Trump promised $5,000 checks if Republicans keep Congress. He's currently handing out smaller amounts through existing federal programs. This is the political equivalent of your dad saying he'll buy you a car if you get straight A's while handing you a five-dollar bill for gas money in someone else's Honda.
The $5,000 dividend is contingent on an election outcome. Retail traders hearing this news are now basing their entire portfolio strategy on midterm polling data. They've discovered a new way to lose money that doesn't even require understanding what a stock is.
Two federal payment programs are already running. Trump is promoting them. He's taking credit for checks that were going out anyway, which is like your roommate announcing he paid the electric bill after you already paid it. Except in this case millions of people are supposed to vote based on the announcement.
The smaller payments exist right now. The larger payment might exist later if a specific thing happens. This is technically a political promise, which means it has the same legal enforceability as a fortune cookie. But sure, let's all restructure our financial plans around it.
Some guy in Michigan just saw this headline and immediately quit his job. He's currently explaining to his wife that $5,000 is coming and they should pre-spend it on a jet ski. She's filing paperwork. Different paperwork than he thinks.
The midterms will determine if the checks arrive. Markets have no idea how to price this information because it's not information. It's a campaign statement with a dollar sign in it. Might as well trade based on what you had for breakfast. At least the eggs gave you protein.
Trump handed out the smaller checks in person, which is perfect. Nothing says financial security like a photo op with a novelty-sized piece of paper that represents a fraction of your rent.
Photo by History in HD on Unsplash
Leave a Comment