Jon Sindreu notes that long-term bond rates have surged higher over the past month:
What accounts for this?
Some analysts attribute this to the possibility of Donald Trump’s promised tariffs derailing the global economy and leading to a jump in inflation, while his tax cuts bloat budget deficits further.... The S&P 500 and the Stoxx Europe 600 ended Friday down 1.5%, and 0.8%, respectively.
The stock market initially cheered Trump's election, but within a few weeks reality began to set in:
There's a lot of nervousness about Trump, and it's spilling over to the rest of the world too. It just goes to show that you should be careful what you wish for.
Billionaires and Wall Street are probably nervous too. They didn't fall in behind Trump until Biden's re-election began to look very unlikely, and then even more after the election. They may not have a lot of confidence in the Trump administration, but it may open some opportunities, especially in speculation, and they could be in for personal attacks if they cross Trump.
The aforementioned billionaires and Wall Streeters were clinking their champagne flutes in anticipation of even bigger tax cuts. But they have the farsightedness of a squirrel. Less, in fact. Squirrels know to stockpile food for the winter. Now they're all losing their shit over the possibility that Trump might actually do the things he said he'd do. Ladies and gentlemen, these are the captains of industry who control much of the economy.
They're far-sighted strategic thinkers. They're brave beyond belief. At Pamplona, they don't run from or with the bulls, they lead the bulls (more like leading lemmings, but eh).
If you're going to fluff, g********* do it with some f'ing style. Watch Rupert Murdoch's business, for example. /s
The billionaires and Wall Street titans love Trump because he's so manipulatable -- just stroke his ego with either words or money (e.g. donating to his
bribeinaugural fund) and he'll let you do whatever you want. Sure, there's some uncertainty in all the crazy shit Trump says, which isn't necessarily good for business. But they can count on tax cuts as long as Republicans control Congress and the rest can be taken care of with some sturdy kneepads and a dinner at Mar-A-Lago.Scott Galloway was absolutely brilliant on Anderson Cooper the other day.
Transcript:
"The best trade of 2024 was Elon Musk for $250 million into the Trump campaign. And since then, the value of his companies and his stake in those companies is up by about $140 billion. So that's about a 5,600% return.
And and that's not any change in the in Tesla in the output. Nothing to do with the company, right. Nothing to do with their operating margins, their innovation, their sales. It's based on a general assumption that America has become a full kleptocracy like Russia, that the largest, deepest pocketed customer in the history of our modern economy, the U.S government will effectively is now are effectively it's now pay to play and will shuffle contracts monies and impose regulatory punishment on the competitors to the companies who do not invest in the Republican Party or in his inaugural campaign, as evidenced by the fact that very few of these tech executives invested in the inaugural campaign fund for Biden, and they are all doing it for Trump.
We have gone full clip."
Sadly, I agree entirely.
I keep saying - the problem is not that Trump wasn't prosecuted after he was president, the problem that he wasn't prosecuted before he was president. The US Justice system has been broken for a long time. It has just taken Trump to point out how broken it is. Trump is a fraudster, but he always was a fraudster. The US seems to have a soft spot for blatant criminals that is a bit hard for civilized nations to understand.
I remember reading about someone interviewed who voted for Trump even though he didn't fulfil his promises last time. And his argument was that he know Trump is a fraud and a crook, but that he is "authentic" in that he is an unrepentant and proud crook. WTF. I would put it otherwise, his shamelessness shows he has no respect for decency and should be another minus point, not a positive point.
True. I keep reading on law blogs about "lawfare", like it wasn't a problem that he was guilty...just that he got prosecuted. We worship money here in the US, so we think doing dodgy stuff in the name of money is OK.
+1
One can hardly call this easy acceptance of a change of government to a dictatorship is somehow manageable, like shifting some books around a bookshelf. It's not so easy.
What dummies!
Why should people be nervous simply because in less than 8 days, a sociopath with the impulse control of an 8 year old will be occupying the worlds most powerful office.
Lots o' sh*t gonna be spilled with the crackpot President. Tell me again, why did the MAGA crowd vote for him?
To make the libs cry. Full stop.
Is your avatar Charo??
Yup!
Exactly. After all, don't we have the Susan Collins' of America to control him, to advise him, to restrain him?
