Good post. I think we are going to precipitate the crisis in the next couple of years that forces the US to cut benefits and raise taxes. That won’t happen until the bottom really falls out. Each party wants the other to take the pain while it continues to pursue it’s version of fiscal profligacy that it became dedicated to during the era of cheap money. The only solution in a 50/50 country is that both take some pain. That won’t happen until there is no other alternative.
What Trump/Bessent need is QE, which is great for GLD but not so much for -TLT.
There is a huge amount liquidity needed this year for refinancing.
Trump also wants a weaker USD that would reduce debt/GDP and help re-balance trade. QE could achieve that while keeping yields at bay during the adjustment process.
Good post. I think we are going to precipitate the crisis in the next couple of years that forces the US to cut benefits and raise taxes. That won’t happen until the bottom really falls out. Each party wants the other to take the pain while it continues to pursue it’s version of fiscal profligacy that it became dedicated to during the era of cheap money. The only solution in a 50/50 country is that both take some pain. That won’t happen until there is no other alternative.
BTW, as a US reader I don’t like it but I agree.
What Trump/Bessent need is QE, which is great for GLD but not so much for -TLT.
There is a huge amount liquidity needed this year for refinancing.
Trump also wants a weaker USD that would reduce debt/GDP and help re-balance trade. QE could achieve that while keeping yields at bay during the adjustment process.
It is always debasement in the end.
The more intriguing issue is that voters hate inflation = and with tariffs AND dollar weakness its hard to square those two things
I think that the idea is to make wage inflation higher than price inflation. This can be achieved through tariffs/re-shoring and deportations.
As long as wages rise more than prices, affordability improves and a larger share of the income goes to labor vs. capital.
Yes - thats the aim.
Don't worry - the Treasury will just fund the entire federal gov't with T-bills in order to keep coupon yields in check.
/sarc... sort of.
Russell, if you were sitting in China how would you view the USA’s negotiating position?
A huge opportunity... if dollar weakness persists - they could potentially open the capital account
What makes you consider GBPCHF as a recession indicator? Looks like a structural short
Lol.... GBP is a structural short, but it does tend to more more in a recession... see 2007 to 2011
No one has even gone bust shorting sterling