Trump

Some Rain on the Donald’s Parade…

By David Stockman  |  July 3, 2019

Stocks dipped early Tuesday. But they bought it, because they always do these days.

Indeed, the S&P 500 Index closed at another new high. This step up “Peak Trump” is particularly poignant, as it comes just in time for the Tweeter-in-Chief to appropriate the Fourth of July for a National Celebration of Himself.

It’ll include, of course, a phalanx of tanks, troops, and other toys deployed in support of the Donald’s bile, bombast, braggadocio, and bullshit. You know, the kind of stuff we used to mock when it happened in Soviet Russia.

In fact, President Dwight D. Eisenhower was presented with such a concept at the height of the Cold War. Here’s what Ike had to say, according to historian Michael Beschloss:

Absolutely not. We, the United States, are seeking peace, we are the pre-eminent power on Earth. For us to try to imitate what the Soviets are doing in Red Square would make us look weak.

Eisenhower wasn’t absolutely opposed to celebrations of military achievement. He actually joined Josef Stalin for one in Moscow in August 1945. There’s the rub, of course…

A procession of troops marching in formation and a display of weaponry is legit after victory is achieved on the battlefield. Literally, then and only then.

Everything else is a parade of statist authoritarianism.

Some Rain on  Peak Trump

The process of “Peak Trump” does not qualify as “victory” in any but the most MAGAfied minds. Here’s the Tweeter-in-Chief, then, yesterday:

The Economy is the BEST IT HAS EVER BEEN! Even much of the Fake News is giving me credit for that!

Of course, here he is begging for a rate cut not 10 days ago:

Despite a Federal Reserve that doesn’t know what it is doing – raised rates far too fast (very low inflation, other parts of world slowing, lowering & easing) & did large scale tightening, $50 Billion/month, we are on course to have one of the best Months of June in US history…

….Think of what it could have been if the Fed had gotten it right. Thousands of points higher on the Dow, and GDP in the 4’s or even 5’s. Now they stick, like a stubborn child, when we need rates cuts, & easing, to make up for what other countries are doing against us. Blew it!

Folks, the yield on the 10-year U.S. Treasury note is 1.97%. There’s now a record $12.5 trillion of government and corporate bonds trading at negative yields.

Indeed, half of all European government bonds – that’s more than $5 trillion – sport negative yields. This includes an incredible 96% of Switzerland’s, 91% of Sweden’s, 88% of Germany’s, 84% of Finland’s and the Netherlands’ and between 76% and 78% of France’s, Austria’s, and Denmark’s.

These are the absurd fruits of global-scale monetary central planning.

And it has absolutely nothing to do with real-world conditions. Otherwise there’d be a difference between fiscally sober Germany and Switzerland and the socialist paradises of Sweden and Denmark. But there isn’t.

They’re buying because they’re front-running what monetary central planners have basically told them they’re going to do. The Federal Reserve will soon be easing, and the European Central Bank will start buying bonds again…

It’s the primary step in the falsification of financial asset prices. Bond prices are going up due to the big, fat thumb of Mario Draghi, his successor Christine Lagarde, and Jerome Powell.

Where does this parade end?

How to Declare Independence

Desperate times call for… “common sense” measures.

And these are desperate times… Markets are corrupted by monetary central planning. They’re confused. And the road back is going to be treacherous.

We’re looking at a major re-pricing for all financial assets. And thousand-point intraday or day-to-day swings are part of that equation. Those can be frightening… for “buy and hold” investors.

I have a different approach, one that combines strategy and tactics into a plan flexible enough for you to survive and thrive amid the coming chaos. It’s called “The Stockman Model.”

All we’re after is a little stability, perhaps a chance to pocket a windfall when opportunity presents…

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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