Headline:
Trump’s Chaotic Economic + Political Strategy.
**********************
The 24/7 U.S. Political Drama…
With It’s Substantial Economic Impacts…
Sure Is Dramatic + Entertaining.
But Not Sure Which U.S. Political Party…Thus Far…Has Been More Pathetic…
**********************
The Republicans’ Endless Victory Laps…
Proselytized By Conservative Media + Egomaniac Trump On Truth Social…
Or Donny T’s Ridiculously Heeling Henchmen…
Regurgitating Pre-Ordained “America First” Talking Points…
With Mechanical Stepford-Esque Style…
Their Blind Loyalty Soaking In Trump’s MAGA Kool-Aid…
Especially Trump’s
1. Annoying +
2. Defensive +
3. Forceful +
4. Loud +
5. Righteous
Female Mini-Me = White House Press Secretary Leavitt
Or
…The Democrats’ Constant Whining About The Deconstruction Of The Money Shredding Federal Administrative State…
As Their Front Row Seat To The Swift Dismemberment Of A Mostly Bloated Federal Bureaucracy Horrifies + Paralyzes Them.
**********************
No Doubt = These 2 U.S. Political Parties Are Idealogically Polarized…
As Any Cordial Political Co-Existence = Pipe-Dream…
Unless…Somehow Trump Becomes A Political Unifier…But Don’t Bet On It…
As His Scorched Earth And Shock/Awe Tactics To Dismantle DC’s Status Quo…
Combined With His Frequent + Public Humiliations Of His Political Opponents…
Only Widen An Already Gargantuan Political Chasm.
**********************
The Democrats…For Some Odd Reason…
Cannot Accept What The Republicans Have FINALLY Acquiesced To…
That Is…The Federal Government’s Grim Financial Reality…
For 24+ Years…Under Both Political Party’s Executive + Legislative Leadership…
Federal Spending Has Far Outstripped Federal Revenue…
Continually Building A Mountain Of National Debt [$36T+]…
Now Even Greater Than Nominal GDP…
Requiring Active + Urgent Measures To…
At The Very Least…Minimize Annual Budget Deficits…
So That Aggregated Debt…Grows More Slowly…
Which…Even With DOGE…Will Be Difficult To Achieve…
As Annual Interest Payments On The National Debt…
Now Approximate $1T Or Close To 50% Of Recent Nominal Budget Deficits…
**********************
And Will Soon Increase = Hockey Sticking The Cost Of Debt…
As Current Interest Rates [4%+] Tower Over Rates Attached To Previously Issued + Now Maturing Federal Debentures…
From 2010-2022…[See Below].
Plus…Higher U.S. Interest Rate Payments Are Compounded By An Ever Increasing Absolute Stack Of U.S. Debt [See Below].
Essentially A Double Edged Debt Sword…That Cuts Twice Deep =
Knee-Capping The U.S. Budget From Day #1 Of Each Fiscal Year.
**********************
Therefore The Democratic Party’s Desperate Quest To Clench Onto The Federal Government’s Prior Fiscal Standard =
Print Money + Spend Money…
Is A Much Flawed + Self-Immolating Strategy…
Because JOHN Q. PUBLIC… Naturally…Is Really Pissed Off…
That A Lot Of His Tax Dollars Were Carelessly + Idealogically [i.e. USAID] Spent…
As Already Demonstrated By DOGE…
Even Though The $55B In Cost Saves [So Far]…
Though Legitimate + Necessary + Tangible…
Are A Rounding Error When Contrasted To The $36T+ Stockpile Of U.S. Debt.
**********************
All Of Which Lays Bare A Convoluted + Murky Domestic/Global Economic Picture…
Certainly Transmitting To Almost All International Financial Markets…
Primarily Because Of Uncertainties Linked To Proposed U.S. Policies =
Some Of Which BRAKE The Economy=
1. Fiscal Spending Cuts +
2. Immigration +
3. Tariffs
And Some Of Which ACCELERATE The Economy
1. Deregulation +
2. Tax Cuts
**********************
Meanwhile…Perpetually
1. Opinionated +
2. Transactional
3. Victimized
Trump…Keeps Markets On Edge…
With Every Social Media Post + Spoken Word.
Media Spotlights Now Increasingly Shine On Foreign Leaders Too…
Addressing How They Intend To Reciprocate…To Proposed U.S. Tariffs And…
Quickly Shifting Overseas Sovereign Fiscal Plans…
Especially Europe…To Counter The U.S’s Surely Culled Monetary Support For NATO…
Re-Positioning + Reinvigorating Defense Budgets…That Have Atrophied For Many Years.
