Trump tax bill 2025: five waves of capital flow explained

0:00In just a few days, the largest wealth transfer in American history begins. It is not a crash. It is not a bailout. It is a flood. $4.7 trillion is about to pour into the US economy. And 90% of investors have no idea it's coming. Wall Street knows about it. Trump's plan isn't just policy, it's a market catalyst that'll create millionaires and it'll destroy portfolios that aren't positioned correctly.

0:25I'm going to show you the exact timeline, the 5 waves of capital flow and the 6 sectors that will absorb this money first. But here's the catch. The window closes fast. Stay till the end and I'll give you the exact dates and positioning strategy that Winston back there dug out. He's a very smart financially trained golden retriever.

0:50My name is Felix Prehn. I've spent years in banking and law and for the last 15 years we've been analysing policy and market cycles. I warned about the 2022 inflation spike when everybody said it was transitory. This is not political. I don't care if you love Trump or hate him. What I care about is what happens when $4.7 trillion hits the market because history shows us exactly what comes next. And if you're not positioned, you watch on the sidelines while others multiply their wealth.

1:29So let's break this down step by step. Here's what most people miss. Trump's 2025 tax cuts, the big beautiful bill, and the jobs act 2.0 wasn't just about lower interest rates. It's about timing. The bill passed in March 2025, but the impact hits in 3 waves. Wave number 1 is April to June 2026, tax refund season. They're pulling it forward this year. It's going to start at the end of February. Wave number 2, July to September 2026, corporate repatriation. I'll break that down for you. And then wave number 3 is the 4th quarter of this year, and that's all about bonus depreciation and capital expenditure.

2:15Let me explain why this matters. According to the Congressional Budget Office and Treasury estimates, you, the individual, will get $1.2 trillion in tax refunds, $8,500 per household. Corporations will get $2.1 trillion in corporate cash repatriation from overseas, and $1.4 trillion in accelerated depreciation in business investments. The total flowing into the economy is a whopping, staggering, mind-boggling $4.7 trillion in just 9 months.

2:46For context, that is 3 times the size of the 2008 bank bailout. Some of my buddies lost their jobs. Nobody sees any sympathy for the Lehman Brothers bankers. I know why. They needed new condos and new cars and a second Ferrari and holidays in the Bahamas. People had no sympathy. Now, the COVID package was half the size of this. This is literally 20% of the US economy hitting the market in just 9 months.

3:33We've seen this before, just not at quite this scale. The 2017 tax cuts. What happened to the market? I tell you what happened. The S&P rallied by 28% in the next 18 months, but that was only $1.5 trillion. So for $1.5 trillion, you get 28% up. This is 3 times larger. The Bush tax cuts, that was when small caps particularly benefited. Small caps went up 47%. Real estate investment trusts went up 38%. If we go back a little further to 1981, the Reagan tax cuts, back then it was the Dow Jones index. It went up a whopping 135% over the next 5 years.

4:25But here's the difference, the critical difference. In 2026, we have record low unemployment. We have a Fed that's already cutting rates. We have pent up consumer demand. This isn't a recovery. It's rocket fuel on an already pretty hot economy. So why will most investors miss this? Most investors are conditioned to react, not anticipate. By the time CNBC is talking about the tax refund rally, the easy money is already made. The smart money is positioning now in early 2026 before the refund checks hit bank accounts.

5:03And if you're watching this later in the year, go back to the beginning and you'll see what's going to happen throughout the rest of the year. Maybe you want to participate in that potentially. Now, if you want to be prepared not just for this, but for every other opportunity and follow a systematic investing and trading strategy the way the guys on Wall Street do, then I've made a mini video for you. Teaches you the fundamentals of the strategies the big boys use. It's free. You can watch it at phoenix.org/getfree. Click on the link down below. It's the first link in the description that you'll see.

5:35But let's get tactical here. This $4.7 trillion doesn't hit all at once. It flows in 5 distinct waves. And each wave creates different opportunities. You miss one, you leave money on the table. So let's break them down one after another. You might want to take notes, you might want to take screenshots so you get the most out of this.

5:57Wave 1. This is where we are right now. The bill is law, but the money hasn't moved yet. Smart institutional investors are looking to front run the refund season. So what are we looking at? We're looking at defensive sectors starting to weaken. What are defensive sectors? It's the utilities, it's the consumer staples. The growth stocks and the small caps begin to outperform and the volatility, the VIX, the fear, it drops as uncertainty clears. The skies are blue.

