Trump’s Deals in the Desert

Trump’s Deals in the Desert

Every so often, a story comes along that makes even Donald Trump’s most passionate partisans squirm a bit.

The most obvious example is the launch of the TRUMP and MELANIA memecoins on the eve of his inauguration last January.

According to research by the firm Chainalysis, Trump and his family have reeled in $320 million in fees from the launch and ongoing trading.

Meanwhile, early investors took a bath as the coin’s price collapsed 87% from its peak.

It wasn’t a “rug pull” in which the developers purposely engineer a crash by suddenly withdrawing liquidity. It’s just the typical volatility that comes with a memecoin.

But the “optics” are nonetheless subpar.

And so it goes with the Trump family’s dealings in Saudi Arabia.

The president arrives in Riyadh tomorrow and will spend two days there. Then it’s on to Qatar and the United Arab Emirates. It’s the first scheduled overseas trip of his second term; Saudi Arabia was also his first stop during his first term.

To be sure, he’s conducting official business. As he told reporters two months ago, “I said I'll go if you pay $1 trillion to American companies — meaning the purchase over a four-year period of $1 trillion — and they've agreed to do that.”

Time will tell how it all plays out. No one in the Saudi royal family has confirmed the existence of such an agreement. And the entirety of the country’s sovereign wealth fund is worth $925 billion.

(However there will be deals announced and they’ll amount to a windfall for a handful of American companies. More about that shortly.)

Meanwhile, there’s the unofficial business…

“For years up until the present day… billions of dollars in Saudi money have been quietly flowing to companies owned by the president, his family and others in Trump’s orbit,” writes Ben Freeman from the Quincy Institute.

Early in Trump’s first term, son-in-law Jared Kushner cultivated a relationship with Saudi defense minister Mohammed bin Salman. Only a month after Trump’s first visit to the kingdom as president, “MBS” staged a palace coup — taking the title of crown prince and de facto ruler.

According to the political tell-all book Fire and Fury, Trump boasted that “We’ve put our man on top!”

The deals began flowing in earnest in 2018. When Trump left office in 2021, Kushner’s private equity firm got a $2 billion investment from Saudi Arabia’s Public Investment Fund. The PIF also sank $1 billion into a firm controlled by former Treasury Secretary Steve Mnuchin.

Freeman has compiled a laundry list of deals that have ensued just since Trump’s re-election last year…

• The Trump Organization is leasing its brand to two new projects in Saudi Arabia
• The Saudi-owned LIV golf tour held a tournament at Trump’s golf club in Miami
• The Trump Organization went in with a Saudi Arabian company to develop a golf club in Qatar
• The same two companies plan to build a Trump skyscraper in Dubai.

Speaking of Qatar and Dubai, deals also abound with the other Gulf sheikdoms Trump will visit this week. For instance, a firm backed by the government of the United Arab Emirates is working with the family crypto firm, World Liberty Financial — using the company’s coin to invest $2 billion into the scandal-scarred crypto exchange Binance.

And there’s much speculation surrounding whether the Qatari government will give Trump a luxury jet that he’d use as Air Force One and continue to use once his term is over.

After the sordid deals conducted by the Biden family in Ukraine and elsewhere, it’s tempting to invoke the sauce-for-the-goose argument.

On the other hand, one might hope the Trump family would uphold a higher standard.

It is what it is. As with all things political, it pays to follow the money — if you have the right information.

Which Paradigm’s macroeconomics authority Jim Rickards does. He says the official business Trump will conduct in the Middle East this week could funnel hundreds of billions of dollars to a select group of American companies.

“My $20 million patented AI stock-scanning software Project Prophecy 2.0 has just triggered ahead of this deal,” says Jim — and it’s helped him identify a setup for a new trade opportunity tomorrow.

Follow this link and Jim will show you how to take advantage.

History Rhymes

Another 90-day tariff pause, another big stock-market rally.

That’s not how the financial media are framing it, but that’s the essence of the day’s market action.

As you might recall, Trump triggered a massive rally on April 9 when he announced a 90-day pause to the “reciprocal” tariffs he imposed on nearly every country in the world — time in which to negotiate country-by-country deals.

Today, the administration has triggered a massive rally with a 90-day pause to the trade war with China.

➢ There’s a special place in hell for the slop accounts on X spreading the rumor Saturday that the Chinese delegation had abruptly walked out. Were the clicks really worth it, guys?

