In my last issue for Australian Small Cap Investigator, I discussed some of the ways the US government could protect its bloated US$37 trillion bond market.

This is important for the bull market in small caps, and markets in general, to continue.

There’s an obscure news story that you need to know about. I can’t see anyone else talking about it in our domestic financial reporting.

For sure the average Australian is certainly clueless on it, and the implications.

The Trump administration is moving to dismantle one of the regulations placed on the US banks in the aftermath of the 2008 crisis.

It’s known as the “supplementary leverage ratio”.

Politico reports it like this…

“The complex rule was designed as a backstop to make sure banks are equipped to absorb unexpected losses on any asset, not just ones that regulators deem riskier.

“The policy requires banks to hold the same amount of capital against risky loans and safe assets like U.S. Treasuries.

“Bessent and Republican proponents say it will be a boon for the Treasury market because it will allow banks to better facilitate the buying and selling of government debt.”

It’s due to happen over the US summer, likely August, a quiet time for Wall Street in general (when else does one holiday in the Hamptons or Barbados?).

It might all sound a bit heavy.

All we need to really know is it would give American banks a powerful incentive to buy US “Treasuries”…which is US government debt.

Get it?

Trump needs more Treasury buyers to fund his tax cuts and the ongoing US deficit.

He can get the banking system to help him do it this way. This will likely also push yields lower, and take that threat away from the stock market for the moment.

Trump’s former “bro” Elon Musk calls Trump’s “big, beautiful bill” legislation – with the tax cuts and deficit spending held in place – “a disgusting abomination”.

I guess the new President is perhaps not what Elon thought he might be.

There’s more to this.

When a bank, any bank, acquires an asset, it simply creates the credit to do so.

Presto!

The bank now owns a US Treasury bond, or 10, or US$100 billion worth. It will balance the books later.

Multiply that by more banks. Suddenly, we’re likely going to find the US markets and economy awash in new money.

Everyone in finance talks about when the “Fed” – the central bank – buys bonds it is “printing money” or “monetizing the deficit”.

It is.

But the above bank behaviour is the same thing.

It’s bullish, in the short to medium term, if it goes ahead as planned.

I’m not saying we can go up in a straight line. Markets are volatile.

But it looks to me like Trump is going to cut taxes and juice the economy with credit to make it look like his policies “work”.

This is a platform for a whole lot of speculative money to start washing over the world markets, ASX included.

There’s no pump like the Trump pump. You and I are going to ride it while it lasts.

When credit booms, markets go up. Then watch Trump take the credit for all the “wealth” created.

My small cap game plan calls for us to go from Stage 2 of the bull market, where we are now, in my view, to a Stage 3 phase – wild speculation.

Trump is just the man to take us there.

If you’re keen to take advantage of this dynamic, go here to read my latest report.

It contains 5 recommendations that I believe are due to fly higher as the small cap bull market really begins to fire.

Two of those are related to the gold market.

Even better, both ideas are not completely dependent on the gold price continuing to rise, even though I believe it will over the medium term.

You have multiple ways for these ideas to pay off. I can’t gauarantee anything of course.

But everything Trump does make the outlook for gold shine brighter.

Get started here. This dynamic won’t last forever.

Best wishes,

Callum Newman,
Editor, Small-Cap Systems and Australian Small-Cap Investigator

Murray’s Chart of the Day –
Platinum

By Murray Dawes, Monday, 9 June 2025

I have had little interest in platinum for years. I rarely look at the chart.

In a recent meeting someone mentioned it, so I brought up a long-term chart and immediately felt my jaw drop.

It is rare to see such a classic set up that has taken 10 years to unfold.

But there it was staring me in the face.

The huge rally many years ago.

Then the immense fall into the buy zone of the whole uptrend.

A retest of the point of control that meets stiff resistance.

And then another bounce off the buy zone.

The quarterly buy pivot from the buy zone was confirmed in December 2022.

Since then we have seen years of range trading. Shaking up the coke bottle..

Volume has spiked in the last year and the price is testing the top of the trading range.

The promised surge in demand for electric vehicles hasn’t eventuated. Instead hybrid vehicles are seen as the most efficient compromise between environmentalism and utility.

So the fears that demand for catalytic converters would plummet is being replaced by the realisation demand may actually increase.

Perhaps platinum is about to rise from the ashes.

Regards,

Murray Dawes,
Editor, Retirement Trader and Fat Tail Microcaps