Investments

“Easy Money” is All They Know

By David Stockman  |  September 13, 2019

If the present trend continues, the Dow Jones Industrial Average will close higher for the eighth straight day. Nice way to close the week.

But who’s to say the Tweeter-in-Chief won’t get involved before the bell rings?

What Will Donald Do?

As of yesterday morning, the administration’s negotiators were open to an “interim” trade deal with China. As of yesterday afternoon, the White House denied such a step would be considered. As of yesterday evening, the Donald was saying “it’s something we would consider, I guess.”

Chris Scott will be here Tuesday to make sense of it – along with whatever else happens on the China/Trade War front between now and then…

That the stock market continues to levitate is a testament to decades of central bank madness.

Record highs for the equity indices are not endorsements of the Donald’s toxic mix of Trade War, Fiscal Debauch, and Easy Money.

Folks, MAGA is a Crock

And I’ll be exposing it in my Keynote Address – “After ‘Peak Trump’: Charting Uncharted Waters – at the 2019 Irrational Economic Summit October 10-12 right outside Imperial Washington.

The President of the United States is an economic half-wit whose views on global commerce, debt, and interest rates are a clear and present danger to prosperity. And he’s bullying them into the policy arena at an exceedingly fraught time.

Indeed, the chickens let loose amid more than 30 years of egregious money-printing by the Federal Reserve are coming home to roost.

As to the matter of our rogue Keynesian central bankers, Trump outdid himself recently, showing that the ship of fools domiciled in the Eccles Building can’t hold a candle to the Donald’s monetary mind-melt:

Our Federal Reserve cannot “mentally” keep up with the competition – other countries. At the G-7 in France, all of the other Leaders were giddy about how low their Interest Costs have gone. Germany is actually “getting paid” to borrow money – ZERO INTEREST PLUS! No Clue Fed!

Sorry, folks. This is buck-naked gibberish.

A Financial Catastrophe

It’s also a reminder of why the Donald doesn’t give a whit about the nation’s hemorrhaging fiscal accounts.

During his first 31 months in office – corresponding with the very top of the longest economic recovery in history – he’s added $2.7 trillion to the net public debt. Yet he thinks it’s just ducky that the German government is getting paid to borrow money.

To the contrary, the race to the interest rate bottom is not some kind of international sports contest. It’s an historic financial catastrophe in the making.

And if the other G-7 leaders were actually “giddy” about the slow-motion destruction of their bond markets and banking systems wrought by the European Central Bank, then “impaired” would be a better term for their mental condition.

Current 10-Year Yield Quotes

After all, anything less than alarum about these 10-year yield quotes from today’s bond ticker is the same thing as failing the financial breathalyzer test:

  • Germany: -0.54%
  • Belgium: -0.21%
  • Netherlands: -0.43%
  • France: -0.26%
  • Italy: 0.84%
  • Spain: 0.23%
  • Portugal: 0.23%
  • Greece: 1.50%

What these ludicrous yields imply is that speculators and fools have driven bond prices to well above par. That means huge guaranteed capital losses on redemption or market correction.

That Italian 10-year, for example, was issued recently with a 3% coupon, meaning that today’s buyer will get whacked for a 70% loss upon redemption. A year ago, the Portugal bond was trading at a yield of 1.87%, the Spanish bond at 1.46%.

The moves since imply massive capital losses for speculators coming in at today’s tiny yields.

Now, the ECB is driving its deposit rate down to -0.50%. And it’s going to restart “quantitative easing” in November.

That should nudge the European financial system even closer to implosion, with Deutsche Bank leading the way down the drain…

Yet the Donald wants the Fed to emulate that madness. By the dim lights under the Great Orange Combover, his man Jerome Powell is “clueless” and “mentally” incapable of keeping up with the monetary arsonists elsewhere around the planet…

When it comes to the trade file, of course, the Donald is at least as out to lunch.

His latest gyrations leave little doubt about that.

After “Peak Trump”: Charting Uncharted Waters

It’s my pleasure to be delivering the Keynote Address at the 2019 Irrational Economic Summit.

And I’d be particularly pleased if you’d join me October 10-12 at the Gaylord Resort & Convention Center at National Harbor, Maryland – right outside Imperial Washington – for what promises to be three days rich with ideas about how to protect and grow your wealth.

The stakes are already high heading into 2020. The U.S. presidential campaign is already underway. And the Tweeter-in-Chief is tied up in the day-to-day movements of the major stock indexes like no president before him.

And the increasingly desperate incumbent will do anything he must to hold the White House.

Tossing John Bolton to the ash heap is a “peace” move. Everything from here to next November is scorched-earth… he’ll run against “Pocahontas the Socialist,” invading immigrants, vaping, and the Federal Reserve.

He recognizes what’s coming, and he’ll make every appeal for more easy money. Jerome Powell’s mid-summer capitulation, meanwhile, means that the rules of the game – such as they exist anymore – have changed.

That’s why I’ve titled my Keynote Address, “After ‘Peak Trump’: Charting Uncharted Waters”.

Now’s the Time to Get Serious About Your Wealth

Firing Bolton was noisy. But the Warfare State budget continues to grow. That’s not to mention the equally burdensome creep of the Welfare State. And the Duopoly stands by, enjoying its power and all that comes with it.

Leviathan gets bigger, Wall Street gets richer, and Main Street… well, Main Street gets more and more little every day.

Combined with the end of the oldest, weakest economic “recovery” in American history, we’re already at a major tipping point… and there’s no telling what the Donald’s great disruptions could do to your wealth.

Folks, it’s going to get volatile. There’s no better time than right now to learn how to invest in an environment flush – and getting flusher – with easy money.

The 2019 Irrational Economic Summit is fast approaching. To reserve your spot today, simply click here, email our team at conferences@dentresearch.com, or call 866-765-7506 before the event sells out.

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David Stockman

David Stockman is the ultimate Washington insider turned iconoclast. He began his career in Washington as a young man and quickly rose through the ranks of the Republican Party to become the Director of the Office of Management and Budget under President Ronald Reagan. After leaving the White House, Stockman had a 20-year career on Wall Street.MORE FROM AUTHOR