6:31So where do we go right here? Now, I'm not telling you what to buy, by the way. This isn't financial advice. I'm just giving you my thoughts, my research. You have to make your own decision or talk to your own financial adviser about it, or a golden retriever who's well trained. That always helps. But we're looking at small caps, we're looking at consumer discretionary. I put some ETF tickers on here. We're looking at home builders because in late 2016 before the tax cut came in, small caps went up 15%. Large caps only did 6. The Russell outperformed the S&P by 9 percentage points in just 3 months. So those are sectors that I'm looking at.

7:09Wave number 2. This is the real refund flood. And I just told you if you paid attention, it's going to come earlier this year. They're going to start this late February, earliest ever in the history of all history. So this is the bigly one. This is $1.2 trillion that hits consumer bank accounts. Now, the average household is going to get a whopping $8,400.

7:36So where does the money go? Well, we've got consumer spending patterns. This is based on Inland Revenue data. I'll tell you where it goes. 35% goes to, what do you think, debt repayment. You guys are surprisingly responsible. Credit cards, auto loans. The next bit, that's 25%, that's discretionary spending. Think vacations, home improvement, electronics, that sort of thing. And 20% is saving. And then the last 20% is just rent, utilities, groceries, that sort of thing.

8:23So what happens? Well, retail stocks love it. Think Amazon, Walmart, Target. Travel and leisure experts, airlines, hotels, cruise liners. Brokerage firms love it, Robinhood, Fidelity, because more money goes into those brokerage accounts. Credit card companies rally even though they're getting hammered pretty hard by Trump. Think Visa, Mastercard, Amex. And once it all settles down, we also realise that they bought more stocks and they bought more stuff. So profits and revenue went up, earnings multiples went up, more money flooded into the market. It's like boom.

8:58The 2008 Bush stimulus checks caused a 12% spike in retail sales in the month they were distributed. Think about this. This is 7 times bigger. It is really big and beautiful. Well, except for the debt disaster, but we won't talk about that because we're going to enjoy this rally and we're not going to let people with a longer term responsible vision spoil this for us.

9:21What's the 3rd wave? It's corporate repatriations. These are not dead bodies coming home. The tax bill includes a one-time repatriation holiday, not a holiday for dead bodies. Its corporations can bring overseas cash back to the United States at a reduced tax rate. We're talking about $2.1 trillion held by US companies in foreign accounts. Why do they do that? They don't want to pay US tax on it. Talk to Apple and Netflix and Microsoft, they're all holding money overseas in weird little places like Ireland. I love the Irish, actually. Don't joke with the Irish. They're pretty serious people.

9:58So who benefits from this? The tech giants, the Apples, the Microsofts, the Googles, they hold more than half a trillion dollars overseas. Who else? The pharma companies who care about you and your children, the Pfizers, the J&Js, the Mercks. And the industrial conglomerates, the GEs, the Honeywells.

10:22So what do the companies do with this repatriated cash? I tell you what they're going to do with it. Why is this good news for investors? 40% is going to go into share buybacks which basically reduces the number of shares out there which means the remaining shares go up in price. 30%, you're also going to love this, I know everybody seems to love a dividend, goes to dividends. So that's good. 20% goes to M&A which is usually a waste of time except of course for the investment bankers who arrange those deals. I mean they do all need a bonus too. We love the investment bankers, don't we? And 10% is just investment. So literally only 10% of that goes to investment, which is still a good thing.

11:08So tech stocks will probably rally pretty hard. The dividend aristocrats, think your Johnson & Johnson, Coca-Cola, they should outperform. M&A begins which means investment banks benefit. So the Hamptons will do well. Nantucket will do well. You know what I'm saying? So the last time we had a repatriation holiday was in 2004. How much was brought home to daddy? $312 billion in 2004.

11:40How much did the S&P go up by that year? 15%. Tech stocks up 22%. This repatriation holiday is once again 7 times biglier than the previous one. So mega cap tech dividend focused stocks is kind of what we're looking at here. Again I'm not telling you to buy it. I'm just saying this is the research, this is the conclusion that I've come to, you have to come to your own.

12:05What is the 4th wave of this? It's actually not an attack, is it? It's an injection in the arm of the wealthy. There is a bonus depreciation for business equipment and infrastructure. Isn't that exciting? What does it mean? It means companies can write off the full cost of investments immediately now, not over years. It's a massive incentive to spend now.

12:32So who benefits? The people who invest a lot? Think Caterpillar, Deere & Co., 3M. What about the construction companies? Well, it's companies like Fluor, FLOR. It is Jacobs Engineering. These are all Palantir customers, aren't they? Interesting. Infrastructure guys, Cisco, Oracle, Salesforce, energy and utility companies, solar, wind, grid modernisation, all that stuff.

