Donald Trump’s Next Big Stock Purchase

By taking a stake in Intel, Donald Trump has changed the very nature of the U.S. economy. 

It’s not unprecedented. 

The U.S. government took stakes in major American financial institutions to stave off a banking crisis amid the 2008 financial crisis. 

But that was also part of an emergency effort to keep the banking system solvent, and those stakes were all sold off by 2014.

The endgame for Intel is less clear.

To borrow a question not asked since the invasion of Iraq…

What is the federal government’s exit strategy?

At what point does the United States sell its stake in a  downtrodden chip manufacturer? 

Or are we just gambling with taxpayer dollars now? 

Because that’s what it seems like. And in fact, it seems like Trump wants to keep playing the stock market game with America’s money.

“I will make deals like that for our Country all day long. I will also help those companies that make such lucrative deals with the United States," Trump said in a post on Truth Social. "I love seeing their stock price go up, making the USA RICHER, AND RICHER." 

Sure. We all love seeing stocks go up. It’s when they go down that it becomes an issue. And there’s certainly no guarantee America will recoup its investment here.{$ad_6169_955588}

Nevertheless, the Trump administration is eyeing other investments to go along with it. 

Namely, defense contractors. That's according to Commerce Secretary Howard Lutnick, who said as much last week on CNBC’s Squawk Box.

Asked if the administration was considering taking pieces of contractors such as Lockheed Martin, Lutnick said the Pentagon was “thinking about it.”

“Oh, there’s a monstrous discussion about defense,” Lutnick went on. “I mean, Lockheed Martin makes 97% of their revenue from the U.S. government. They are basically an arm of the U.S. government. They make exquisite munitions, I mean, amazing things that can knock a missile out of the air when it’s coming towards you.”

Presumably, other major defense companies like RTX and Northrop Grumman would be in the mix , too.

After all, it would look pretty bad if the Pentagon took a stake in Lockheed Martin and then started awarding it contracts at the expense of its competitors . 

It’d also raise some questions about federal spending. 

Which is to say, if the U.S. government has multi-billion-dollar stakes in defense companies, wouldn’t it be more reluctant to cut military spending — and more inclined to increase it?

These are the sticky situations that arise when the government starts flirting with socialism. And make no mistake, that’s exactly what it is when the government starts nationalizing its domestic industries. {$ad_5968_818106}

China and Russia own their defense companies, too. And it hasn’t made them any more efficient or innovative. In fact, it’s the opposite. U.S. defense companies are the best in the world — and they got that way through free market competition. 

So this seems like a step back, and a troublesome one at that. 

Yet it also seems rather likely to happen.

In addition to the government’s Intel stake and Lutnick’s foreshadowing of more government investments to come, Trump has also called for the establishment of a sovereign wealth fund. 

And National Economic Council Director Kevin Hassett said explicitly that with respect to the Intel stake. 

He called it “a downpayment from a sovereign wealth fund, which many, many countries have.” Trump campaigned on the idea of building a sovereign wealth fund for the United States, and Hassett said that such a fund would mean the government could take equity stakes in more companies. 

“I’m sure that at some point there’ll be more transactions, if not in this industry then other industries,” Hasset said.

Again, this is murky business. But it seems inevitable and it bodes extremely well for the defense contractors I’ve been recommending for years.

Lockheed Martin, Northrop Grumman, and RTX would almost certainly be a part of that. 

But other smaller defense tech companies like my latest Golden Dome play could be in the running too. 

So make sure to check that out here.