NEW YORK (AP) — President Donald Trump reportedly must pay back more than $300 million in loans over the next four years, raising the possibility his lenders could face an unprecedented situation should he win a second term and not be able to raise the money: foreclosing on the leader of the free world.

But financial experts say the notion of Trump going broke anytime soon is farfetched.

Even with a total debt load across his entire business empire estimated at more than $1 billion, they note he still has plenty of assets he could cash in, starting with a portfolio that includes office and condo towers, golf courses and branding deals that have been valued at $2.5 billion.

Based on Forbes magazine estimates of the value of his buildings, for instance, selling his partial interests in just two properties— an office complex in San Francisco and a Las Vegas tower that houses a hotel and condos — could bring in $500 million alone.

And even if he doesn’t sell, that kind of valuation backing up the loans could make them easier for him to refinance.

“He’s going to be able to roll these loans over. They have collateral backing them up. They’re not that risky to the lenders,” said Phillip Braun, a finance professor at Northwestern University’s Kellogg School of Business.

Trump’s true financial picture has gotten renewed scrutiny in the wake of a New York Times report this week that he declared hundreds of millions in losses in recent years, allowing him to pay just $750 in taxes the year he won the presidency, and nothing for 10 of 15 years before that.

But the Times report was quick to note that tax filings alone can’t help determine someone’s net worth. And several experts told The Associated Press that, while the true state of Trump’s financial situation is unclear because of a lack of public information, he is probably not scrambling for money.

At issue is the often wide difference between what businesses report as profits and losses to the IRS and what they actually receive in profits they put in their pockets.

Plenty of real estate investors report big losses under tax accounting rules and pay little in federal taxes. That is because the tax code allows them to reduce their tax bills with myriad legal loopholes and breaks, including sometimes generous depreciation charges that reflect expected wear and tear on buildings.

Northwestern’s Braun said Trump’s minuscule tax payments don’t surprise him, nor do the losses claimed. “His accountants work really to make sure he doesn’t pay any taxes,” he said.

A better idea of how Trump is faring, Braun said, comes from Trump’s operating profits.

Forbes, which has been valuing Trump properties for decades for its annual billionaire issue, says Trump’s 40 Wall Street office tower generated $18 million in operating profits in 2019, Trump Tower $13 million, and Trump’s share in San Francisco’s 555 California Street tower $26 million.

According to Forbes’ latest valuation, even pandemic-reduced prices leave Trump with $2.5 billion worth of properties and other assets, and that is after subtracting his $1.2 billion in debt.

The Times said Trump’s real estate company has $421 million in loans he has personally guaranteed, with $300 million of that coming due over four years.

The Trump Organization did not immediately respond to an email and phone call requesting comment. Trump dismissed the Times story Monday as “fake news” and said he is “extremely underleveraged.”

“I have very little debt compared to the value of assets,” he wrote.

Among his lenders listed in his personal financial disclosure are New York-based commercial lender Ladder Capital, which is owed at least $110 million, and Bryn Mawr Trust Co. a suburban Philadelphia bank, which held Trump debt worth between $5 million and $25 million for Seven Springs, a New York estate owned by the Trump Organization.

Trump’s biggest lender on his disclosure is Deutsche Bank, his chief financier stretching back two decades. It helped him buy and fix up several buildings in New York and Chicago and his Doral golf club in Miami. It is owed at least $125 million, with loans coming due in 2023 and 2024.

One option for Trump is to get his lenders to refinance his debt or to take out a new loan. Deutsche Bank is an obvious candidate to help him with either because it has been so forgiving to him over the years.

Trump defaulted on bonds that the bank helped sell to investors to finance his casinos in Atlantic City, New Jersey, and a bank loan for his Chicago hotel and condo tower, and yet the bank has continued to lend to him.

Mike Offit, a former executive at Deutsche Bank who lent to Trump in the late ’90s, said that if a property backing a loan was still throwing off good cash, and all else was well, the easiest solution for a bank with a Trump loan not likely to be paid back would be to just push out the due date.

“If I was sitting at my old job and a Trump loan was coming due next year and he’s the president, I would just say let’s extend the maturity,” he said.

But several other real estate experts aren’t so sure Deutsche Bank may be willing to help Trump much any more.

The bank has been subject to money laundering and tax evasion investigations in Germany and the U.S., and last year settled with the U.S. stock market regulators for allegedly violating the Foreign Corrupt Practices Act by hiring relatives of government officials in Asia and Russia to drum up business for its investment banking division. In addition, its U.S. division had failed a few annual “stress tests” administered by the Federal Reserve in recent years, hampering its ability to lend for a while.

Deutsche Bank declined to comment.

Another problem: Not all Trump’s lenders are banks and other institutions that he can negotiate with across a table.

Nancy Wallace, a real estate professor at the University of California, Berkeley’s Haas School of Business, said that hundreds of millions of Trump’s bank loans have been packaged into bonds and sold to investors, and the banks are no longer in charge. If a borrower looks like it is in trouble, there could be less room to cut it a break.