13:01So we're expecting $1.4 trillion in business capital expenditure. A lot of that of course will go into automation, it'll go into AI, it will go into energy and bringing supply chains back to the US. So if you want to look for an ETF on this, something like industrials which is XLI, that's an ETF you might want to have a look at. Materials, steel, copper, aluminium and so on should do quite well, infrastructure stocks should do well.

13:25Again you want a historical example, well look at 2017. Business investment grew 6% that year. Industrial stocks went up by how much? 34%. Not so shabby. So what do we focus on here? Companies with strong order backlogs, commodities, copper. Dr. Copper seems to be making a comeback. And if we continue with this tight labour market, then guess what, it's going to cause some inflation, which is good for what? Gold, yes, and silver, absolutely. So that theme is going to continue in my humble opinion.

14:13But there is an uncomfortable truth to this and I just hinted at it. $4.7 trillion flooding in the economy will cause inflation, just like printing $4 trillion when the Fed did it during the COVID madness. Everybody lost their shirt and they thought that pharma companies are there to save you. I mean really, you believe those guys? Anyway, the Fed's going to respond. So this is where it gets a little tricky.

14:38But will the Fed respond in a normal environment where you have an independent Fed staffed by a bunch of economists who are always right? They would hike interest rates. But we are going to get rate cuts in 2026. Why? Because Trump wants them and he's going to appoint someone who's going to give them to him. But after the midterms, if inflation accelerates and inflation goes back up to 3%, what would then happen? You get interest rate hikes.

15:08Now Trump is doing everything to make sure that doesn't happen. And you may have seen that he's lowering oil prices. How? Invades Venezuela or makes it a colony, liberates it, sorry, you get the idea. Actually my Venezuelan friends are very happy about it, so I hope it works out for you guys. He's lowering credit card rates, he's saying 10% no more. He's looking to lower the cost of housing.

15:42And he's thinking all of those things will make you think there is no inflation. Nothing to see here, folks. And you're going to think gas has never been cheaper, food's getting cheaper, my credit card bills are getting cheaper, let's keep swiping the plastic. But the real measure of inflation is not what you pay for your groceries or gas. It's the stock market.

16:04So if the stock market goes up say 25%, to me that's the 25% inflation. Why? Because your salary didn't go up 25%. But the people who have lots of money in stocks and real estate and gold and silver and other hard assets, they got 25% wealthier. So their money is now worth 25% more, which if you flip it around means your money, your salary, is worth 25% less. So what does that mean? Try to put as many dollars into assets. That's the only logical conclusion that I can come to.

16:33So while I'm putting this out there, that's the scenario where we get rate hikes and we might get those in 2027, when they're trying to combat the inflation again, when it rears its ugly head because it did that before. And if you go back to 2021, 2022, energy stocks, so this is, make a little note for late 2026, we'd like to look forward. Energy stocks went up 65%. Tech stocks by the way went down 35%. Maybe you don't remember that.

17:14So you want to set some sort of risk management whereby you take profits on the highest high valuation growth stocks. Learn how that really works, get a proper system in place that takes you very very little time. Go to felix.org/getfree and watch that lesson over there.

17:25So where do we position our money? Well, the obvious wave 2 winner to me is Amazon, Home Depot. If you want to buy an ETF, here is one on the screen. Again, this is not financial advice. I'm just telling you where I'd start doing my research. You have to make your own decisions. Technology, Apple, there's massive buyback potential, they got loads of money they can bring home. Microsoft, QQQ, that would also do the trick. I'm still very bullish on Nvidia. I'm very bullish on Alphabet. Ad revenue is going to recover. AI is going to make loads of money for them. So we're looking at some serious returns here for the year.

18:07And then we have financials, M&A activity, investment banking, this picks up. So JP Morgan is an obvious one. They are the ruler of the world, our lord and master, thank you very much for blessing us on this glorious day. We got Goldman Sachs. I think companies like Visa are going to grind through despite what Trump's putting out there. Schwab, Charles Schwab, Robinhood, those retail investment stocks, they're going to potentially do well. I give you an ETF here again, XLF, if you just want to cover the whole financial sector. I'm bullish on those, not quite as bullish as on the previous ones, but still.

18:40And then as we move towards the end of the year or as Venezuela becomes more clear, your Exxons and your Chevrons should do well. But that's a longer term pick. They're oil majors, they're going to benefit. ConocoPhillips as well. NextEra Energy, those guys. I'm bullish on those but almost later in the year because we need to understand what this whole Venezuela mess is all about. Who's going to pay for what, how much are they going to invest, how much are they going to be allowed to keep and that kind of thing.

