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Speaker 1: Team forty seven with Clay and Buck starts now means

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Speaker 1: so called Trump accounts. I actually think this is a

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Speaker 1: great idea, Buck, And we talk a lot about financial

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Speaker 1: literacy on this program, and we can get into this

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Speaker 1: somewhat during the course of the program. So few kids

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Speaker 1: out there have financial knowledge or understand the concept of

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Speaker 1: compound interest. That is, if you start with one thousand

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Speaker 1: dollars invested when you're really young, and you just allow

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Speaker 1: that money to continue to grow, it is transformative by

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Speaker 1: the time you get to twenty or thirty years old.

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Speaker 2: I'm glad you're admitting this because I believe you were

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Speaker 2: giving me a ba humbug and making fun of me

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Speaker 2: for being the uncle who gives his nieces and nephews

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Speaker 2: who are toddlers or babies instead of useless you know,

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Speaker 2: like butterfly socks or something. I give them money in

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Speaker 2: long term, either you know, stock accounts or for the

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Speaker 2: purposes of college. Because that that.

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Speaker 1: Is, that is very very good of you. I would

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Speaker 1: suggest maybe Uncle Buck could also give a toy to

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Speaker 1: a kid in addition to a I don't think it's

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Speaker 1: one or the other.

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Speaker 2: I's not get crazy.

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Speaker 1: Let's not get I think you probably could get a

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Speaker 1: you know, Tanka truck for a kid and also give

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Speaker 1: him some some help on his future college. But I

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Speaker 1: do think this compound interest idea is one of the

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Speaker 1: least understood aspects and what it does is and we'll

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Speaker 1: have some fun with this, because I do think it's important.

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Speaker 1: But it teaches you the values and power of individual

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Speaker 1: responsibility from a financial perspective, and playing the long game

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Speaker 1: as opposed to constantly trying to scramble in the short game.

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Speaker 1: You're listening to Team forty seven with Clay and Buck.

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Speaker 2: We are join now by a very special guest, Joe Lavorgnia,

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Speaker 2: counselor to the US Treasury Secretary Scott Bessant. A lot

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Speaker 2: of you will know him from his time as a

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Speaker 2: senior economist for a big Wall Street bank on CNBC

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Speaker 2: and other places. Joe, Welcome to the program.

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Speaker 3: Thank you, very happy to be on with you.

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Speaker 2: All Right, we're talking Trump accounts. Big event today in DC.

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Speaker 2: Lot of talk about economy stuff from the President and

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Speaker 2: from Secretary Bessent. Let's start with Trump accounts, though, what's

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Speaker 2: the idea here? Why does it matter so much to

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Speaker 2: this administration and to the American people?

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Speaker 3: Well, it is a down payment on the future. It

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Speaker 3: is a way to encourage newborns and those children that

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Speaker 3: will be born over the next several years under the

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Speaker 3: Trump administration to be able to partake in the capitalist

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Speaker 3: system where the US has been an engine of growth

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Speaker 3: and prosperity. And this is a way, a very novel

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Speaker 3: approach to get FIM in the game of investing, building

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Speaker 3: a nest day, creating wealth, creating financial stability. And the

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Speaker 3: Trump administration is going to start that with seed capital

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Speaker 3: of a thousand dollars which then can go upwards of

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Speaker 3: another five thousand that could come through a combination of

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Speaker 3: either an employer, a family member, a guardian parent to

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Speaker 3: really build wealth and to get over time, young boys

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Speaker 3: and girls understanding the powers of compound interest and how

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Speaker 3: an investment today can pay huge dividends longer term.

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Speaker 1: Okay, this is so important. I think compound interest basic

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Speaker 1: financial literacy, and this is Clay appreciate you coming on

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Speaker 1: the program. Is something that kids really desperately need to understand.

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Speaker 1: And by the way, I think also a lot of

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Speaker 1: adults when you talk about compound interests. So let's say

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Speaker 1: that someone has an account starting at birth and they

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Speaker 1: basically or just let's say it's S and P five

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Speaker 1: hundred index funds on average, what does the compound value

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Speaker 1: of that look like? And over time? What kind of

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Speaker 1: dollars are we discussing For people out there who don't

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Speaker 1: really comprehend this, and.