Office buildings and hotels have also been hit especially hard by the lockdowns and travel restrictions. So lenders may not be eager to lend to Trump now, and selling off parts of his sprawling empire to raise cash won’t be so easy either, and is not likely to get him full value,

Still, “the real estate lending market is difficult at the moment, but for buildings throwing off cash? That shouldn’t be a problem,” said Bernard Kent, chairman at Schechter Investment Advisors in Detroit. “For something like Trump Tower, the future cash flow wouldn’t be tremendously affected by COVID-19 or people moving out of New York. Top-flight properties there tend to hold value.”

If all is lost, and Trump is really in trouble, some experts say there is another way he could raise money to pay off his lender: copy rocker David Bowie, who sold bonds that allow investors to make money off his music royalties.

“Trump Bonds” would enable investors to share in his future earnings from selling his name to, say, condo builders or purveyors of steaks or colognes or neckties.

“Trump has a brand that has value,” Kent said.

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Joins 109 Members of Congress in urging the President to extend benefits before looming expiration

Congressman Raul Ruiz, M.D. (CA-36) is calling on President Donald Trump to extend the expanded unemployment benefits made available under H.R. 748, the Coronavirus Aid, Relief, and Economic Security (CARES) Act. In a letter to President Trump, Dr. Ruiz and 109 other members of the House of Representatives urged an extension of these expanded benefits, which are set to expire at the end of the month.

“It is essential that we extend federal pandemic unemployment compensation before it ends at the end of July,” Dr. Ruiz and the other members wrote in the letter. “Cutting off enhanced unemployment benefits while the economy is still in crisis would ignore the millions of Americans who are still suffering. We hope that you will support this measure in the weeks ahead.”

In March, Dr. Ruiz voted for the CARES Act, which is now law and provided an additional $600 in weekly federal unemployment benefits for those who lost their job due to the coronavirus pandemic.

In May, Dr. Ruiz voted for H.R. 6800, the Heroes Act, which would extend the supplemental unemployment benefits through January 31, 2021. Despite the fact that the number of U.S. workers applying for unemployment benefits is continuing to climb, the Senate has so far failed to act.

You can read a copy of the letter below.

Letter Copy:

Dear Mr. President,

We write to express our strong support of extending the critical Federal Pandemic Unemployment Compensation (FPUC) supplement to unemployment benefits. These benefits are critical to continuing to support hardworking American families impacted by coronavirus.

Throughout the pandemic so far, over 130,000 Americans have lost their lives and over 14 million Americans are still out of work, even as we begin to safely reopen our economy. For 16 weeks in a row, the number of U.S. workers applying for unemployment benefits for the first time has been over one million. According the U.S. Bureau of Labor Statistics, the country’s unemployment rate stands at 11.1 percent— far above 3.6 percent in January 2020, before the coronavirus spread within the U.S. To put this into perspective, over 5 million Americans who had jobs when you took office are unemployed today.

The coronavirus pandemic—and the subsequent health and economic crisis it created—is far from over. While the CARES Act extended unemployment insurance by providing an additional $600 weekly federal unemployment benefit for those who lost their job due to the coronavirus pandemic, the expanded benefit currently expires at the end of July. The nonpartisan Congressional Budget Office (CBO) expects the unemployment rate to remain around 10 percent through the end of 2021. Thus, Americans will continue to need extended unemployment benefits to weather the pandemic.

During a recent House Budget Committee hearing on the economic impacts of the coronavirus, former CBO Director Doug Elmendorf said, “I think the worst thing you could do is let these benefits expire at the end of next month.” While the U.S. House of Representatives has acted with the passage of The Heroes Act to extend unemployment insurance through January 31, 2021, the U.S. Senate has so far failed to act.

First and foremost, extended unemployment insurance benefits have helped American workers. Millions of workers who lost their job or were furloughed due to the global public health crisis, because of FPUC, were able to continue paying rent, putting food on the table and covering health care expenses. The Joint Economic Committee (JEC) found that during the pandemic, unemployed workers receiving unemployment benefits were more likely to be able to afford unexpected emergency expenses and groceries, compared to those not receiving benefits.

FPUC also helps businesses and stimulates the overall economy. The JEC estimated that extended unemployment benefits supported as many as 2.8 million jobs and reduced the unemployment by as much as 1.8 percent. The CBO estimated that extending FPUC through January 31, 2021, would result in greater consumer spending, helping to directly support businesses as they continue to reopen. Thus, extending unemployment benefits is critical to stimulating the economy during this economic crisis.

Some Republicans have made allegations that unemployment benefits disincentivize work. Working Americans are not choosing unemployment benefits over returning to work. Rather, they are choosing to keep themselves and their families safe. In a June Gallup poll, nearly half of workers reported they were afraid to return to work, for fear of being exposed to COVID-19. Additionally, the June jobs report debunks the Republican myth that unemployment benefits disincentivize work. Since April, employment has risen sharply in many industries Republicans claim compete with extended unemployment insurance benefits, such as the restaurant, construction and retail industries. This demonstrates that Americans choose to return to work when businesses reopen and jobs become available again. Furthermore, a recent study from the Federal Reserve Bank of Chicago found that those collecting unemployment insurance benefits work harder on their job search and receive better job offers than those who are not collecting benefits. The truth is that our economy is still is crisis, with permanent job losses continuing to increase and employment numbers nowhere near pre-coronavirus levels.

