Elon Musk and President Trump have SPLIT UP! Why? Fighting over a recession?

What is going on between President Trump and Elon Musk? A lot of folks just very curious about the complete 180. Previously what came across as a bromance is now a, hey you're not supporting me and my big beautiful bill, and you have comments like, yeah he's so ungrateful. That's something that Elon Musk has said. So this is gonna be an informal video. Usually I have a more detailed presentation that sort of walks through the bullet points. This is just gonna meet me talk to you for a couple minutes, sharing why I think you've seen this dramatic parting of ways and ideological perspective between President Trump and Elon Musk. Particularly as it's very relevant to the U.S. market and investing in terms of what's going on here. So you have this big beautiful bill that President Trump's trying, big beautiful bill, quote unquote, that President Trump is trying to push. And Elon Musk, that is the main pain point for him in terms of responding to it, saying this is not beautiful. You either have big or you have beautiful, but you can't have both. And what really is rubbing him the wrong way is that the U.S. deficit continues, even with this bill, continues to pencil out to let's say around five, six percent. Last few years it's been at record highs, especially for peacetime for the United States. And that is the concern, that the U.S. should not be at this level of deficit. And you even have some call outs to this, you know, regional separation in views, when just a few weeks ago Scott Besant, Secretary Scott Besant, was in a shouting match, is reported to have been in a shouting match with Elon Musk in the Oval Office. And I think that that data point is where you really see the fissure start to grow wide, is because here it is, Elon Musk is saying, wait a second, you're now proposing some sort of bill, big beautiful bill, where next year you're going to yet again have five, six percent deficit spending, and then maybe the year after that it's going to be five percent, the year after that it's going to be four percent. There's no way that this is really solving the economic problems of the United States. Because here it is, if you keep this deficit spending, eventually you're going to bankrupt the United States. That's the concern that Elon Musk has. So let's take out that chainsaw and let's cut that deficit from, you know, six, seven percent to two to three percent. Let's do it in a year. That was the goal. And the challenge with that approach is that, and this is where Treasury Secretary Scott Besant comes in, is saying, wait a second, the U.S. government's one of the largest consumers, buyers, in the world. If you have the U.S. government effectively cut its spending from six, seven percent of the deficit, you know, deficit to GDP, six, seven percent, to two to three percent, that's a huge three to four percent headwind. When you're looking at recessions in the United States, usually they're economic contractions to the tune of a couple percent. So that would be enough. That dramatic slashing would be enough to get the U.S., to tip the U.S. into a recession. And then you start having the problem of unemployment benefits ticking up and tax receipts dropping, in which case, you know, all of a sudden you're back into that situation where deficit spending picks up. So it would be self-defeating to do a very dramatic move quickly. Elon Musk doesn't want to hear that. He wants to hear, let's cut the deficit because this is a problem. What Scott Besant is saying is that we need to get to roughly three percent over time, let's say over the next four years. And by the way, if we do this gracefully, there's a greater percentage odds that we don't tip the economy in some sort of recession because as the fiscal picture is pulling back, maybe we go from six percent to five percent to four percent versus six to two to three percent in one year. If there's a gradual declining in terms of declining government spending and you offset it with, let's say, innovation, deregulation, productivity, there's a chance to sort of have a smoother ride than just tipping the whole thing over and saying, hey, let's just burn it all and reset. And that that won't work. It will result in significant problems that will result in a spike in deficit spending. So I think you have Scott Besant, treasury secretary, and there's even been subsequent videos where, you know, Trump saying I'm disappointed with Elon and who's in the room with him, Secretary Scott Besant. And, you know, they're making the comments that they effectively they need to do this. They need to pass this. It makes it more favorable that the economy, you know, stays strong. And you've recently seen in just the last few weeks expectations from the Federal Reserve suggesting that second quarter GDP might run to the tune of three to four percent real. That's that's, you know, before any sort of inflation benefit, if you throw in one to two percent in terms of inflation, then you're talking about close to GDP potentially for the US economy in the second quarter. So a resurgence in terms of growth. So you have this dynamic that's going on. Then you have the the midterms, you know, that'll be coming up. And so, you know, Trump's thinking about, wait a second, if if I sort of spike the ball right now, there's a chance that, you know, the Republicans lose the midterms because the economic picture gets worse. Whereas if we can sort of slowly glide it down, there's a chance that we have the scenario where we get to a more sustainable three percent. Yes, it's ugly for a few years as we drift from seven percent to six percent to five percent. That's that's not the type of deficits that folks personally, I don't like seeing that. But I think Treasury Secretary Scott Bessen is looking at the picture and saying one leads to real economic challenges and potential recession or potentially worse, worse than a recession. If you have that sort of four percent contraction in short order or a gradual step down and you're communicating with the bond market and you're figuring out maybe clever ways to generate incremental, you know, revenue or assets, you know, monetizing different assets on their balance sheet. And, you know, maybe you could have some sort of glide path where you don't have any issues in the bond market. But one one path, which is the you spike the ball, you just cut everything suddenly, actually might have an equal odds of a problem, a tantrum in the bond market because you'd have that situation where you say now things are out of control because we have to do this stimulus type of spending, because unemployment's ticking up, because tax receipts are going lower. So you have this, you know, it's such a difficult path to walk. And I think it is an important reminder of how difficult macro investing is. Just a few weeks ago, folks were saying the odds of a recession were around 70 percent. Now, markets saying it's around closer to 20 to 30 percent. So it's important to recognize the macro developments. This is going to be very volatile. What's personally my approach, you know, what what fits better with my own personal investment journey is trying to find those types of companies I can sit and hold for years at a time where I'm saying, oh, yeah, there's obvious management alignment. You know, here it is. You have, you know, the CEO, the president buying stock. Literally, I called out a stock to my subscribers earlier today where the president also just filed. They were buying, you know, shares in the company. So that's the type of situation looking for the obvious management alignment, obvious growth. That's how I'm dealing with this sort of uncertainty, because macro is always going to be unclear what's going to happen. And these are two very different paths that can play out, you know, in in in the years ahead. You could have a situation where something closer to Elon Musk happens, where you have this dramatic cut recession and and then who knows what sort of chaos gets unleashed or you can possibly have this glide path and you never know what are the what are the unexpected events that could happen. I mean, that's that's the goal that Scott Besson has is, you know, the gradual deficit reduction to around three percent. But who knows what, you know, maybe technological innovation results in some sort of uptick in unemployment. You could have all sorts of crazy things happen. Anyway, this was more of an informal video talking about why is Elon Musk and Trump, you know, splitting up? President Trump's fleeing up. I don't think it's purely tied to, let's say, cutting the EV subsidies for the you know, the electric vehicles for Tesla. I don't really think that's the heart of it. I think it's a, you know, a perspective on the deficit. And Elon Musk came at it saying this is a real problem for the United States. We need to solve this ASAP. And you have a, you know, a market veteran, Scott Besson, saying, whoa, you can't move that fast, otherwise it's going to be counterproductive. If this video has been helpful for you, please make a point of hitting that thumbs up, hit that subscribe button. I'd love to hear your thoughts on this format, more of a casual conversation versus the usual slides that I put together. Thanks so much for tuning into Unrivaled Investing.