What President Trump’s “200% tariffs” on rare earth magnets means… robotics are inevitable – but that makes investing simple… how will the rate-cut drama play out?… Louis’ crystal ball on how stocks wrap up the year
How did Nvidia’s earnings come in?
By the time you’re reading this, Nvidia (NVDA) will likely have released Q2 results, which dropped after the closing bell.
We’ll cover the details in tomorrow’s Digest with commentary from our experts – principally Louis Navellier, who still holds NVDA in his Growth Investor portfolio, where his subscribers are up 4,176.29% as I write.
But suffice it to say: this isn’t just another earnings report. Nvidia has become the market’s proxy for AI and next-gen computing – a company whose numbers set the tone for the entire sector.
Whatever the outcome, the implications will ripple well beyond one stock…for better or worse.
We’ll report back.
Trump’s 200% tariff threat – politics or an economic warning?
On Monday, President Trump lobbed his latest threat at China…
They have to give us magnets.
If they don’t give us magnets, then we have to charge them 200% tariffs or something.
It might sound like political theater, but it underscores a critical economic/technological reality…
These magnets are the heart of our AI-powered future – without them, we have no next-gen technologies.
For context, rare-earth magnets drive electric motors in autonomous vehicles, actuators in service robots, and precision systems in drones and industrial automation, among other uses.
China has a stranglehold on them. The country mines approximately 70% of the world’s rare-earth ores and controls nearly all the processing, accounting for about 90% of high-performance rare-earth magnets.
These magnets are at the center of trade negotiations between Washington and Beijing
Earlier this year, China tightened export controls, causing supply disruptions and sending Washington scrambling for alternatives.
A temporary easing followed in August after progress on trade negotiations. Chinese shipments rebounded and the U.S. stepped up domestic production efforts. But China has kept strict licensing and tracking rules in place, maintaining market leverage.
That’s why Trump’s latest warning of 200% tariffs is serious. It’s a reminder that, despite some relief in recent months, rare-earth magnets remain a strategic choke point in the global race for advanced technologies, from EVs to defense to robotics.
But Trump’s threat is a reminder of the rise of robotics
I was recently asked – with the potential for so much to go wrong with humanoids, why are we barreling toward their development?
Because we must.
Here are three key reasons:
- Adverse demographics
- Unsustainable government debt/spending
- National security concerns with China.
I won’t flesh out each in today’s Digest, but let’s examine demographics…
The federal government’s financial system runs as a Ponzi scheme where the young pay for older retirees.
This isn’t an issue when the population is growing, there’s significant household formation, and the up-and-coming generations outnumber the older generations. But that’s no longer our reality.
Here’s the CDC’s National Vital Statistics Report from March:
Since 1990, the U.S. total fertility rate (TFR) declined from about the replacement level of 2.1 births per woman—the fertility level needed for a population to replace itself from one generation to the next—to 1.62 births per woman in 2023.
So, what are the consequences for demographic decline?
The system breaks…
- A smaller working class are forced to pay higher taxes to cover snowballing government spending obligations – but it’s still not enough
- The revenue shortfall requires a tidal wave of new debt issuance to pay for all the government’s spending obligations
- Higher bond yields from this wave of debt weigh on equity returns
- The new debt leads to money printing, inflation, and the accelerated weakening of the U.S. dollar
- Social Security’s insolvency accelerates
Basically, it’s a dystopian succession of tipping dominos stemming from “too few young workers contributing to the system” while “too many elderly take out of the system.”
How robots curb this – and the opportunity for investors
Physical AI doesn’t age, doesn’t retire, doesn’t draw Social Security, doesn’t require healthcare, and doesn’t require salaries…
It simply produces economic output.
Now, this prompts a logical question…
Won’t fewer human workers also mean even fewer people contributing to a still-growing population of takers? Won’t that worsen the situation?
