Trump tax cut will stimulate growth.

0:00 Speaker 1 Sunday morning. Which way is the Economy Going? You know, there’s a lot of optimism in our in the world, and there are a few people that are pessimist with us today is Keith Banks. And Keith Banks was vice chairman of Bank America and he ran us Trust, the subsidiary of Bank America for nine years. Did a great job.

0:24 Keith Banks. Which way is the Economy Going? Book? What is your? Your? You on?

0:31 Speaker 1 Where it is?

0:33 Speaker 2 Sure? John? And first of all, thank you for having me back on the show. It’s always a pleasure to be with you and share some of us with your audience. So when I step back and think about kind of where we are, John, I think from an economic standpoint, you know, we’re we’re we have a good foundation going

0:52 into twenty twenty five. I think this year we’re going to see nominal GDP, which just means you take real growth both plus inflation, nominal GDP end up somewhere between five and six percent. It will continue to be driven by the consumer. The consumer, as you know, represents roughly two thirds of economic activity in the US, and the

1:16 consumer is still healthy. You’ve got real uh, you know, job growth has been good, unemployment rate is low. Real wages have been growing at a good clip, and because of what’s happened in the financial markets and housing markets, there’s been a very strong wealth effect. And finally, and surprisingly, there’s still a lot of what they call excess cash.

1:41 So when the government pumped all the cash into the economy and to consumers during and after COVID, that really bloated the cash reserves of individuals. And that’s been worked down, but it’s still positive. So I think you’re going to have a situation growth will be good.

2:01 Speaker 1 Uh.

2:02 Speaker 2 And you know, we got to see how some things play out that could impact growth, you know, including some of the policy the potential policies of the Trump administration. But right now, I like the the economy is on very solid putting.

2:16 Speaker 1 I agree with you. Now. The consumers are feel good. I think the investors feel good. It seems like uh President Trump has control of the borders, control of uh of anybody that’s not treating our country right that he is uh focusing on it, and he’s become a world leader, and I think the world leadership really really uh respects him.

2:48 What say you?

2:50 Speaker 2 I would agree with that, John, I think unfortunate unfortunately, there has been a leadership void over the past four years. Uh and and President Trump has stepped into that void in an incredibly strong manner. I think his leadership, like you said on the border, even just his presidence with other world leaders. You know, he’s man of action. He’s

3:12 got a lot of great ideas. I love the fact he’s got Elon Musk trying to figure out where we can find waste and fraud because ultimately, waste and fraud is paid by you and I and other taxpayers, so it’s important they find that. And also if they find enough, they can reduce the budget deficit. So I think, you know,

3:30 and the Trump presidency has been interesting from a market standpoint, and I think about it in almost three phases. So when Trump President Trump was elected, you know, it created a euphoria for a lot of reasons that you just stated, jump and so that allowed investors to daydream about what could be, and that you know, think of a in

3:53 President Trump’s words, the golden age, you know, returning as we go into twenty twenty five, will go from what could be to what will be as his policies get more crystallized and more specific, including his tariff policy and then the final piece would be what is with which means the policies are now being implemented, and so from

4:17 a market standpoint, you know, you’ll have to see how what ultimately happens lines up with what the earlier expectations were, which in fact drove the markets considerably higher, you know, upon the announcement of his successful candidacy.

4:34 Speaker 1 If you had a million dollars right now and you had to put it into different categories, how much would you put into equities, how much would you put into bonds, how much would you put into bitcoins or whatever category you want.

4:48 Speaker 2 To put sure, and you know, a lot of this depends upon you know, people’s age, people’s risk tolerance. But you know, if you just you know, think about it more generically. As I look at this year, I think equities will do better than bonds because I think interest rates are going to stay pretty steady. I don’t see

5:08 the said cutting rates at least, you know, not until maybe the very end of the year if that. So, if rates don’t change much, that means basically what bonds give you is the what they call the coupon, the interest you get from owning a pond. So it’s a good source of cash flow, so I would overweight. I’d

5:26 have more equities in my portfolio today going into this year than I would fixed income, but I would have both. I would own more US equities than I would international equities because I think the US when you look at even though the international equities have done well early this year, you know, if you look at the GDP in the US,

5:49 if you look at earnings for share growth, if you look at, you know, the technology underpinning of this country and the healthy consumer. I think we have a lot of structural advantages over certainly Europe, but most other parts of the world. So i’d be overweight US equities. I like large cap. I think large cap will ultimately do

6:09 well this year, but we’d also start to diversify into small cap and mid cap, and in a small you know, you know, you’d also want to include some alternative assets. That means assets outside of equities and fixed income. It could be bitcoin, although that’s more speculative, or you can have hedge funds or private equity funds. I think the

6:30 combination of all that would give you diversification, and I think that’s important this year because you know, given the fact there’s a lot of things that will be rolling out, as I mentioned before, especially relative to the Trump policies.

6:43 I think you can get a good amount of volatility and choppiness, although I think ultimately the trend will be up, and I think the mark could be up, you know, in a similar amount to earnings. I think earnings could grow this year for corporate America about ten percent. That’s the case you would expect over time over the course

7:03 of the year, you could see the S and P five hundred representative of equities of growing close to that rate.

7:11 Speaker 1 Hey, thanks, thank you Sunday morning. Relaxed for the rest of the weekend, and God bless America and we pray for the best. Thank you so much.

7:23 Speaker 2 Thank you, John