Lol. Nervous about a guy who has failed in every business venture he's ever undertaken, except for the one run by somebody else in which he played a success? About a guy assuming the Presidency who apparently still is unclear on what tariffs are or what effects they have? About a future President who has made clear by word and deed that he's going to eschew expertise and surround himself with cronies and grifters? About a past President who's such a nickel-and-dime sponger that he billed the Secret Service for using golf carts when they were staying -- at his orders -- at his own hotel? About a guy convicted of 34 counts of business fraud?
Why would anyone be nervous about that?
I'm definitely shifting my balance substantially. I think the only people who are gonna do well the next few years are the aforementioned grifters and cronies. As with medical care, as far as Republicans -- and especially this one -- are concerned, you're on your own, and if it goes badly you should have made better life choices.
Indeed. And the market is demanding a 'moron premium.'
This is what it looked like in the UK when Truss became PM. It lead to the conservatives kicking it out. I can't understand why Americans think the presidency is a good idea.
It works as long as you have two other branches of government to serve as independent checks and balances. If one party captures all three branches, and is super corrupt and completely subservient to the president's cult of personality, then the system collapses and you have, more or less, an elected dictator.
The Founders assumed -- naively, it seems -- that those rising to the highest elected offices -- presidents, senators, SCOTUS justices -- would be self-possessed men of honor and dignity, whose instincts would always be to put country above party and faction. They simply didn't game out the "what happens when the inmates take over the asylum" scenario. They thought there were enough gates to protect the Constitution. Sadly, no.
This guy wants to be pals,
https://i.redd.it/nez63j40xjce1.png
What could go wrong?
It's like a poster for a movie co-directed by Tarantino and David Lynch.
Elon Musk isn’t worried about his 401-k; his political donations will pay off for the businesses he owns, in terms of government contracts, favorable regulations, tariffs on foreign-origin competition. Talk about activist investing!
Even if Musk were to lose 99% of his fortune, he'd still be richer than God, so, yeah, he doesn't give a shit about anything.
Those who were stupid enough to believe anything Trump says deserve to be nervous.
Maybe the problem is that homo sapiens is really not so sapient.
👍👍👍👍👍
Bingo!
It's not that they believed what he said, it's that they *didn't* think he was serious about stuff like slapping tariffs on all imports and now that they're actually paying attention and he's sounding like he wants to do just that, a lot of voters are like "Hey! We thought he was just bullshitting!"
Maybe he was. Maybe he wasn't. Who knows? The point is, this game of "Is the President Serious or Full of Shit? Let's Flip a Coin!" is no way to run a country.
What is there to be nervous about? I'm sure he'll run America's economy as successfully as he ran his casinos, and he'll maintain international relationships as well as his own marriages.
And he will make a mockery of the law and justice as he has mocked them in his private life. Citizen Trump the nation could bear, but a president Trump?
We'll survive, but will we be recognizable?
A lot of MAGA think a country run by a megalomaniacal autocrat and a cadre of billionaire oligarchs will be a lot of fun. It would be interesting to see some of them have a candid conversation with an average Russian or Belorussian citizen and see how that's working out for them. These are broken countries with no future. Oh, except for the billionaires who loot them and mostly live in Monaco or Dubai and even then, they have to live each day trying to stay away from windows in tall buildings and having lackies start their cars for them.
The most depressing thing is that when things go terribly, they’ll find a way to blame Democrats, rest assured. So, there will be no occasion for self-reflection among Republicans. Not a bit.
+10. Or more. At best, it will be because "Democrats abdicated their responsibility to STOP THIS FROM HAPPENING!!!"
Two Bingos in one thread. Damn.
If only we hadn't mocked them as racist hicks, we wouldn't be here, amirite?
They'll try. But it didn't help them in 2018 or 2020 (nor, really, in 2022).
If Franklin Roosevelt was so great, then where was he when Trump declared himself Emperor Donald John Trump I ? He could have prevented it, couldn't he ? /s
Unfortunately, you missed an important point. From the article:
As I wrote over a month ago, look at the policies he's threatened to pursue: (a) mass deportations and (b) tariffs. High tariffs are assumed to bring jobs back to the domestic market through pricing parity (raising the cost of imports to match domestic), but done at the same time that one is set to lose million+ workers.