True, fewer workers mean fewer payroll contributions into programs like Social Security. But this isn’t only about Social Security inflows – it’s about whether the overall economy can generate enough goods and services – and by extension – tax revenue to cover all our entitlement promises.
Robots – by replacing lost labor and sustaining productivity growth – expand the economic pie even as the workforce shrinks. That larger output base gives the government more taxable activity to draw from, which helps keep Social Security and Medicare solvent despite fewer human contributors.
So, no, robots won’t directly pay Social Security taxes, but their productivity will sustain growth and keep the system from unraveling.
Bottom line: These technologies are not just “nice to have” innovations – they’re the only answer to a shrinking workforce and ballooning fiscal obligations.
On that “shrinking workforce” note, the Trump administration’s restrictive immigration policies could result in 2025 being the first year of negative net migration in at least 50 years.
Historically, some of these immigrants have filled crucial roles in our economy – everything from agriculture and construction to healthcare and service industries. If net migration truly turns negative, it will accelerate the twin pressures of an aging population and a shrinking labor pool.
This is why politicians, policymakers, CEOs, and forward-thinking investors are arriving at the same conclusion…
Robotics isn’t optional, it’s inevitable
Just as electricity and the internet reshaped entire eras of economic growth, robotics will be the backbone of the next expansion cycle, ensuring output rises even as the working-age population shrinks.
For investors, that makes robotics not just an innovation play, but one of the most straightforward long-term bets on America’s economic survival.
I want to cover more ground in today’s Digest, so I won’t get into the specific investment implications as I’ve done in prior Digests. But earlier this month, our experts Louis Navellier, Eric Fry, and Luke Lango released a collaborative research video on how to invest in Physical AI.
I was given permission to link to it again given the relevance to today’s Digest – though we won’t keep the video up indefinitely. If you’d like to dig into this topic in more detail, please check it out here as soon as you’re able.
Either way, the age of robotics/Physical AI is barreling toward us. Make sure you’re ready.
Finally, how many rate cuts are coming – and when?
It depends on who you ask.
Legendary investor Louis Navellier dove into this in yesterday’s Growth Investor Flash Alert podcast:
The Fed has already announced – Jerome Powell announced last week – that they’re a full 1% (100 basis points) above the neutral rate.
So, President Trump would like to have at least four rate cuts.
Treasury Secretary Scott Bessent thinks they should have six.
Traders are more restrained, though still looking for a handful of cuts.
As I write Wednesday, CME Group’s FedWatch tool shows:
- 89.3% probability of a 25-basis-point cut at the September meeting
- 49.6% odds on two quarter-point cuts by December
- 37.3% odds on three rate cuts by December (up from 20.1% a month ago)
The farther out we look, the hazier it gets.
As we’ve pointed out in the Digest, it won’t just be about how much rates move, but how the market interprets the Fed’s motivation…
Are rate cuts a fear-based lifeline for a flatlining economy? Or a victory lap celebrating wins on growth and inflation?
We’ll be tracking this.
Louis’ crystal ball looking toward the end of the year
Circling back to Louis, here’s his roadmap for the interplay between the Fed, seasonality, and the market as we look toward 2026:
We tend to rally going into holiday weekends, so don’t be surprised by that.
After Labor Day weekend, we might have some profit-taking because volume will be light.
The first half of September is seasonally weak. Then on Wednesday, September 17, we should have the Fed rate cut, a new dot plot and hopefully, they’ll get the market excited.
The second half of September is better than the first half. Then we get into October – same thing – second half is better than the first half.
Then we have a new Russell realignment. That’ll help small-cap stocks, just like it did in June when the last realignment happened.
Put it all together and Louis is bullish as we look to finish up the year. He believes dips are buying opportunities as long as you can stomach some volatility.
We’ll give him today’s final word:
I know some of you don’t like the rollercoaster that the market’s on, but I do think things are going to get a lot better here pretty darn quick.
I’m expecting a nice year-end rally.
Have a good evening,
Jeff Remsburg