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Speaker 3: Clay, I want to also, I should add that Secretary

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Speaker 3: best and highlighted that nearly forty percent of US households

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Speaker 3: have no direct equity exposure. Right, this is a way

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Speaker 3: really to make Americans part of the capitalist system. It's

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Speaker 3: an inclusive way to build wealth and to create financial security.

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Speaker 3: Regarding the compound question, if you put a thousand, the

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Speaker 3: government gives one thousand dollars in twenty twenty six, well,

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Speaker 3: then let's say that through a combination of either employment

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Speaker 3: or somebody making the maximum contribution after the thousand, you

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Speaker 3: contribute five thousand additional every year for the next eighteen years.

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Speaker 3: Based on historical equity returns of roughly ten percent, that money,

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Speaker 3: when you do the math, could be earth slightly more

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Speaker 3: than three hundred thousand dollars. Leave it in another ten

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Speaker 3: years the historical returns again, with a maximum contribution of

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Speaker 3: five thousand per year, that money could be worth almost

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Speaker 3: one point one million. So the power of compounding is remarkable,

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Speaker 3: and people are going to intuitively innately understand financial literacy

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Speaker 3: when they go to their Trump account and they see, Wow,

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Speaker 3: look at how this thing is increasing in value and

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Speaker 3: I add more, I could make more. I mean its

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Speaker 3: savings in real time, and I think it's going to

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Speaker 3: be a great tool of people are going to realize

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Speaker 3: we need to invest in the future, and they're going

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Speaker 3: to probably leave their money in there, and they're going

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Speaker 3: to then reap the benefits from being invested in all

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Speaker 3: these wonderful companies that create a lot of high paying

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Speaker 3: jobs and investing in and helping make the US economy

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Speaker 3: and continue to keep the US economy the best and

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Speaker 3: brightest in the world.

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Speaker 1: The easiest way to understand this that I always try

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Speaker 1: to explain to my kids and everybody out there, I

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Speaker 1: would encourage to do your rese on this. Basically, if

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Speaker 1: you just buy s and P five hundred index funds

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Speaker 1: historically and leave them in there, every ten years, your

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Speaker 1: money doubles. So you start thinking about every ten years

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Speaker 1: a doubling, and you start looking at twenty, thirty, forty

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Speaker 1: fifty years of that that's not even talking about putting

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Speaker 1: more money in as you are, which obviously makes it

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Speaker 1: even better, but every ten years doubling, I just don't

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Speaker 1: think most Americans really understand the value of starting early

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Speaker 1: and continuing to pile in. Yeah.

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Speaker 3: No, that's right, and in fact, clad I'd say it's

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Speaker 3: even better than that. It's the simple rule, your listeners,

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Speaker 3: is the rule of seventy two. You know, if essentially,

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Speaker 3: if you have a ten percent equity return, your money

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Speaker 3: actually doubles every seven years. If it's a seven percent return,

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Speaker 3: then it's ten years. So the numbers are even better

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Speaker 3: if you have historical returns approaching ten percent that we

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Speaker 3: even suggest, but you're exactly right. That's with just an

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Speaker 3: initial investment you get those wonders of compounding. But that's

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Speaker 3: why we're hopeful, Clay. You know, today President Trump announced

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Speaker 3: all these wonderful US companies across all different sorts of

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Speaker 3: industries now are going to partake in the Trump accounts.

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Speaker 3: And because the thing is that employers can contribute up

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Speaker 3: to twenty five hundred per annum into a Trump account,

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Speaker 3: and that's not going to count as employee income. So

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Speaker 3: the ability to actually to add to it to get

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Speaker 3: those big, big returns is there. I think that's just

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Speaker 3: a great way the program was designed.

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Speaker 2: Speaking to you Joel of Wornia councilor to US Treasury

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Speaker 2: Secretary Scott best In, a guy with decades as a

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Speaker 2: very well known Wall Street economist, and Joe. To that end,

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Speaker 2: I want to ask you about something that's going to

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Speaker 2: matter a lot to everybody listening day to day. It's

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Speaker 2: also going to matter a lot to this administration and

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Speaker 2: in the upcoming midterm elections. It has to do with affordability.

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Speaker 2: Trump spoke about this recently in Iowa. This is eight.

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Speaker 2: I want to have you dive into this, but first

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Speaker 2: wanted to hear from the president play eight guys, they

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Speaker 2: came up.

