To The Moon

$Kite(KRG)$

We're not just talking about valuations, yields, or interest rate spreads. Today, I want to unpack a broader macro event that I believe is being widely underestimated — a public clash that’s unfolding between Elon Musk and former President Donald Trump. You might wonder what that has to do with the economy — let alone the REIT sector — but bear with me, because I believe the implications could be far-reaching and quite meaningful for investors.

Now, I know some of you might be thinking: "How could a personal feud between two high-profile figures influence economic policy or financial markets?" And at first glance, yes, it might seem like a stretch. But when you look closer at what this represents — especially within the context of GOP dynamics, fiscal policy divergence, and the rising risk of recession — it starts to make a lot more sense.

Let me explain.

A Growing Divide in the GOP

We’re witnessing what I would call a philosophical split within the Republican Party — a schism that’s becoming more pronounced as we head into the 2025–2026 political cycle.

On one side, you have Elon Musk. He's positioning himself as a fiscally responsible, pro-deficit-reduction advocate. He’s publicly warning that Trump’s proposed "Big Beautiful Bill" could push the U.S. government toward bankruptcy. Musk is also sounding the alarm about Trump's protectionist policies — specifically, a wave of new tariffs that he believes could trigger a recession in the second half of the year.

In Musk’s view, America needs to rein in spending, reduce deficits, and avoid punitive trade policies that distort markets and hurt consumers.

On the other side, we have Donald Trump — who, interestingly, campaigned on reducing the deficit and cutting wasteful spending, but now seems to be taking the opposite approach. His new economic platform proposes massive tax cuts, increased deficit spending, and further expansion of the debt ceiling — potentially by multiple trillions over the next few years. This, of course, raises fundamental contradictions within his policy stance. You can't reduce the deficit while simultaneously slashing revenues and supercharging expenditures.

So now the GOP is being pulled in two different directions: one led by Trump, the frontrunner for the presidency, and the other led by Musk — who, while not a politician, holds immense influence among tech elites, business leaders, and a growing segment of Republican voters who still care about fiscal conservatism.

This divide isn’t just philosophical. It has real consequences.

Policy Gridlock and Uncertainty

What we’re seeing is the early stages of a potential policy gridlock within the GOP — and by extension, within U.S. economic governance.

Without clear, unified leadership on issues like taxation, trade, and government spending, we are likely heading into a period of high policy volatility. And as any investor knows, the markets hate uncertainty.

When businesses don't have clarity on future tax rates, trade regulations, or stimulus policies, they hold back. They delay major investments. They slow hiring. They start conserving cash. Investors, too, get more defensive — reallocating capital from equities to fixed income, raising cash positions, and de-risking portfolios.

Consumers aren’t immune either. When the outlook is uncertain, especially when recession fears are in the air, people tighten their belts. They delay major purchases like homes, cars, or renovations. Discretionary spending goes down.

This combination of cautious business sentiment, defensive investor positioning, and consumer belt-tightening all leads to one outcome: a slowdown in economic activity.

Foreign Capital Flight Risk

And unfortunately, the risks don’t stop there. One of the most alarming aspects of Trump’s “Big Beautiful Bill” — which is getting very little media attention — is the inclusion of a provision known as Section 899N. This section could significantly increase taxes on foreign investors who hold U.S. assets, including equities, bonds, and Treasuries.

Let’s be clear about how serious this is.

Foreign investors currently own roughly 20% of U.S. stocks and about 30% of the Treasury market. If this legislation goes through and those investors face a punitive new tax regime, they may start reallocating capital away from the U.S. That could mean lower demand for Treasuries, pushing yields up just as the U.S. government is planning to expand the debt significantly.

At the same time, lower foreign demand for U.S. equities could compress valuation multiples, raise the cost of equity, and weigh on stock prices — particularly for capital-intensive sectors that depend on equity issuance to fund growth.

So on one hand, you’re trying to stimulate the economy with deficit spending, but on the other, you’re alienating the very foreign capital needed to fund that deficit. It’s a deeply contradictory policy stance that increases systemic risk and weakens investor confidence.

Recession Risks and Market Signals

All of this aligns with my broader view — a view I’ve been sharing for months now — that a recession in the near term is becoming increasingly likely. In fact, I’ve published a detailed analysis on five leading indicators pointing toward a recession, which you can read for free at [High Landlord] — the link is in the description. I’ve temporarily removed the paywall, so you can access the full analysis even if you’re not a subscriber yet.

And I’m not alone in this view.

JPMorgan recently said that the odds of a recession this year are essentially a coin flip — about 50% — and they rise further in 2026. The bond market agrees. The FedWatch Tool is now pricing in four rate cuts over the next 12 months. That’s not the market betting on soft landings — that’s the market hedging against a hard one.

Why REITs May Be the Big Winners

So with all this macro uncertainty — policy disarray, potential recession, rising global distrust — what does it mean for investors? I believe that REITs are the big winners in this type of environment. Here’s why.

Most REITs own essential, recession-resistant infrastructure:

• Cell towers

• Grocery-anchored retail centers

• Affordable housing

• Industrial warehouses

• Farmland

• Hospitals

• Data centers

• Net lease portfolios

• And yes, even cannabis cultivation facilities

These assets are typically leased on long-term contracts, often with built-in rent escalations, and their demand profiles are non-cyclical. They throw off predictable cash flows, even in economic downturns.

Yet despite this resilience, REIT valuations today remain near decade lows, thanks to the interest rate surge we saw from 2022 to 2023.

But here’s the key: the Fed already started cutting rates in late 2023 — and as those cuts continue, REITs stand to benefit enormously from a lower cost of capital and from renewed investor demand for yield and safety.

Two REITs I’m Monitoring Right Now

Let me highlight two names that I personally find compelling in today’s environment.

1. Kite Realty Group (KRG) This is a grocery-anchored strip center REIT with assets in fast-growing Sunbelt markets. Its rent levels are well below market, and as leases roll over, it has room for significant internal growth. It also boasts one of the lowest leverage ratios in its peer group, yet it’s trading at just 11x FFO, which is very cheap. That’s a 25% discount to NAV, and if it re-rates back to 15x — which is historically average — we’re looking at potential 40%+ upside, plus a 5% dividend that’s well-covered.

2. NewLake Capital Partners (NLCP) This is a cannabis REIT that leases cultivation facilities on a triple net basis — tenants cover all expenses, and the leases average 10+ years. Even more remarkable, NLCP has zero debt and is net cash positive. It trades at just 6.5x FFO, with a 12% dividend yield. The payout ratio is at the low end of its target, andThis is a REIT with tremendous cash flow, growth optionality, and some downside risk.

Final Thoughts

So to sum it all up: The Musk vs. Trump feud is more than just a spectacle. It's a signal of deeper economic and political fragmentation. That fragmentation is creating policy uncertainty, which increases recession risk and weighs on markets.

But for patient, long-term investors, this also creates opportunity — especially in REITs. Because when interest rates fall — and I believe they will — REITs with resilient cash flows, strong balance sheets, and depressed valuations are poised to outperform.

This is why I continue to build my portfolio week after week. I’m not trying to time the market. I’m building a durable, income-producing portfolio that I believe will perform well regardless of how this political drama unfolds — and potentially thrive because of it.

Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.

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