Housing market flips and prices flop; Ukraine flips war odds on Putin; inflation reverses; Trump flips and flops all over tariffs; Trump allegedly flip-flops on Iran nuclear deal.
Better than most of your articles of late, covered real issues. I get tired of the Trump hate, every political leader does some stupid things. Tariffs are a non-event, the debt problem is going to sink the country. David you like to beat up Trump, I only see one place where he's wrong. We can't grow out of the debt. Get away from the news of the day.
Well, the problem there is that I fully disagree with you on the tariffs and would, whether they were implemented by Trump or Biden. So, Trump gets no free ride, because the tariffs are a HUGE part of the economic news already, driving bonds up and down as they come and go, and that is before they have had time to cause any inflation, which will also drive bonds crazy when it comes.
These extraordinary tariffs will light inflation on fire because businesses ALWAYS pass on as much of the cost increase as they can. We've already seen them doing it and seen them even telling the world they will do it a lot. Walmart and Target have both said they will do all they can to negotiate the Chinese and other down, but they still expect to pass through some serious inflation.
Bonds always price in inflation, so the more it rises, the more the cost of the gargantuan US debt will rise. If the huge tariffs ever actually hit and don't get pulled immediately by Trump or the courts that say he is operating outside the constitution, then they will also create a huge drop in demand for Treasuries because Treasuries are the main instrument used for foreign exchange, so with a huge drop in foreign trade, there will be a lot less foreign demand for Treasuries. Of course, if the ultra-high rates never stay in force, then the calculus will change.
All of this exacerbates the debt problem when that problem is already huge.
If it turns out I am right, will come back and thank me for the truth, or will supporting Trump no matter what rule out the praise of truth? I know that, if I am wrong, I will certainly say so and will praise Trump for seeing an outcome that I fully do not believe will materialize, and then I'll probably go away as having been more trouble than I'm worth; but, so far, it is going about as I expected with stocks and bonds proving highly volatile to Trump's tariff jolts. What will matter most is whether the tariffs go on to stay and at what level.
Good one, David. Linking as usual @https://nothingnewunderthesun2016.com/
Thank you.
Better than most of your articles of late, covered real issues. I get tired of the Trump hate, every political leader does some stupid things. Tariffs are a non-event, the debt problem is going to sink the country. David you like to beat up Trump, I only see one place where he's wrong. We can't grow out of the debt. Get away from the news of the day.
Well, the problem there is that I fully disagree with you on the tariffs and would, whether they were implemented by Trump or Biden. So, Trump gets no free ride, because the tariffs are a HUGE part of the economic news already, driving bonds up and down as they come and go, and that is before they have had time to cause any inflation, which will also drive bonds crazy when it comes.
These extraordinary tariffs will light inflation on fire because businesses ALWAYS pass on as much of the cost increase as they can. We've already seen them doing it and seen them even telling the world they will do it a lot. Walmart and Target have both said they will do all they can to negotiate the Chinese and other down, but they still expect to pass through some serious inflation.
Bonds always price in inflation, so the more it rises, the more the cost of the gargantuan US debt will rise. If the huge tariffs ever actually hit and don't get pulled immediately by Trump or the courts that say he is operating outside the constitution, then they will also create a huge drop in demand for Treasuries because Treasuries are the main instrument used for foreign exchange, so with a huge drop in foreign trade, there will be a lot less foreign demand for Treasuries. Of course, if the ultra-high rates never stay in force, then the calculus will change.
All of this exacerbates the debt problem when that problem is already huge.
If it turns out I am right, will come back and thank me for the truth, or will supporting Trump no matter what rule out the praise of truth? I know that, if I am wrong, I will certainly say so and will praise Trump for seeing an outcome that I fully do not believe will materialize, and then I'll probably go away as having been more trouble than I'm worth; but, so far, it is going about as I expected with stocks and bonds proving highly volatile to Trump's tariff jolts. What will matter most is whether the tariffs go on to stay and at what level.