In effect, you're immediately raising prices and creating pressure to maintain high prices even when the market takes a hit. Good luck with that, because we all know the Fed will follow Volker and the incoming administration won't be able to decipher the signals of the market to conclude that its policy was flawed.
Meanwhile, I see some people are catching on to the odd behavior of the Beveridge and Phillips, but with odd explanations for them. I personally think they're seeing correlated events as causative. I guess we'll test some of their conclusions this year, won't we?
Not to mention the deficit increasing and economically dislocating tax cuts coupled with hospital closures with the Medicare cuts. I guess it is an open question how much of this will happen but rest assured, there will tariffs, people will be deported and the national debt will increase, none which is good for the economy. Is is easy to recommend a portfolio relocation towards bonds.
I don't actually expect cuts to Medicare or Social Security. Too many old MAGA voters won't stand for that. All senior citizens really.
Which is why most of the devastating cuts will be reserved for Medicaid, TANF, and food stamps, which help poor people. They know they can shit on them with impunity.
The question is when will rates peak ? I assume they will go a bit higher in the near term.
Well, you have to consider that the money people had a choice between a toddler-brained psychopath who kept frothing at the mouth over the vengeance he was going to take, and a candidate who was
* A woman
* A "POC" (ln Librul Speak)
* A Democrat
Given these horrifying characteristics of Vice President Harris, it was clearly no choice at all. Easy peasy. ... But now, the money men get to lie in the bed that they made. Pleasant dreams (heh, heh, heh).
I have no illusions as to Trump doing anything worthwhile for the economy, but that is one of the most egregious Drum Trend Lines in ages.
"... that is one of the most egregious Drum Trend Lines in ages."
I will second that. Lots of people who claim to think scientifically (as opposed to those evil conservatives) don't actually understand how science works. So they pull stuff like this.
LOL! I saw that too. Kevin with his "insert trendline tool" reminds of this: https://www.youtube.com/watch?v=QxYmm5yCJBg
I agree. It's a thoughtless extrapolation. One reason we can't consider that trend line reliable is that it suggests that people in the market today are willing to pay 5800 for something that the Data Science tells us will be most likely be worth 5500 in less than a month. The reality is we don't know which way it's going to go.
The surprise, imho, is that *our* domestic Masters of the Universe are actually getting nervous. They all know, or should, that stocks do better when Dems are in charge, but the R label worked its usual magic on them in November with half-hearted dangling of the old formula about letting corporations run freer and pay even less in taxes, and cutting taxes on rich people. It takes powerful juju to shake those Old Republican instincts.
Could it be they're being affected by some combination of the continued bellowing on tariffs, apparent actual seriousness about deportations, the batshit cabinet nominations, the expansionism and saber-rattling and prospective unsettling of the entire international order? Or could it be trump's handing over the country's fiscal keys to the techbro who bought him and is visibly as batshit crazy and management-incompetent as any five first-year MBA flunk-outs, and hostile to any business that isn't his own? Or maybe by trump's showcasing his need for corruption and his willingness to strong-arm everything and everybody for ransom and visible kowtowing?
I really can't imagine why any of that would bother them. You have to be a wokester to even recognize any of it, let alone think it could be a problem. Must be just herd instinct that's moving them.
"I really can't imagine why any of that would bother them."
The nominations of Patel and Bondi makes it clear that Trump intends to fully weaponize the FBI and DOJ to intimidate anybody that annoys him. The main target will be Democratic candidates, but anybody else may be a target. That should scare the rich people more than others.
While bonds and stocks are sometimes competing investments, with government bonds diversifying a portfolio for a degree of protection, they dropped sharply in December, too. After all, Trump will be managing the government, its revenues, and its ability to pay as well as the economy.
Just nervous, shit I am worried.
I suspect the billionaires will be pretty much insulated from when the bad stuff starts to happen.
But generally crickets from the Charles Schwab's, WSJ, and other Captains of Finance who never miss a chance to tut tut whatever any new Dem administration proposes to do while scolding all those naive Dems about the need for predictability especially on the regulatory / tariff / tax front. And then they elect this absolutely dimwitted thin-skinned narcisistic man-child. They can all chew my willie
Irrational exuberance anyone?
To put this all another way,
Shorter Wall Street/bond market: "Mais ou sont les Rex Tillersons d'antan?"