“The U.S. has capitulated to Beijing’s long-standing demand that all unilateral tariffs imposed on or after ‘Liberation Day’ be removed,” says the authoritative “Shanghai Macro Strategist” account on X.

The memes have been positively savage…

But Wall Street likes it. The S&P 500 is up 2.6% on the day and over 5,800 for the first time in over two months.

The Dow’s gains are a little more modest, while the Nasdaq is up nearly 3.5%. The risk-on atmosphere, meanwhile, is knocking the stuffing out of bonds and gold.

Bond prices are falling and yields rising, the yield on a 10-year Treasury note back up to 4.43%. (Near as we can tell, the bond-sell-off today is simply a function of hot money flooding out of bonds and into stocks — not any new rupture in the bond market.)

Meanwhile, what was it we were saying a few days ago about getting used to $100–a-day moves in gold? It’s down $88 right now to $3,235. (Reminder: Gold crossed $3,000 for the first time two months ago. Healthy consolidation.) Silver is holding up much better, down 16 cents to $32.53.

Bitcoin has held the line on $102,000 since Friday — briefly hitting $105k this morning before pulling back a little below $103k.

Crude is rallying hard — a barrel of West Texas intermediate up $1.48 to $62.50, the highest so far in May. Presumably that’s on the theory that trans-Pacific shipping won’t be grinding to a halt after all.

Speaking of which…

“The tariffs caused a sharp drop in demand. The pause on China tariffs will cause an even sharper increase in demand,” tweets Craig Fuller, CEO of the logistics data firm FreightWaves.

“There isn’t enough excess capacity to handle all this shipping at once,” adds Spencer Hakimian of Tolou Capital Management. Ocean freight rates will leap higher this month, and so will trucking rates this summer.

“This could be very similar to late 2021–22,” Fuller elaborates — “as importers rightfully surge orders beyond transportation capacity.”

Gotta get that Christmas inventory to the warehouses by mid-August — just in case the trade war resumes after 90 days.

Berkshire “Death Clock”

“Berkshire Hathaway is a ticking time bomb,” says Paradigm trading pro Enrique Abeyta.

As we mentioned last week, Warren Buffett intends to step down as CEO by year-end, after which it’s Greg Abel’s show.

“Taking Buffett out of the equation,” says Enrique, “changes the entire risk profile of owning BRK shares. Millions of retirees with billions of dollars’ worth of Berkshire stock could ruin their retirement if they continue to own shares in the next few years.”

The problem is Abel’s track record to date — especially the $100 billion the company has sunk into Berkshire Hathaway Energy. “Quietly,” says Enrique, “they have built the largest electric power company in the United States.

“Over two decades, they have not generated any dividends from this business and (according to a sale in 2022) may be looking at a $20 billion loss. But the loss could be double that amount.”

“I am skeptical about Berkshire's ability even to come close to matching its historical returns,” Enrique concludes.

“The book value of Berkshire right now is roughly $455k per share. This compares to the share price of the “A” shares of $776k per share, or a 70% premium.

“This should be considered the ‘Buffett’ premium justified by his track record.”

Take away Buffett’s rock-star mystique and what’s left?

“Do you think thousands of investors will trek to Omaha to see Abel and a bunch of other suits drone on about utility businesses with terrible returns?”

If you own BRK shares, Enrique advises taking your profits now. If you’re not quite convinced, he makes a more detailed case at our sister e-letter Truth & Trends.

Prescription Drug Premonition

This morning the president signed an executive order aimed at lowering prescription drug prices. James Altucher’s readers saw it coming even before he took office.

The order aims to rectify a problem we’ve been pointing out in this space for the last decade. Back then, the poster child for the fiasco of prescription drug pricing was Sovaldi, a blockbuster Hepatitis C drug made by Gilead Sciences. It cost $1,000 a pill, or $84,000 for a 12-week course.

That was in the United States. In Egypt, Gilead charged $900 for a course of treatment.

As James wrote his Altucher’s Investment Network readers at year-end 2024, “All signs point to Trump preparing a bold move in 2025 to force other countries to pay more for American-made medicines.”

The rationale? “The United States accounts for just 7.8% of global drug consumption, yet Americans account for over 65% of pharmaceutical companies' sales of new medicines.

