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Billionaire investor Bill Ackman has reignited speculation about the privatization of Freddie Mac and Fannie Mae, suggesting that under a second Trump administration, these mortgage giants could be freed from government control within two years, potentially leading to an IPO in 2026. Ackman's comments have spurred a significant rise in the stocks of both companies, which have seen substantial gains since Trump's election. The argument for privatization includes the potential to generate billions for the government, reducing the deficit and returning funds to taxpayers. However, there are concerns about the impact on housing market credit access. The feasibility of this plan hinges on the leadership of key financial agencies like the FHFA and the Treasury Department. Despite previous efforts during Trump's first term, the plan did not materialize due to various reasons including the global health crisis. Ackman remains optimistic but cautions investors about the high uncertainty involved in such investments.
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Lucid Motors is experiencing a surge in interest from former Tesla owners, particularly with the launch of their new Gravity SUV. The company's interim CEO, Marc Winterhoff, highlighted that Tesla buyers are looking for alternatives due to recent brand issues at Tesla, including slower sales and controversial political stances by CEO Elon Musk. The Gravity SUV, which starts at $79,900, is seen as a significant step for Lucid, aiming to capture a larger market share by appealing to the American preference for SUVs. Lucid plans to produce 20,000 vehicles by the end of the year, with the Gravity expected to be supply-constrained. Despite competition from other luxury EV and traditional car manufacturers, Lucid benefits from its domestic production in Arizona, avoiding the 25% tariffs on foreign cars imposed by President Trump. This strategic advantage, along with high vertical integration in manufacturing, positions Lucid favorably in the competitive EV market.
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New York Federal Reserve president John Williams has indicated that the Federal Reserve will likely maintain current interest rates for an extended period due to the uncertainties surrounding President Trump's new tariff policies. In an interview with Yahoo Finance, Williams highlighted the potential for these tariffs to have long-lasting effects on inflation, which might not be fully realized for several years. He emphasized the need for the Fed to remain vigilant about how these tariffs could cascade through the economy, affecting prices and potentially leading to a scenario reminiscent of the stagflation of the 1970s. Despite current economic indicators showing stability, with unemployment at 4.1% and inflation around 2.5%, Williams expressed concerns about the risk of inflation exceeding forecasts and the possibility of slower economic growth. He stressed the importance of the Fed's readiness to adjust policies to navigate through this period of heightened uncertainty, ensuring that inflation does not take root as it did in past decades.
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President Trump's vision of leading America into a new golden age is overshadowed by concerns over the country's fiscal health. Moody’s, a prominent ratings agency, has recently downgraded its outlook on US debt from stable to negative, highlighting the unchecked rise in federal debt and increasing interest costs. This follows similar actions by S&P and Fitch, who have already reduced the US credit rating. Trump's proposed economic policies, including tax cuts and tariffs, are criticized for potentially exacerbating the fiscal deficit. Despite claims from Trump's team and advisors like Elon Musk about significant spending cuts, these assertions lack substantiation and are met with skepticism. The Congressional Budget Office projects a dire future with the debt-to-GDP ratio expected to soar, potentially worsened by further tax cuts. Moody’s and other analysts doubt the effectiveness of Trump's strategies, pointing out that they might lead to lower growth, higher inflation, and increased borrowing costs, painting a less than golden future for the US economy.
