I agree 100% however as with Bond, Greece, etc. the debt binge leads to a big bubble first. Considering that he has only just past the tax cut and is yet to start the infrastructure, I reckon this bubble is only halfway.Trump IS the Black Swan
Trade deficit getting bigger, and will blow out even more with the USD falling, which will also give the Fed their much missed and confused 2% inflation through increased imported goods prices (paid for by more consumer debt no doubt).
Fiscal deficits about to explode also - the US will be increasingly reliant on the good will of foreign debt buyers to fund an expanded Trump fueled debt binge.
It seems like Trump is trying to extrapolate the same methodology used in his debt based property dealings into some sort of global debt based ponzi? And with all good ponzi schemes, it relies on finding bigger fools to offload on to.
I agree 100% however as with Bond, Greece, etc. the debt binge leads to a big bubble first. Considering that he has only just past the tax cut and is yet to start the infrastructure, I reckon this bubble is only halfway.
Markets are forward looking so one could argue that the continuing run up in the US was in expectation of the infrastructure spend and tax cut, buy the rumour sell the fact, Trump is a nut after all..no getting around that.
The two-year Treasury yield jumped above 2 percent, marking a rebound to a key psychological level last seen just as the U.S. sank into the depths of the financial crisis in September 2008.
Now, in a development that may have seemed unthinkable during much of the economic recovery, the two-year note provides investors with more income than dividends on the S&P 500 Index.
Investors stand to lose a lot if inflation rises further over the next few years because today’s still low yields won’t compensate them for the loss of purchasing power. And they’re getting just a wee-bit nervous about it.
This nervousness will be one of the factors driving the 10-year yield higher. There are other factors too, including the increased supply of government bonds needed to finance the larger deficits following the tax cuts, and the biggie: The Fed’s QE Unwind, or “balance sheet normalization.” The scheduled balance-sheet shrinkage accelerates this year to:
Q1: $60 billion
Q2 $90 billion
Q3 $120 billion
Q4 $150 billion
For a total of $420 billion in 2018. This is scheduled to increase to $600 billion in 2019.
Even normalized interest rates would crush the US budget under interest payments. Analysts have calculated that if the interest rate on Treasury debt stood at 6.2% – their level in 2000 – the annual interest payment on the current debt would nearly triple to $1.3 trillion annually.
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