“Trump has a history of taking action on this issue,” James added. “During his first term, he signed an executive order to ensure Medicare wouldn't pay more for drugs than other developed nations.

“Though that order was later rescinded, Trump has continued to rail against what he sees as unfair pricing practices by other countries.”

Lo and behold, Trump unveiled a “most favored nation” policy today — in which the U.S. government will pay prices for drugs that are tied to the prices paid by other countries.

“Basically what we’re doing is equalizing,” he said before signing the order. “American patients were effectively subsidizing socialist health-care systems.”

Kudos to James for this bang-on call…

Tariff Mailbag

Many, many tariff-themed emails hit our inbox after Friday’s edition — starting with a side eye toward China’s economic statistics.

“You wrote that ‘China reported’ an 8.1% year-over-year increase in exports and noted it was four times greater than economists' expectations. Don't we know by now that we can't believe everything (maybe anything) China tells us?”

Dave responds: Indeed, 15 years ago, we were among the first outlets to delve into a remarkable State Department cable spilled to WikiLeaks.

In it, China’s future premier Li Keqiang described Chinese economic statistics as “man-made” and unreliable. For the real deal, all he looked at was electricity consumption, rail cargo volume and bank lending.

So yes, many of the economic numbers coming out of Beijing are at least as suspect as the ones coming out of Washington, D.C.

But for the “expert consensus” of analysts on Wall Street and in the City of London to be so far off with their guesses?

It really does seem as if China found ready buyers in other countries for the goods that were tariffed to a fare-thee-well in the United States.

And the broad outlines of the tariff pause announced today? They reinforce the impression that Beijing was the one that “had the cards.”

“I agree with Friday's Bullet No. 2,” says a reader assessing the legal case against tariffs.

“If the merits of the suit over who can impose tariffs makes it to the Supreme Court it’s likely to win that Trump's tariffs (and all the others imposed by presidents over the years) are invalid.

“That might make Trump reach out and channel more of AOC and demand that the court be expanded immediately.

“(Which would really put AOC in a bind opposing what she advocated.)”

“I call bull**** on Emily Ley and all those small businesses that are in the same position as my company,” writes our final correspondent — who says he sits on the board of a small business almost entirely reliant on Chinese imports.

“Not that they are wrong legally, but for gosh's sake, people need to grow a little backbone and have some principles even if they have to make sacrifices, and yes even close their businesses.

“First of all, in every economic shift people get hurt. Libertarians are OK with this in principle or so they say. If we determined everything we do based on whether someone would get hurt, we'd do nothing.

“Second, there are people (and industries) that are/were getting hurt before the tariffs. These tariffs just move the hurt around. I am not sure why someone isn't suing on their behalf. And, no, just because one can come up with a legal argument, doesn't change the equities.

“Third, so many businesses, mine included, rely on slave labor to survive. Can't do it anymore? Too f-ing bad. We were forced to use the same factories as big businesses and the same slave labor because the dam* anti-Americans, supported by intellectually defective libertarians, made it so that we had to use the same slave labor as big business to stay in business.

“We may go out of business because of these tariffs, but what Trump is doing is better for the U.S., better for the world and better for humanity. Emily Ley and businesses like mine may actually have to become better or have a product that has some pricing power.

“At the end of the day, if every business is being treated the same (and I mean that literally), capitalism will survive and be alive and well. In other words, if our big competitors and we are tariffed the same, all is good. The rest is our problem. If not, that's a problem.

“But if a company has a product that can't compete or have enough pricing power to make a profit without using slave labor, it deserves to go out of business. Period. So dam* sick of the victim card being played and the absolute lack of principles and the selfishness of it all.”

Dave: Not sure who you mean by “intellectually defective libertarians” there. Real libertarians resent how the globalists hijacked the term “free trade” over the last 30-odd years to mean 800-page documents with crony-capitalist carve-outs for favored industries.

But the globalists needed cheap foreign labor to effectively finance the gargantuan national debt they’d run up.

Bill Clinton’s Treasury Secretary Larry Summers gave away the game last month: “If China wants to sell us things at really low prices and the transaction is we get solar collectors that help reduce climate change, we get batteries for electric cars, and we send them pieces of paper that we print — you think that’s a good deal or a bad deal for us? I think it’s a good deal.”

Depends on who he means by “us,” right?

Best regards,

Dave Gonigam
Managing editor, Paradigm Pressroom's 5 Bullets