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Speaker 4: You know, it's a word that they came up with, affordability.

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Speaker 4: Every time you hear the word, remember they're the ones

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Speaker 4: that caused the problem. And the first time you heard

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Speaker 4: about it was like a few months ago. This lection's

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Speaker 4: all about affordability. Well, they're the ones that caused the problem,

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Speaker 4: but nobody knows that.

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Speaker 2: You know, people forget So now, Joe, how can this administration?

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Speaker 2: Clay and I have talked many times about, Yes, you

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Speaker 2: look at inflation previous administration worst inflation forty years. That's established.

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Speaker 2: How do we bring this situation to a best possible

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Speaker 2: outcome this year for the American people and certainly for

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Speaker 2: the administration for the purposes of the referendum that's coming

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Speaker 2: up in the midterm elections.

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Speaker 3: Much of it has been done through the One Big

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Speaker 3: Beautiful Bill, or the Working Family's Tax Act, which it's

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Speaker 3: also known as And what I mean by that is

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Speaker 3: that bill is encouraging significant business investment in building factories

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Speaker 3: and expensing capex. We've already seen the capex come back

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Speaker 3: in full force. This is helping lift productivity growth, which

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Speaker 3: is output per hour, and that has also been galvanized

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Speaker 3: through a lot of business friendly deregulation where companies can

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Speaker 3: operate more officially. So you're seeing these big productivity gains.

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Speaker 3: Why does that matter? Productivity gains matter because rising productivity

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Speaker 3: is the lifeblood of rising living standards. When companies can

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Speaker 3: produce more with their existing workforce, they can pay those

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Speaker 3: workers more. So what the Trump Administration's policies are going

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Speaker 3: to do is they are going to allow people to

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Speaker 3: take home more pay after tax. Take on pay will

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Speaker 3: be going up. And because the economy is investing in

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Speaker 3: the future, it could produce more, which means prices could

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Speaker 3: come down. So what you have is a disinflationary boom,

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Speaker 3: strong growth led by productivity and prices falling because the

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Speaker 3: economy's productive capacity is increasing. Think of it this way.

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Speaker 3: Energy the drill baby drill, opening of federal lands, the

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Speaker 3: easing of permitting, and things of that sort to invest

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Speaker 3: in energy production. What's that doing. It's increasing output, but

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Speaker 3: at the same time it's lowering the energy costs. Take

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Speaker 3: that and multiply it across the economy. That's how you

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Speaker 3: basically get affordability to massively improve is you're allowing people

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Speaker 3: to keep more of what they have and you're giving

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Speaker 3: them the tools to produce more so that they could

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Speaker 3: get paid more, and that's higher living standards.

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Speaker 1: This is a big picture question for you. You've been involved

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Speaker 1: in finance for a very long time, and we're talking

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Speaker 1: to Joe Lavornia. When you look I was reading recently,

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Speaker 1: Amazon went public with an initial market capitalization of around

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Speaker 1: five hundred million dollars and then it has risen up

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Speaker 1: to multiple trillions of dollars, which meant if you bought

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Speaker 1: you know, one thousand dollars in Amazon stock. When it

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Speaker 1: hit public markets, you've made millions and millions of dollars.

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Speaker 1: Now there's talk about SpaceX. I'm sure you've seen potentially

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Speaker 1: going public at a valuation of one point five trillion dollars,

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Speaker 1: which means a lot of the value created in that

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Speaker 1: company will never have been accessible to so called average investors.

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Speaker 1: The number of public companies is declining overall. Are you

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Speaker 1: concerned at all about the way that the public markets

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Speaker 1: are kind of being skipped and all of the value

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Speaker 1: is being created now in private marketplaces, which doesn't give

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Speaker 1: the average Joe investor the same access to roaring growth

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Speaker 1: marketplace companies as might have existed back in the nineties

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Speaker 1: or before.