So…Fiscal Spending Priorities Are Drastically Pivoting…
Which For Any G-7 European Sovereign = Massive Economic Implications…
**********************
Ultimately…Markets Will Have A Clearer Sense Of U.S. Policy…
Allowing For More Aggressive + Directional Asset Price Positioning.
To That End…Until Very Recently The Bond Market’s Bet =
A U.S. Inflationary Impulse…
Primarily Tied To Trump’s Immigration + Damocles Sworded Tariff Policies…
Explaining Much Of The 10 Year Treasury Yield Launch…Its Highest Levels Since 2009 [See Above]…
A Yield Dynamic Initiated Just Prior To The U.S. Presidential Election In November ’24.
**********************
However…That Trade Has Recently Come Into Question…
And 10 Year Bonds Have Been Marginally Bid + Gaining Momentum…
As Last Week’s Typically Reliable Atlanta Fed GDP Estimate For Q1 ’25 Was Revised Substantially Lower…
From: +2.30% = Annualized Rate Of Growth…
To: -1.50% = Annualized Rate Of Contraction
…Equating To An Enormous Downside Revision.
**********************
Coupled With Recently Dismal Consumer Confidence Readings…
From Both The University Of Michigan + Conference Board…
And…S&P’s Flash U.S. PMI Commentary For February…
Which Was Particularly Bleak =
A Sour Recipe For Near Term U.S. Economic Activity.
**********************
Essentially…Consumers + Businesses Have Been Overwhelmed With A Tsunami Of DC “Snow Globe” Shaking…
Initiating…
1. Apprehensions +
2. Fears +
3. Uncertainties
…About Future U.S. Economic Performance…
Primarily Due To U.S. Policy Dynamics + It’s Wide Range Of Potential Outcomes…
Focusing…For Now…On The Bad Potential Outcomes Rather Than The Potentially Good.
So That The 10 Year Treasury Yield Has Retreated By 40 Basis Points …Since Trump’s Inauguration…
Is More Reflective Of U.S. Economic Growth Concerns vs. Reduced Inflation Fears.
**********************
Moreover…Trump Executive Order’s His Economic + Social Policies On All Americans…
Despite A Very Marginal Popular Vote Victory = 77.3M Vs. 75.01M…
Which…Incidentally…Is Neither A Mathematical Landslide Nor A Legislative Mandate.
Nevertheless…The Republicans Do Control…
1. The Executive Office +
2. Both Legislative Branches +
3. The Supreme Court
Which = Both Powerful + Rare.
So…Continue To Expect More…
1. Bullying +
2. Extorting +
3. Intimidating Tactics
From The U.S. President…On All Policy Fronts…Domestically + Internationally…
As His Idealogical Righteousness Only Ramps With His Number Of Days In Office + Political Allies’ Adulations.
**********************
Still…It Is Likely That Trump’s
1. Aspirational +
2. Expectational +
3. Preferred Outcomes
…For His Visioned U.S. Economy Characterized By…
1. Isolationism +
2. Nationalism +
3. Tariff-ism
Will Not Unfold Precisely As He And His Advisor’s Have Calculated + Mapped.
Transitions Of Any Type Are Always Potholed + Tricky…
Especially For The Globe’s Largest Sovereign.
Therefore…Almost All Economic Outcomes…Will Include…
Intended + Unintended Consequences…
Some Of Which = Negative + Some Of Which = Positive.
The Economic Magnitude Of The Ultimate Policy Transitions =
Nobody Truly Knows…Just Too Many Moving Parts…
As Well As…Currently…Not Too Many Stable Parts Either.
**********************
And In Spite Of The Administration’s Urgency To Tackle…What They Consider…
Countless + Legitimate National Issues/Problems…
In All Likelihood…Trump’s Executive Team = Spreading Themselves Too Thin…
Because Usually…
Too Much + Too Fast = Too Sloppy Outcomes.
**********************
But It Seems Trump Could Not Care Any Less…
As He Now Absolutely + Zealously Articulates The Reason His Life Was Spared From A Western Pennsylvania Rooftop Rally Shooter Last Summer =
Apparently…The Almighty Himself Saved Donny T. From That Volley Of Bullets…
So That Trump Could Specifically Fulfill His MAGA Political Agenda…
Which If Trump Truly Believes =
Is Quite Motivating For Him + Quite Scary For His Political Opponents.
So Brace Yourself…
For Many More Snow Globe Shakes To Come.
**********************