19:15And then you get another sector, sector 6. Why does this work? Real estate. Tax refunds are basically down payments. You're going to get super low interest rates next year. It means housing demand goes through the roof. So REITs benefit. Now industrial warehouses are already doing very well. Residential ones, let me give you another ticker here, EQR, and don't go out and blindly buy those and blame me for it. Do your own bleeding research. There are other stocks, SPG, British stage stock. VNQ is an ETF option. So we're looking at those winners materialising as interest rates come down.

19:55There's another one actually as interest rates come down, which is SoFi, because student loans are going to get refinanced and they're the number one student loan refinancing company out there.

20:14So what's the timeline here? Well, if you want to front run this, of course that's where the highest risk sits obviously. You can look at small cap stocks, IWM, VB, that kind of thing. You can get more bullish on discretionary stocks, XLY is a ticker. You can reduce bond exposure, that's kind of a no-brainer generally speaking, again just my humble opinion. And retail stocks is something I think to look at. There's another ETF for retail stocks, XRT, travel and leisure, airlines, hotels.

20:40And then as we go into more the middle of the year, we're probably still going to hold on to our consumer discretionary positions. We're going to look at this inflation data very closely and it might be nonsense at that point, so it might not mean much. And then as we go through the summer, the corporate repatriation should do very very well. So I'm looking at QQQ, that's an easy one. Maybe some of the dividend ones, VYM or SCHD. That's another one, also another ETF. Again, not recommending specific things. I'm not your financial adviser. I'm just doing my research and I'm sharing it with you. Got to come to your own conclusion. Get yourself a proper adviser, get yourself some proper education.

21:23And then for the 3rd quarter, we're going to look at the capital expenditure boom and all that free money you're getting if you're investing in the US, so you can write it off immediately. So we're looking at industrials here, XLI. Materials and commodities, I think we'll front run this. I'm very bullish on gold and silver still. It'll get choppier, especially silver, but I'm very bullish on that.

21:46And then what we want to do towards the end of the year is watch out for the inflation buck. So what are inflation hedges? Gold, TIPS, Bitcoin, energy stocks. And we might want to remove some of our and take profits on some of our high growth and high tech names. That's kind of how I'm seeing the year play out. And it is all thanks to the master, the commander in chief.

22:16Donald the Trump. Now could something go wrong? Yeah, sure. The Fed, you might appoint a Fed chair and he turns around and he does his own thing. We've seen that with the present Fed chair. He was appointed by Donald Trump. He's a card carrying Republican. Now they're prosecuting the poor chap, right? Just what did you do? You only printed $4 trillion. It was so much fun printing. He couldn't stop himself. Who could, right? If you could print money, wouldn't you? I would. I think it's just human anyway. That's possible.

22:48Consumers could just go, "We're not going to spend any of the money. We're going to save. We're scared about the future. Why? AI is going to make us all unemployed." Possible. But if they save, your money is just going to flow slightly different places. Your Walmarts, your Targets are going to do not as well. The money is still going to flow into what? Into your Robinhoods and into your Schwabs and into your brokerage accounts. That's still going to prop up the market.

23:12And what do consumers buy? They tend to buy stocks they've heard of, right? The popular names, the Microsofts, the Amazons, the Teslas, the SoFi, the Robinhood, the stocks they've heard of. They buy those, right? It's just human nature.

23:24And you could also say this is already priced in and nothing is going to happen. Yeah. I don't really buy it because when I talk to people outside of the really well-informed Wall Street lot, they look at me and they go, "What? This is happening really?" So you're now better informed than 99% of people out there. And if you think more people should be informed of this, well, first of all, share this video with more people. That would help us tremendously, wouldn't it, Winston? He doesn't look too concerned, does he?

23:51About spreading the news. He's like, I've done my bit. I've chewed the research papers. I slept and drooled on them. But seriously, if you are more serious about managing your money differently in 2026 by having skills, having a system, having a structure, having a pattern, following the patterns because it's bleeding obvious, I think once you understand it, watch the little masterclass I made for you at felix.org/getfree and learn and get better.

24:13How do we make most of our money? Risk management. My note sounds deathly dull, but that's how we actually get to keep our profits. So if you want to do that, felix/getfree. And I wish you a glorious, amazing 2026. You're going to have one and I hope you're not going to sit on the sidelines and miss it all because that would be a shame, wouldn't it? All the best.

24:38Gold and silver are both at all-time highs, and your gut is telling you that you've missed the boat. But here's the problem. Central banks are buying gold at levels we haven't seen since 1967.