The Stock Market’s Dark Prediction for Mass Deportations

Trump's immigration agenda could be a boon for private prisons

A guard escorts an immigrant detainee from his 'segregation cell' back into the general population at the Adelanto Detention Facility, managed by GEO Group. Credit: Getty Images

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Since leaving the platform which shall not be named after Elon Musk acquired it, Substack's “Notes” application has been my primary social media platform. I've found it to be great for learning about other newsletters. and engaging with the existing and potential subscribers to this newsletter. As with my former platform of choice, Notes allows me to react to breaking news with short-form commentary and insights quickly. If you like rapid response, you can download the app here.

Over the last few days, I've spent a fair amount of time conversing with “My Boys,” i.e., three of my former colleagues from my days as a trader on Wall Street. One is still in the investment banking business, another has retired to Hawaii, and a third is a C-level officer in the biotech industry. I only ever speak with them individually, but I consider each of them a valuable resource. Yesterday, my conversation with one of these gentlemen made its way into something I posted on Notes that got a bit of attention, so I've decided to expand on it here.

But first, about those cheaper bacon and egg prices you were promised…

This afternoon, Diane Swonk, KPMG’s Chief Economist, dropped the company’s downgraded economic forecast. Here’s a link to the complete forecast, but this is the upshot:

The KPMG economics team assumes scaled-back tariffs, at least in the short term. It is unclear if their calculus is that, due to his deep ties with the Chinese government, Elon Musk will talk Trump into backing off from his campaign promises, that China bestows Ivanka with even more trademarks, or that Trump was lying in the first place (which in my view, seems a more likely conclusion). Regardless of the scenario, if the KPMG forecast is correct, both middle and lower-class households will take the brunt of the economic pain, as is usual with the Republican Party.

KPMG’s model anticipates tax cuts and limited deportations as a starting point, resulting in:

• Slightly lower unemployment next year but rising in 2026 as the economy peters out.

• The economy hangs on next year, but rolls over in 2026, mainly due to tariffs and significant curbs on immigration.

• None of the cheap grocery prices Americans expected to receive, as inflation reignites in 2026, rapidly increasing in out-years.

• The possibility of a Fed that is less independent. KPMG sees further rate cuts ending next year, and a possibility that next month’s expected rate cut may not materialize. Should that happen, they believe it could prompt “aggressive efforts to remove members of the Board of Governors. Efforts to interfere with rate decisions by the Fed would be countered by rising bond yields.”

You may want to go watch that Ava DuVernay documentary

Since the election, the overall market, which was already setting records hand over fist, has been on a tear. The message the market is sending is that it believes when Trump takes over annoying incidentals such as rules and regulations will go the way of the proverbial dinosaur. My view is that while the good times may roll for a while, the party won't last long. But let's save that conversation for another day.

What caught my attention, and that of at least two of my former colleagues, is the spike in the stock prices of companies in the private prison business. This was especially evident yesterday when Trump announced his appointment of former acting ICE director Tom Homan as his “border czar.” For those who don't know Mr. Homan, here he is on 60 Minutes just before the election. He seems like a nice guy.

Since the “border czar” role is no more of a thing than it was when Republicans accused the current vice president of occupying this imaginary position, it won't require Senate approval. As such, no one knows exactly what kind of authority Homan will have. But as you can see from the video, Homan has no problem snatching up U.S. citizens alongside their undocumented relatives.

And the private prison stocks love it. Just look at the post-election price action in Geo Group and Core Civic, two publicly traded companies in the private prison sector:

Investors in these stocks see Trump's election, and his appointment of Tom Holman as border czar, as a moneymaker. Company CEOs are already telling investors their prisons can reap huge government contracts as the Trump administration rounds up undocumented immigrants:

In a conference call last Thursday, Geo Group chairman George Zoley said he expects the government to fund 70,000 to 100,000 beds in ICE detention centers, roughly double the 41,500 beds now funded. Geo Group can up its operational ICE detention center beds from 13,000 to 31,000 by next year, forecasts Brendan McCarthy, an analyst at independent research firm Sidoti. McCarthy projects $3 billion in revenue for Geo Group in 2025, a 24% jump from its blended 2024 sales.

The Street expects the Trump administration to house undocumented immigrants in private prisons, rather than build government-run camps. And given the current glacial pace of processing their asylum applications, it's anyone's guess how long they'll be incarcerated.

Trump may be in no hurry to push these undocumented immigrants out of the country. Under the 13th Amendment, prisons can “loan out” their prisoners for extremely low wages, something that is already happening across the country, but getting very little press. According to a report by The Associated Press earlier this year, in some cases, prisoners are forced to work for no pay at all—as enslaved laborers:

While prison labor seeps into the supply chains of some companies through third-party suppliers without them knowing, others buy direct. Mammoth commodity traders that are essential to feeding the globe like Cargill, Bunge, Louis Dreyfus, Archer Daniels Midland and Consolidated Grain and Barge – which together post annual revenues of more than $400 billion – have in recent years scooped up millions of dollars’ worth of soy, corn and wheat straight from prisons, which compete with local farmers.

Trump may attempt to offset the inevitable supply chain disruption created by his mass roundups with the very immigrants he has incarcerated. If things go the way the market expects, undocumented immigrants may do the same jobs, only from prison, and for even less money than they earned before incarceration.