Rise and shine... Trump didn't want this... 'The two Kevins'... Student-loan bills are piling up again... Credit scores are falling... The financial life cycle... How to survive the 'Great Devaluation'...
The latest from the president...
If you weren't watching CNBC this morning, you missed President Donald Trump calling in and giving a lengthy interview.
"We don't have all day," host Joe Kernen said at one point while trying to move the conversation along.
We know you don't have all day, so here are a few important takeaways from the interview...
- Kernen brought up the idea that the "revised" jobs numbers (which led to Trump firing the Bureau of Labor Statistics commissioner) could actually give Trump what he wants: lower interest rates from the Federal Reserve. In response, Trump said, "it's not what I want… I wanted it a year ago. I wanted it a long time ago."
- Trump is considering four people to replace Jerome Powell as Fed chair when his term expires in May. Trump named former Fed official Kevin Warsh and National Economic Council Chair Kevin Hassett as two candidates. Trump said Treasury Secretary Scott Bessent is not in the running because he wants to stay at the Treasury.
"I think the two Kevins are doing very well," Trump said. "And I have two other people that are doing well... and I'm going to make the decision soon."
We suspect the other two people under consideration are current Fed members Chris Waller and Michelle Bowman. Both publicly dissented with Powell and the majority of Fed members who voted to keep interest rates steady last week.
- Proposed tariffs on pharmaceuticals, which Trump has previously said could be more than 200%, will "start small"... then possibly move higher to 150% or 250%. Trump also said details about tariffs on the semiconductor industry will be coming soon.
- Trump said lower oil prices would end the war in Ukraine because Russia's economy "stinks" and relies on revenue from energy sales to fund its military. Trump mentioned OPEC nations "drilling more" because he thinks they want to keep him "happy."
- Trump highlighted around $1 trillion in investment in the U.S. from trade deals with Japan ($550 billion) and the European Union ($650 billion). He said he expects a good deal with China.
We'll have to wait and see how all these stories play out. But I (Corey McLaughlin) want to quickly follow up on the first point...
While many folks have been eagerly waiting for lower interest rates, the Fed cutting interest rates in the months ahead because of a crumbling jobs market isn't a "good" thing. It means lower rates are happening because of a weakening economy.
Investors might be catching on to that. The S&P 500 Index closed lower in five of the past six trading days.
And the mood could continue to dampen. There are still plenty of questions around tariffs, even more after Trump's interview this morning. The Institute for Supply Management also released a sour economy report today. Its purchasing managers' index for services plateaued in July and indicated higher inflation and lower employment.
It is interesting to note that Trump sounds like he might not want lower rates in these circumstances. That said, things could change tomorrow. And a lot of people will embrace lower rates without thinking twice.
Here's Nick Koziol with the story of a group who would welcome a "cheaper" cost of dollars, at least in the short term...
Checking in on the student debt picture...
On Friday, the Biden administration's Saving on a Valuable Education ("SAVE") plan that launched in 2023 officially expired. Amid legal challenges to the plan in 2024, 8 million Americans with student loans went into "forbearance." So payments and interest were paused.
But now, those outstanding loans are accruing interest again (though payments aren't required just yet).
Still, the interest alone is going to be a big problem...
According to the Student Borrower Protection Center, average borrowers will begin accruing about $300 per month in interest on their loans. Across all the borrowers that were in the SAVE plan, that adds up to more than $27 billion in interest payments over the next 12 months.
An extra $300 a month may not sound like an insurmountable bill, but it's a huge red flag when you look at what else is going on with student-loan debt...
Back in May, the Department of Education resumed collections of student-loan payments that were paused during the COVID-19 pandemic. As soon as those repayments started, 7% of student-loan borrowers immediately moved into default.
As we wrote in the June 26 Digest...
Credit bureau TransUnion estimates that nearly 2 million borrowers will go into default in July. Since 2020, the share of borrowers more than 90 days late on their student loans has nearly tripled to 31%.
That has already had an impact on folks' credit scores. Just look at these two postings on the Reddit page dedicated to student loans...
And we're not just cherry-picking anecdotal evidence. In May, the New York Fed said that borrowers are already seeing hits to their credit scores. From its report...
In total, more than 2.2 million student loan borrowers who became newly delinquent saw their credit scores drop more than 100 points and more than one million saw drops of at least 150 points.
The shift in student-loan policy hurt those with higher credit scores the most.
The New York Fed found that those with credit scores above 720 saw their score drop by an average of 177 points. On the other hand, subprime (the least creditworthy) borrowers "only" saw their scores drop by 74 points.
No matter what credit bucket you're in, lower credit scores mean limited access to debt and higher interest rates if you get approved for new loans. That makes it more expensive to service that debt.
But things have gotten even worse...
According to the New York Fed's quarterly consumer credit report, more than 10% of student loans are now in "serious delinquency" – meaning borrowers haven't paid in more than three months.
That puts student loans as the second-highest delinquency rate of any form of debt – just behind credit-card debt at 12.3%.
With total student-loan debt rising to $1.64 trillion in the second quarter, that means nearly $170 billion of debt hasn't had a payment in more than three months.
If you add in the extra $27 billion from interest payments, that's a lot of money folks won't have to pay for other things.
In short, the bills are piling up for many Americans.
When the burden from higher credit-card and student-loan debt begins to eat into consumer spending (which we may already be seeing with the "Starbucks indicator"), it will be a big drag on the economy.
Higher debt levels may be one reason why we're seeing the younger generation pile into "meme stocks." Although, we don't recommend throwing caution to the wind with options trades on shorted companies to build long-term wealth or get out of debt.
What to do instead...
While lower rates and a cheaper cost of dollars may help people saddled with debt in the short term, it also devalues the dollar in the long term. We've discussed this for years (including yesterday). That has negative consequences for everyone.
That's the financial life cycle in our fiat currency system. The government's "solution" to the latest crisis often comes at the expense of the currency. We're talking about more money-printing rather than real production... or lower interest rates to "help" temporarily instead of rates that reward savers... or bailouts of companies that shouldn't be afforded the opportunity.
If you really want to protect and grow your wealth over the long run, you must have a plan other than the "conventional" stocks and bonds.
These assets didn't do very well during the bear market of 2022, when they sold off as the Federal Reserve raised interest rates to combat 40-year high inflation. And that's just one example.
Our Dr. David "Doc" Eifrig has a blueprint to navigate what he calls the "Great Devaluation." You can learn more about it here in a free presentation.
Doc is the editor of Retirement Millionaire, Retirement Trader, and Income Intelligence. He's also the CEO of MarketWise, our parent company.
Doc says while the headlines tend to focus on inflation and interest rates, the real risk is systemic.
By that, he means a financial reset that erodes purchasing power and ruins conventional strategies like holding bonds or cash. Instead, he recommends putting your money into other assets. Watch his new briefing for more details.
(A note for our Stansberry Alliance members and Doc's Income Intelligence subscribers: Feel free to check out the presentation, but you already have access to all of this new research right here.)
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In today's mailbag, a response to yesterday's mail, which called for more accurate inflation readings from the government... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.
"I couldn't resist responding to today's comment by subscriber [Lewis] M. While I agree with his premise, asking any politician to intervene on behalf of their constituents for a more 'financially accurate CPI' to help offset the true inflation rate is nothing but folly. One, they know how much that would add to the debt, but second and most importantly, I've never met or seen a politician more concerned about his constituents than himself. Politicians have created this nation's financial disaster. Asking them to fix it is like asking an arsonist to put out the fire." – Subscriber Jim V.
All the best,
Corey McLaughlin and Nick Koziol
Baltimore, Maryland
August 5, 2025
