(DailyReckonings via Zero Hedge)—The new Trump administration is off to a fast start. All of the key nominations for the Trump cabinet and White House staff have been made, the Senate confirmation hearings (where needed) have mostly been held and some of the key positions have already been filled. Trump signed a large pile of Day One executive orders over the course of January 20 and 21 immediately after the inauguration. More executive orders are in the pipeline.
This all stands in sharp contrast to Trump’s 2016 transition process where the nominees were not well chosen, confirmation went slowly, and the deep state holdovers from the Obama administration were still in place. What a difference four years makes.
We are extremely optimistic about Trump’s economic plans. Whether by executive order, regulatory processes or legislation, Trump will be pursuing lower taxes, less regulation, and higher tariffs on foreign trading partners in order to promote high-paying jobs in the U.S.
Some complain that Trump’s America First policies may hurt growth in places like China, India and Brazil. That’s entirely possible but too bad. China needs to figure out how to Make China Great Again. That’s China’s job, not the job of the United States.Trump’s job is to Make America Great Again and he’s off to a good start.
The U.S. Consumer of Last Resort
Simply put, the U.S. consumes more than it produces. Americans buy consumer goods and solar panels from China, semiconductors from Taiwan, steel from Japan and automobiles from Korea. The difference is purchased from abroad and paid for with U.S. dollars, which foreign central banks use to load up on U.S. debt.
The U.S. runs a trade deficit along with a budget deficit and is in debt to the world. Those days are over. Asians, Africans and Latin Americans can still sell goods to the U.S. but they’ll have to manufacture those goods in the U.S. to get over high tariff walls. The result is good paying jobs in America.
With higher earnings, Americans can save more. Foreign investment in the U.S. will also rise as foreign manufacturers build here to avoid tariffs. Eventually, higher savings and higher investment will close the production gap and reduce the trade deficit. Among other consequences, look for a stronger dollar as the world scrambles for dollars to invest here. That makes the rest of the world cheaper for U.S. consumers and reduces inflation also. It’s a win-win-win policy.
3 Threats on the Horizon
The fact that Trump’s policies are sound, and the long-term economic prospects are good, should not divert us from the fact that there are serious economic challenges in the near-term. These will not be Trump’s fault because they have been years in the making. But the damage may emerge early in Trump’s term.
This scenario is not unlike the start of Ronald Reagan’s first term in 1981. The U.S. had its worst recession since the end of World War II during 1981-82. (We’ve had worse recessions since, but 1981-82 was the worst up until that time).
It took a few years for Reagan’s policies to take effect. The period 1983-1986 was one of the strongest growth spurts in recent history with 16% compounded real growth. But we had to get through a rough patch first.
Here’s a summary of three economic threats to investors that may emerge over 2025 before we get to higher ground expected in 2026 and beyond:
1. Stock Market Crash
Markets are at or near all-time highs based on every available metric: P/E ratios, the CAPE ratio, market cap/GDP ratio, concentration risk, etc. This stock market bubble is amplified by indexing, investor complacency and analyst euphoria. When such conditions have existed in the past, they have always been followed by market crashes of 50% to 90% unfolding over several years. Examples include the Dow Jones Industrial Average (1929), the Nikkei (1989), NASDAQ (2000), and the S&P 500 Index (2008).
We are now positioned for an historic crash. The specific cause does not matter – it could be war, natural disaster, a bank or hedge fund collapse or other unexpected event. What matters is the super-fragility of the market when the trigger is pulled. This is why Warren Buffett has over $300 billion in cash and why central banks are buying gold.
Investors should prepare now; don’t be the last one to know. Strategies include reducing allocations to stocks, increasing allocations to cash and purchasing some gold (up to 10% of your investable assets) to participate in a flight to quality.
2. A U.S. Recession Is Coming
This is problematic for stocks independent of any crash potential. Inflation has persisted, energy prices are back up to interim highs, unemployment is going up, job hiring is frozen, and the manufacturing sector is contracting.
Federal reserve rate cuts won’t help. They do not provide “stimulus.” Rate cuts are a sign of economic weakness, not strength. The Fed is not leading the interest rate market. They are following the market down.
Of course, a recession could trigger a market crash. But even if it does not, recessions are typically associated with 30% declines in stock valuations over a year or less. The investment strategy for a recession is substantially the same as the crash strategy.
3. Currency Wars Are Back and Trade Wars Are Coming
The super-strong dollar today makes it difficult for other countries to buy U.S. goods. Tariffs will make the global dollar shortage worse as foreign investors seek dollars to jump the tariff walls and invest directly in the U.S.
Both the strong dollar and the coming U.S. tariffs invite retaliation by trading partners who will put up their own tariff walls. The result will be a global contraction in trade that could resemble the trade collapse of the 1930s during the Great Depression. U.S. stocks fell 85% from October 1929 to June 1932 during that episode of trade wars. A repeat could be on the way if economies such as China (that should be boosting consumption) choose to fight trade wars instead.
We’ll be closely monitoring all these threats and provide you with the best in analysis and recommendations in the coming weeks and months.
Bypass Big Tech Censors
Two Storms, One Harvest
Every food crisis in living memory has been a one-shock event. The 2008 price spike was a commodity bubble. The 2020 shortages were a logistics failure. The 2022 grain scare was a war on one exporter’s ports. Each time, the system bent, adjusted, and recovered, and each time the experts assured us afterward that global markets are simply too big and too diversified to fail.