While the nation as a whole is suffering, certain populations are being hit harder than others. The unemployment rate for people of color remains higher than the national rate. The unemployment rates for the African American, Hispanic or Latino and Asian populations, respectively, are 15.4, 14.5 and 13.8 percent. Furthermore, the CBO issued a report illustrating the harmful effects ending FPUC will have, particularly on communities of color. Our nation is currently reckoning with deep-rooted racial injustices. These injustices are the reason communities of color disproportionately feel the health and economic effects of this pandemic and must be addressed.

Therefore, it is essential that we extend FPUC before it ends at the end of July. Cutting off enhanced unemployment benefits while the economy is still in crisis would ignore the millions of Americans who are still suffering. We hope that you will support this measure in the weeks ahead.

Sincerely,

Dr. Raul Ruiz

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Tariffs have been delayed to December with renewed hopes by President Trump that some agreement would be made with China. September 1st additional tariffs were to kick in. August presented additional slowing economic data globally that resulted in multiple governments seeing their bond rates drop. Data shows that it is the consumer, you and I, that are propping up the country with our spending. It seems to be in quite a substantial way to offsetting slowing manufacturing, housing and service sectors. By comparison, the United States is doing very well despite this compared to other countries. 

Now don’t get over-excited and jump back in the market with both feet. Just like when the market is panicking and I remind you to not do the same, it is my responsibility to do the same and give advice when there is mania to jump back in. Yes, the market is rallying and interest rates are back above their low. I suspect the market is going to shrug a slowing economy and interest rate inversion off. After all, a recession happens on the average about 22 months after an inversion. We have time, right?

When looking at the data there is still concern about slowing profits for companies and the continued lowering of projected earnings. This week started with racing back up toward the all-time highs. Why? Nothing has changed. If there was an agreement with China, then maybe. If there was an increase in corporate profits then, yes. Even if there were a bump in inflation, it would be a reason. Are there any positive headwinds?

It seems there is a positive discussion regarding the economy. Recently several companies who were labeled as companies that would be hurt by tariffs actually show in their latest corporate earnings that they haven’t been. Apple and Walmart both had good earnings and have rallied strongly lifting their indices. This week economists meet for the annual event in Jackson Hole, Wyoming. Right before this event, several of them upgraded their projected GDP to above 2%. They will release why soon. 

With the market giving us head fakes weekly, each direction looks like a trap. This is where discipline, a plan, and data comes in. Don’t get emotional or stressed out. I would like to see a 12-17% move off the highs before starting to add to positions. Right now, it appears there is double the risk to the downside than to the upside. Let the market gain a direction before evaluating your next steps. One measurable that I am watching is the Volatility Index, VIX. Normally when the market rally, it will drop. It should typically have a negative correlation to the market. In recent weeks, it hasn’t. When the market rally, it has not been falling and holding its ground. If this continues, there is more downside we believe soon. If it falls back off, then the market should move higher for the short term. Areas we are monitoring closely is oil and copper. These are both at twelve months, if not longer, lows. It appears oil is finally bottoming out poised to rally. 

As Kenny Rogers sings, “Know when to hold’em, known when to fold’em. Don’t gamble in the market.

Andrew F. Kotyuk, CIMA* is CEO and Principal of Alpha Wealth Management LLC

For questions or investment topics, please email me afkotyuk@alpha-wealth.com.

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Almost immediately after this, President Trump announced raising tariffs by ten (10%) percent on $300 billion worth of Chinese goods. The new tariffs would start on September 1st. Talks had cooled since earlier in the year prior to the G20 Summit where positive comments were the last public milestone. This announcement caught the market by surprise last week, resulting in the market losing ground. China announced they would retaliate over the weekend to the new U.S. tariffs. U.S. markets opened Monday to China stating that in retaliation they would drop their currency, the Yuan to extremely low levels against the dollar. As this news was digested the broad markets fell. Noted was the Dow Jones that fell over 900 points at the worst point Monday. The U.S. in, response, labeled China as a currency manipulator.

These two U-turns force the volatility indices to more than double. These headwinds are not likely to change anytime soon based on history. Taking inventory of both countries and the global market at this point; it appears to be a game of chicken to see which county blinks first. With the Federal Reserve now in a dovish defensive move Administration is positioned to hold the line and play hardball. Going into next year, the consensus is that both countries will be moved to reach an agreement. 

As this volatility spikes, a defensive posture in any portfolio makes sense to keep the powder dry as they say. For fixed-income portfolios, as rates are dropped shifting to longer-term notes will lock in rates and help avoid the interest rate risk that has started. Today’s short-term rates will easily be cut in half. For equities waiting to buy for better opportunities ahead is the name to this game. Identifying what to buy and at what price to buy or lower your cost basis in a holding will pay off once we are out of these headwinds. Keep in mind that tax-loss selling of holdings at a loss and rotating into another security that is better position is another way to play the correction. Lastly, remember rebalancing during volatile times too. You want to spike not be spiked in these markets.

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