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Speaker 3: I understand your point about public versus private markets, and

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Speaker 3: I think that reflects the fact that you know under

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Speaker 3: unfortunately many Democrat administrationship significant overregulation, so capital immediately went

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Speaker 3: to the private market instead of the public market. But

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Speaker 3: what we know is over the past year, we've had

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Speaker 3: tremendous growth in the stock market. The returns have beat

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Speaker 3: most money managed because US companies, many of which I

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Speaker 3: don't need to name the names, but you know that

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Speaker 3: have done phenomenally well. They'll continue to do well, and

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Speaker 3: as the administration tries to encourage private capital will come

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Speaker 3: in and to innovate and create. I'm pretty confident, Clay

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Speaker 3: that we're going to see the US stock market continue

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Speaker 3: to perform well. It is what we call the high

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Speaker 3: data on the US economy, and President Trump knows how

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Speaker 3: to get growth moving. And you know, I'm an optimist,

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Speaker 3: so I'm not particularly worried about that. But as we

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Speaker 3: have less regulation, you might see these public markets, and

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Speaker 3: I think rightly so improve You're going to see more

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Speaker 3: merger activity. You know, business is back, as the President says,

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Speaker 3: there's tremendous investment coming in the US, and the US

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Speaker 3: is indeed the hottest economy in the world. I mean,

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Speaker 3: we've been growing almost five percent the last three quarters.

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Speaker 3: I mean that's incredible. And therefore the public markets are

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Speaker 3: going to benefit from that, and by default, the people

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Speaker 3: who are investing in these Trump accounts are going to

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Speaker 3: benefit as well.

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Speaker 2: Hey, Joe, it's buck one more for you here, putting

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Speaker 2: on your macro economist tat for a second, and maybe

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Speaker 2: your forecast or no stradamus side of things. The AI

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Speaker 2: boom that we're in right now in terms of all

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Speaker 2: the money that's going toward this stuff. Are you a

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Speaker 2: believer in sort of the Elon model of this stuff

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Speaker 2: is all real, It's going to change the world we

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Speaker 2: live in and the productivity gains are going to be stratospheric.

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Speaker 2: Or do you have concerns about a pullback because we

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Speaker 2: might be a little cart before the horse on this stuff.

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Speaker 3: I mean, look, you have you have a huge equity boom.

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Speaker 3: I mean you've had a forty five percent or forty

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Speaker 3: something percent increase off of the April lows. Is one

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Speaker 3: of the biggest recoveries post Liberation Day we've ever had

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Speaker 3: following a fifteen percent stock draw down in the markets

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Speaker 3: are understandably optimistic about the future that the President has

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Speaker 3: laid forth. That's not to say they won't be corrections

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Speaker 3: along the way, but I think we have to look

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Speaker 3: at the long term picture in the fact that the

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Speaker 3: US market is so innovative, so dynamic, and US companies

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Speaker 3: are set to The President has set the field for

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Speaker 3: those companies to thrive, and he's got people in leadership

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Speaker 3: positions such as the Secretary. They're going to make sure

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Speaker 3: that private capital is accessed in the most efficient way.

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Speaker 3: And the AI story is for real. I think it's

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Speaker 3: very important. We're certainly seeing the productivity data and you know,

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Speaker 3: as there could there be you know, some spending that

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Speaker 3: needs to be cut back here and there, of course,

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Speaker 3: but that's you know, that's the nature of the cycle.

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Speaker 3: But I think generally speaking, you know, the optimism that

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Speaker 3: we're seeing in markets as well placed buck because you're

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Speaker 3: seeing it in the GDP data, you're seeing in strong CAPECKX.

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Speaker 3: You're going to see it more on the investment side,

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Speaker 3: especially for factories because that expensing is only going to

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Speaker 3: last three years, so that's going to see you're going

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Speaker 3: to see a big boom there, and I do think

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Speaker 3: you are. Because inflation will continue to move down, you

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Speaker 3: will see interest rates come down to that should be

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Speaker 3: lowering rates further. That's going to use affordability. It's going

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Speaker 3: to make home buying more accessible to folks. And it's

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Speaker 3: all to me, it's all good news. And maybe I'm

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Speaker 3: too optimistic, but President Trump persent a powerful influence on that.

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Speaker 3: I never want to sell the US economy short. Oh.

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Speaker 1: I think the economy is going to be flying and

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Speaker 1: firing on all cylinders. And like you just said, we're

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Speaker 1: over five percent for the fourth quarter, and man, if

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Speaker 1: we could get five percent growth in twenty twenty six,

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Speaker 1: it would be transformative on so many different levels. Joe,

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Speaker 1: we appreciate the time, Thanks for coming on with us.

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Speaker 3: Thanks guys, appreciate being on