What nobody in Washington seems eager to discuss is that 2026 is shaping up to be something the modern food system has never actually faced. Two independent shocks, one climatic and one geopolitical, are converging on the same harvest cycle at the same time. Not sequentially. Simultaneously.
Start with the weather. The Pacific Ocean is currently building toward what forecasters now openly call a record event. NOAA’s Climate Prediction Center puts the odds of at least a strong El Niño near 88 percent, with roughly two in three odds it reaches “very strong” status, the tier reserved for perhaps three or four events in the entire satellite era. Every major global model now projects a median peak in Super El Niño territory, and most of them project it exceeding the 2015-16 event, which until now held the modern record. Sea surface anomalies were already brushing the super threshold in mid-July, months before these events normally peak. The atmosphere has already shifted into El Niño mode, and the event is forecast to crest in late fall and early winter.
This is not about “climate change.” It’s about the standard cycles of weather, and the cycle we’re currently in is one that has likely devastated societies in the past. We’re better prepared as a society today, but not all Americans are equally prepared.
Serious households have started doing the quiet math on their own. Grocery bills tell part of the story, and the forecast maps tell the rest, which is why long-term food storage has moved from fringe hobby to mainstream line item in the family budget, with established suppliers like Heaven’s Harvest seeing demand from people who five years ago would have rolled their eyes at the idea. That instinct is not paranoia. It is pattern recognition, and the pattern is worth walking through carefully.
Editor’s Note: Heaven’s Harvest IS a sponsor, but the warnings of this article are real and would be written even if we didn’t have a survival food sponsor. With that said, those who take advantage of what they offer can use promo code “Patriot” for 15% off.
The Fertilizer Clock Is Already Running
While the Pacific warms, the second shock has been unfolding in the Strait of Hormuz. The conflict with Iran turned the world’s most important energy chokepoint into a contested waterway, and the consequences reach far beyond the gas pump. Roughly a third of global fertilizer trade moves through Hormuz, and the disruption sent urea prices up 86 percent year over year by March, with a 53 percent jump in a single month.
The World Bank projects energy prices rising about 24 percent in 2026 and fertilizer about 31 percent. By its own accounting, fertilizer prices ran 35 percent higher in the first five months of this year than the same period last year.
Here is the mechanism the nightly news will not explain. Fertilizer is not a grocery item. It is a time-delayed input. The nitrogen a farmer in Iowa or Punjab could not afford to apply this spring does not show up as a problem this spring. It shows up as a thinner harvest six to twelve months later.
The World Bank’s own food security brief concedes that the effects of reduced applications earlier this season “are likely to become visible only later in harvest outcomes.” Translate that from institutional language into plain English and it means this. The damage is already done, it is already in the ground, and we are simply waiting for it to arrive on the shelf.
Now check the calendar. Six to twelve months from the spring planting season lands us squarely in late 2026 and early 2027. Which is precisely when the strongest El Niño in the instrumental record is forecast to peak, bringing its signature droughts to Southeast Asia, Australia, southern Africa, northern Brazil, and South Asia, the very regions that grow the world’s rice, sugar, and oilseeds.
The World Bank warns openly that a strong El Niño “could disrupt multiple crop belts simultaneously” on top of the conflict-driven input costs. Their baseline projection assumes the Middle East disruptions ease by autumn. What in the last two years of Middle East history suggests that assumption is safe?
The System Has No Slack Left
The comfortable answer is that global markets always adjust. But adjustment requires slack, and the slack is gone. Global cereal production is expected to decline from last year’s records even before El Niño does its work. The UN World Food Programme, hardly a den of right-wing preppers, is calling this the most significant disruption to its supply chains since Covid and the invasion of Ukraine, and its supply chain director put the stakes bluntly.
Today’s supply chain challenges are tomorrow’s hunger crisis.
There is also a political dimension that markets cannot price. When food gets scarce, governments do not behave like economists. They behave like politicians. Export bans, hoarding mandates, and panic buying at the national level turned the modest rice shortfall of 2008 into a global crisis, and analysts are already warning that import-dependent nations are the first dominoes.
The 2015-16 Super El Niño, a far weaker event than what is now forecast, threw tens of millions into food stress across Africa and Asia. This one is projected to be stronger, and it arrives with fertilizer already rationed by price and shipping lanes already contested by missiles.
What Joseph Knew
Scripture does not treat preparation for lean years as faithlessness. It treats it as wisdom delivered in advance to those willing to act on it.
Behold, there come seven years of great plenty throughout all the land of Egypt: And there shall arise after them seven years of famine; and all the plenty shall be forgotten in the land of Egypt.
Joseph did not respond to that warning with a hashtag or a committee. He stored grain during the years of abundance, and when the famine came, Egypt stood while its neighbors begged. The lesson is not that famine is certain. It is that the time to prepare is precisely when preparation still looks optional.
Nobody who filled a pantry in a year of plenty has ever regretted it, and nobody standing in an empty aisle has ever been glad he waited for certainty.
None of this calls for panic, and panic is the enemy of sound judgment anyway. It calls for the same unglamorous prudence our grandparents considered ordinary. Keep some cash margin, know your local growers, and put real food in deep storage while it is cheap and available, because the entire arc of this story is that cheap and available is a closing window.
Families looking for a straightforward place to start can visit Heaven’s Harvest and use promo code Patriot for 15 percent off long-term storable food. The forecasts may yet soften, the strait may yet reopen, and we should pray they do. But hope is a fine thing to hold and a foolish thing to eat.