You Can't Count on the Fed, the White House or Anybody Else

In partnership with

Major League Baseball was a different game in the 1930s, ‘40s and ‘50s.

There were only 16 teams — eight in each league. And only the top two — the pennant winners in the American and National leagues — made the postseason: Those two teams then squared off in the World Series — and everybody else went home.

Baseball — not football, not basketball and not the Indianapolis 500 — was “America’s National Pastime.” And the top stars were national icons.

Stars like the New York Yankees’ slugging outfielder Joe DiMaggio.

The Yankees were known as the “Bronx Bombers.” And DiMaggio was their No. 1 star — having inherited that mantle from Lou Gehrig … who had previously inherited it from Babe Ruth.

The Great Ones all had nicknames — and the very best ones often had several.

Ruth was “The Great Bambino” or “The Sultan of Swat” — or simply “The Babe.” Gehrig was “The Iron Horse.” Boston Red Sox Slugger Ted Williams — who many see as the greatest hitter ever — was “The Splendid Splinter” or “Teddy Ballgame.”

Some of those players were so legendary that nicknames alone couldn’t capture their greatness — they even had “explanatory” descriptors that were like postscripts to their greatness.

For instance, Yankee Stadium was known as “The House that Ruth Built.”

(In today’s leached-out, social-media era, we’d probably refer to that as The Babe’s “branding.”)

Joe DiMaggio came long decades later. But he had all of this, too.

He was “Joe D” — a moniker that reflected his exalted status, and the reverence his fans held him in.

He was “Joltin’ Joe” — a nickname that acknowledged his clutch hitting and pre-steroids power.

And he was “The Yankee Clipper” — a name coined by sportscaster Arch McDonald to describe the graceful way DiMaggio covered centerfield in Yankee Stadium.

And Joe D. was important — so important that even on a team as powerful and star-studded as the Bronx Bombers, it was an incontrovertible fact that DiMaggio’s hitting, fielding and leadership made it a winner.

Decades before Reggie Jackson proclaimed himself to be “the straw that stirs the drink,” fans, teammates and sportswriters acknowledged that Joe D. was Catalyst No. 1.

That “postscript” saying: “As DiMag goes, so go the Yankees.”

That wasn’t just rhetoric — as DiMag proved in 1949.

He’d ended the previous season with heel spurs so painful that an offseason operation was needed. The surgery didn’t help. Joe D. was benched when the ’49 season began.

The Yankees weren’t “Bombers” that year: Only superb pitching overcame punchless hitting and kept the Yanks in first place — even as the Red Sox lurked.

In June, led by Ted Williams, the BoSox got hot — winning 10 of 11, with a late-month, three-game showdown at Fenway Park threatening to put Boston within easy striking distance of a fading New York team.

And that’s when DiMaggio said he was ready to play. His teammates took the train to Beantown — leaving Joe in New York. At the last minute, with manager Casey Stengel stalling about the lineup, DiMaggio flew to Boston and was penciled into the cleanup spot.

In the first game, Joltin’ Joe singled in his first at bat. And he homered his next time up. In the bottom of the ninth, he robbed Teddy Ballgame of extra bases — to end the game: Yankees 5, Red Sox 4.

In Game Two, the Red Sox jumped out to a huge 7-1 lead. But DiMaggio homered twice and knocked in six runs — and the Yanks won 9-7.

In the seventh inning of Game Three — with two runners aboard and New York clinging to a one-run lead — The Yankee Clipper clanged a blast high off the Fenway Park light tower for a 6-3 victory and a series sweep.

DiMag hit .455 with four homers and nine RBI in that series.

But it wasn’t over.

Boston stormed back late in the season — beating New York three straight to take a one-game American League lead with a mere five games to play.

And the last two, fittingly, were against each other.

The Yankee Clipper had been hospitalized — this time with a virus and fever that cost him 18 pounds. But he climbed out of his hospital bed to play.

Down 4-0 in Game One, Joe D. doubled to rally the Yanks to victory. He dragged himself through Game Two — finally exiting in the ninth — but his presence was inspiration enough: New York won the game — and the pennant.

The World Series was almost an anticlimax. New York won — as the Bombers did nine times during his 13-year career.

Yup … as DiMag went … so went the Yankees.

