while I think your thesis has merit, I think you misinterpret what President Trump wants. he wants US production to be sufficient to satisfy US consumption. if non-US companies wish to sell in the US, the idea is build capacity in the US.
Remember, of all the nations on earth, the US is the closest to being self-sufficient, and if you add Canada and Mexico as a bloc, it would be enormously powerful both economically and militarily. I really don't think Trump cares about Europe at all, it is just an afterthought
Canada, Mexico and the US are all capital importers... Europe and Japan capital exporters... but remilitarisation would suggest there is no capital to export soon.
It is just a statement of the consequences of what he wants - reshoring in the way it is being pursued = capital outflow from the US to fund Europe/Japan remilitarization + as T-s are no longer "safe". It's pretty straightforward. He doesn't need to care about Europe for this to happen
While I agree with your thesis regarding yields on US duration over the longer term, the flight-to-safety trade may put a bid under bonds in the short term. My TLT puts are taking a beating with the Nasdaq -5% today.
Indeed - rising yield trades getting battered. But politics still favours rising wages - and rising inflation... but could we have a recession? As long as austerity doesnt happen, growth should be ok
What do you think of the view that the central bank will prevent long bond going too high by more QE. 10% would be so devastating I’d imagine an authoritarian republican government would never let that happen.
I am not sure how old you are - but we have well over 10% in the early 90s, and the world survived... I just think its bad for businesses like private equity.
Sorry my real question is about Raoul Pal's Realvision central thesis in which Central Banks are going to go back into heavy QE and float all boats. I can see that causing inflation, I think the real rates are the difference with your view. Do you think the Fed at least will start buying bonds again?
If rates go to 10% bc USTs are not the RF asset any more, the dollar is def toast. If bc of inflation then its still ok.
Not sure there may be that much negative impact on valuations of other assets, temporary disruption yes, but equities may be a refuge from cash in that scenario for US investors not willing to hold fx exposure, which is likely the majority as they are used to the "safety" of the USD.
I am actually quite upbeat on global growth. I see savings been invested in capital projects, tight labour market, and rising wages... I just see valuations falling as yield rise, and cost pressure limiting profit growth...
Are there any corollaries between now and the Gilded Age? Wikipedia tells me that "Historians saw late 19th-century economic expansion as a time of materialistic excesses marked by widespread political corruption." Sounds familiar.
while I think your thesis has merit, I think you misinterpret what President Trump wants. he wants US production to be sufficient to satisfy US consumption. if non-US companies wish to sell in the US, the idea is build capacity in the US.
Remember, of all the nations on earth, the US is the closest to being self-sufficient, and if you add Canada and Mexico as a bloc, it would be enormously powerful both economically and militarily. I really don't think Trump cares about Europe at all, it is just an afterthought
Canada, Mexico and the US are all capital importers... Europe and Japan capital exporters... but remilitarisation would suggest there is no capital to export soon.
It is just a statement of the consequences of what he wants - reshoring in the way it is being pursued = capital outflow from the US to fund Europe/Japan remilitarization + as T-s are no longer "safe". It's pretty straightforward. He doesn't need to care about Europe for this to happen
While I agree with your thesis regarding yields on US duration over the longer term, the flight-to-safety trade may put a bid under bonds in the short term. My TLT puts are taking a beating with the Nasdaq -5% today.
Indeed - rising yield trades getting battered. But politics still favours rising wages - and rising inflation... but could we have a recession? As long as austerity doesnt happen, growth should be ok
What do you think of the view that the central bank will prevent long bond going too high by more QE. 10% would be so devastating I’d imagine an authoritarian republican government would never let that happen.
I am not sure how old you are - but we have well over 10% in the early 90s, and the world survived... I just think its bad for businesses like private equity.
Sorry my real question is about Raoul Pal's Realvision central thesis in which Central Banks are going to go back into heavy QE and float all boats. I can see that causing inflation, I think the real rates are the difference with your view. Do you think the Fed at least will start buying bonds again?
(And I'm old lol)
They probably need to offset a clearinghouse driven liquidation... like the BOE after Truss
Specifially I meant QE like this to keep bond yields at or below inflation. https://www.youtube.com/watch?v=mPmAOY_OApw&t=980s
They could, but will come under heavy pressure not to due to rising inflation pressures
Looks like March was just the warm-up act. I'm curious to see what the main event has in store for us. Buckle up!
If rates go to 10% bc USTs are not the RF asset any more, the dollar is def toast. If bc of inflation then its still ok.
Not sure there may be that much negative impact on valuations of other assets, temporary disruption yes, but equities may be a refuge from cash in that scenario for US investors not willing to hold fx exposure, which is likely the majority as they are used to the "safety" of the USD.
I am actually quite upbeat on global growth. I see savings been invested in capital projects, tight labour market, and rising wages... I just see valuations falling as yield rise, and cost pressure limiting profit growth...
Are there any corollaries between now and the Gilded Age? Wikipedia tells me that "Historians saw late 19th-century economic expansion as a time of materialistic excesses marked by widespread political corruption." Sounds familiar.
The only comparison I can think of is how political revolution always seems to follow income inequality