instead of into equities? In my mind we're already there and it's just a question of how much further it pushes into that direction.

Additionally, if you have any particular bonds/preferred stock you think are particularly good value please comment what they are.