Newsletter 54: Trump’s “Big Beautiful Bill” — What It Means for Your Portfolio
Hi Hedgelings,
Something big just passed in Washington—and whether you love or hate Trump, this “one big beautiful bill” is about to ripple through your wallet, the stock market, and entire industries.
Let’s break it down:
💸 Corporate Tax Cuts, Defense Boosts, and Spending Sprees
Trump’s new economic package is a whopper:
- $4.5 trillion in tax cuts over 10 years
- Permanent corporate tax cuts (down to 21%)
- $350 billion in government spending—mostly defense and border security
- Rollbacks on environmental and labor regulations
- Cuts to Medicaid and food assistance
- And a surprise addition: Child savings accounts that start investing from day one
So… what does this mean for your money?
📈 Winners: Manufacturing, Semiconductors, and Defense
Let’s start with the obvious winners.
- Manufacturing & Semiconductors: These industries thrive on capital investment. Thanks to new provisions allowing immediate write-offs for equipment and R&D, companies like Intel, TSMC, and Nvidia are well-positioned to benefit.
- Defense Contractors: With $350B allocated to defense, firms like Lockheed Martin, Raytheon, and Palantir (especially those in AI-driven systems) could see a nice bump. Border security infrastructure plays may also ride this wave.
- Consumer Discretionary: Individual tax cuts mean more disposable income. Retailers and service providers (think Walmart, Target, Visa) might enjoy a short-term sales boost—at least among middle-income Americans.
🩺 Losers: Medicaid Providers, Renewable Energy, and Budget Retail
Of course, this isn’t a clean sweep.
- Healthcare Stocks Relying on Medicaid: The bill slashes $1T from Medicaid. Companies like Centene and Molina, which serve low-income patients, face real revenue pressures.
- Low-Income Retailers: With food assistance programs also being cut, consumers shopping at places like Dollar General may spend less—impacting those stocks.
- Renewables & EVs: The rollback of $500B in clean energy tax credits is a blow to the future of green tech. Expect headwinds for Tesla, Rivian, and solar/EV players.
🏦 Long-Term Risks: Debt, Inflation, and Rate Hikes
The Congressional Budget Office estimates the bill will raise the U.S. deficit by $4.1 trillion in 10 years. That could send the debt-to-GDP ratio over 120%—an economic red flag.
- Higher deficits → higher interest rates
- Higher rates → pressure on growth stocks
- Inflation risk → stress on fixed-income portfolios
Who wins in this kind of storm?
Companies with low debt, pricing power, and strong free cash flow.
Think: Microsoft, Visa, McDonald’s, and Costco.
👶 A Surprising Twist: Stock Investing for Kids?
One standout provision: Government-seeded child savings accounts. These accounts invest in index funds, aiming to grow with the market.
This is more than just a gimmick—it could introduce millions of young Americans to investing early, boosting long-term stock participation (and capital inflows).
🔍 So, Where Should You Invest?
Stick to Buffett-style principles:
- Wide moats
- Low debt
- Free cash flow
- Ability to pass on costs (hello, inflation hedge!)
Avoid sectors heavily reliant on government subsidies or discretionary budgets—especially those serving low-income demographics.
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💬 Final Thought
Whether this bill creates a new golden age or a debt-driven bust is still up for debate.
What’s clear is this: government policies shape market realities. The more you understand the chessboard, the smarter you’ll play the game.
✨ Learn all the different ways of earning income and decide what works best for you. Inaction and procrastination are the only things that guarantee you’ll stay exactly where you are.
Stay sharp, stay spiky — be the hedgehog with a strategy
- Mindy
Founder, Hedgehog Huddle