As I showed you folks yesterday, the risks we face as investors are surging, The American economic expansion is growing long of tooth … everyday American consumers are feeling the squeeze … and we’re at a juncture that parallels those old New York Yankees days.

As U.S. Policy goes, so goes the U.S. economy.

And our standard of living.

We’re talking about the U.S. Federal Reserve with monetary policy. And our leaders in Washington with tax policies, spending plans, burgeoning deficits, industrial investments and tariffs and other trade policies.

You can’t control what they do.

But you can control what you do.

Four Scenarios For the Next 12 Months

We’re stock pickers — meaning we focus on long-term Wealth Building, and not on near-term wobbles in the stock market or economy. So we’re not forecasters, per se. But we are professional observers and veteran analysts. So we monitor the “Triggers” that can affect big storylines and near-term developments. And we filter those observations to pursue a powerful goal: To think independently, to focus on self-reliance and to craft strategies and find opportunities that smooth out near-term eddies to build long-term wealth — all for you.

To that end, I asked myself this question: If we’re in an economy that’s policy-driven, and I see the “stressors” that affect regular folks are on the increase, what possible scenarios are we looking at in the next year or so — and what can we do to protect ourselves and also take advantage of the opportunities that always pop up when times get tougher?

I came up with four outlooks. I described them. And I even did a little bit of “handicapping” — admittedly using the “SWAG” (scientific, wild-a** guess) methodology, but basing it on data and our decades of experience in the financial markets.

With that little intro, here are those four scenarios to monitor over the next 12 months.

It’s like the old “Let’s Make a Deal” game show … when you have multiple “doors” to choose from.

Here are the four doors — the four scenarios — for the American economy over the next 12 months:

Scenario No. 1: Base: “Soft but Squeezed” (Probability: 35%)

Why: Affordability and services inflation keep pinching households. But the economy remains resilient.

Growth will run at 1.7% to 1.9%, with inflation settling in the 2.5% to 3% range. Joblessness will come in at 4.4% or higher. The 10-year U.S. Treasury will run in the 4.1% to 4.6% range — a much-elevated term premium versus the 2010s. The S&P 500 will chug along at 4% to 8% — and valuations won’t run as high as they have in recent years. Wall Street will push high-quality companies and defensive stuff like staples and utilities.

Scenario No. 2: Bull: “Clean Soft Landing” (Probability: 20%)

Why: The Holy Grail slowdown goal of any economist. Deficits and tariff uncertainty — and resolute CapEx intensity — makes it less likely.

With inflation down in the 2.3% to 2.5% range, joblessness in the 4.2% to 4.4% range, real income will be strong and central bankers will feel better about cutting rates. U.S. stocks will rumble to 12% to 18% gains. Earnings will be strong and predictable. Cyclicals, small-caps and high-quality growth companies could take center stage.

Scenario No. 3: Bear: “Shallow Stagflation/Consumer Crack” (Probability: 25%)

Why: Credit stress is a risk, but policy backstops and CapEx demand argue against a deep crack. Job market still healthy.

Real economic growth will kinda stink – either treading water (0%) or wheezing along (1%). Inflation will be a pesky (2.8% to 3.2%). Joblessness will get to 4.6%, 4.8% or (egad!) even higher. The 10-year will run as high as 5.1%. Stocks will be volatile. And they’ll see a valuation squeeze (especially in high-beta stocks) — leading to a fallback of 10% to 18%. Defensive stocks will see the spotlight. One offshoot: It’ll be tough to borrow money — to buy cars or houses, or to finance a business.

Scenario No. 4: The DiMaggio Economy: “Policy‑Powered Expansion”(Probability 20%)

Why: Reshoring (industrial policy spending) is real in semis/electronics/energy infrastructure and can keep growth above trend despite 2.7%–3.3% inflation.

Fiscal/monetary/industrial policy puts an above-trend charge into the economy, with growth in the 2.2% to 2.8% range. Employment will remain strong. Capital spending in semis, data centers, the electrical grid. We see a 10-year in the 4.3% to 4.7% range. The S&P 500 advances between 8% and 13%, but “breadth” (a sign of health) is good. Industrials, utilities, grid/infrastructure, chips, equipment and defense are all strong. So-called “high-multiple” stocks — especially in AI — remain volatile. But the underlying companies continue to ride the wave of capital spending.

But “storybook” endings — like that ’49 pennant race — are rare. There’s a lower probability that a “DiMag” — be it the Fed, the Trump Administration, tax breaks, or targeted spending — will rescue an increasingly squeezed Middle-Class America and help regular folks stumble into the American Dream.

A Winning Plan

That’s not disastrous. At least, not for you.

You’re an independent thinker. You’re immune to “The Crowd.” And with this checklist — and the Stock Picker’s Corner portfolios (Model and Special Situation), as well as our daily reports — you and your family can still be pennant winners.

Step One: Be Self-Reliant

If you depend on others for your financial independence, expect to be disappointed. Take a step back, understand your own needs, set your own goals — and think critically and act independently. Once you’ve made that decision, these other steps get a whole lot easier.

Step Two: Be a Wealth Builder, not a Wealth Killer

Find the best storylines and you’ll find the best stocks. Invest, don’t trade. Play the long game. Turn bad news into good opportunities by Accumulating on pullbacks. Heck, if you really want to combine Steps One and Two — and turn the tables on everyone else — invest in the one player that wins no matter who wins or loses: CBOE Global Markets Inc. CB 0.00%↑, the world’s largest options exchange.

Step Three: Be Your Own “Policy” Winner

Most “experts” associate monetary and fiscal policy with Washington. Monetary policy is how the Fed controls rates and the money supply. Fiscal policy is how the government decides to raise money (taxing) and then spend it. You can do the same. Look at where your money goes (see what needless subscriptions you have). If you’re worried about that “Middle Class Squeeze,” get ready by cutting spending. And pare back what you owe. One of “Bill’s Rules:” Don’t Carry Debt Into a Downturn. If you do all this, and that “downturn” doesn’t materialize, you’ve now got fresh cash to invest in stocks.

Step Four: Invest in “Real Income”

Think of “income” more like “cash flow:” After you factor in inflation, prevailing interest rates and what slice of that income you’ll pay in taxes, look for income/dividend plays that put “net” cash in your pocket. Check out the Angel Oak Financial Strategies Income Term Trust FINS 0.00%↑, a fund that invests in debt issued by U.S. financial institutions, especially small banks. It pays out monthly, and its current yield is 10.25%. I have two favorites — both in our “Income Playbook.”

Step Five: Energize Your Portfolio

Even without the AI Revolution, energy will be a place you need to be in the years to come. The U.S. Energy Information Administration (EIA) says global electricity demand could surge by 33% to 75% by 2050. Here in America, our grid is creaking and the “energy mix” is shifting. We’re going to need more energy. And we’ll need the pipes to move the fuel, the power plants to create it and the wires to transmit it. One venture with great assets is MPLX LP MPLX 0.00%↑ , a U.S. pipeline, storage and fuel/logistics company that’s owned by Marathon Petroleum Corp. MPC 0.00%↑. It has a hefty 8.2% yield. And both it and its parent are intriguing plays on Venezuela, an opportunity I detailed extensively here. Marathon and MPLX are actively importing Venezuelan crude.

Step Six: Hold Hard Assets

We like silver and gold. And we’re believers in the Commodities Supply Shortfall. There are plenty of ways to invest here. I like Iperion X IPX 0.00%↑ — kind of a “critical minerals startup” that’s hyper-focused on titanium. And there’s one “silver stock” that any hard-assets investor should own shares of. Check out our latest research here.

Step Seven: Watch Our Storylines

Storylines are the powerful trends that make big money for the folks wise enough to climb aboard. The Space Economy is one of the newest we just detailed for you — and I shared my No. 1 stock. That’s how we watch the economy — but still find ways to win big.

Joe D. powered the Yankees — and made the Hall of Fame. In 1941, all of America tracked his exploits in a hitting streak that eventually reached 56 games — still a record. And that streak could’ve been even greater: Cleveland Indians third baseman Ken Keltner robbed Joltin’ Joe twice in game 57.

DiMag immediately started a new streak that reached 16 games — meaning, without Keltner’s heroics, he would’ve hit in a stunning 73 straight games.

The second-longest streak: The Baltimore Orioles’ “Wee Willie” Keeler (on my list of heroes), who hit in 45 games in 1896-97.

But you don’t need to rely on someone else to be a hero in your Wealth Building story.

You can be the hero yourself.

No matter how badly squeezed the American Middle Class gets to be.

And no matter what happens to the U.S. economy in the next 12 months.

I’ll keep you posted.