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Trump Folds
Late last week, following the worst two-session slide for US equities since the financial crisis (if
When Trump came back to office, I remarked to a friend that the bond market might be the only real check against Trump. Today’s events added a small amount of credibility to that idea.
It’ll be interesting to see what the bond market thinks about the GOPs proposal to add trillions to the deficit to finance tax cuts for the wealthy. Combined with projections that IRS receipts are going to be short due to DOGE’s actions, we may not be beyond a Liz Truss moment yet.
I hope this is not old. A friend of mine shared a quote from James Carville. “When I die I want to come back as the bond market!”
I’ll say it for you, ‘You told me so’. I suppose I overestimated his fortitude, which surprises me because I have so little respect for him to begin with.
I can’t wait to laugh at all the ridiculous ways this will be spun to the MAGA crowd as a glowing success.
Back of envelope
If tariffs on China settle at 50% and rest of world gets 10%, that is about 15% avg US import tariff or about $600BN in new taxes. Lower than the 20-25% implied by 4/2 announcements, but 6X higher than pre-4/2 appx 2-3%. Plus higher uncertainty level and all the lasting damage discussed in H’s excellent posts.
So what does that mean for US/other economies? Still recession in 2Q?
Thanks for this calculation.
Annual pre-tax corporate profits $4TR (after-tax $3.3TR) and personal savings $1TR.
See BEA release pp 15-16 https://www.bea.gov/sites/default/files/2025-03/gdp4q24-3rd.pdf Someone let me know if I’m reading this wrong.
So $600BN seems like a lot. Even if the business part is tax-adjusted, still a lot. Granted substitution and demand destruction will take that number down some, to still a lot.
I guess Reps want to use this money to extend the 2016 TCJA tax cuts, but extension is not “new money” tax cuts.
Having de-risked a fair amount, once again I am stunned by the chaos. I may just accept the ~4% in MMF rather dance between acid rain drops of this administration as the exitUS continues.
I watched Trump’s Air Force 1 interview on Sunday night. It was an absolutely arrogant display. It reminded me of an old quote:
“If you’re not humble, life will visit humbleness upon you.”
–Mike Tyson
Kudos to you, H. One of your top “drop the mic” insights.
feels a bit like stock manipulation, but what do I know
I’m sure the orange family & sycophants benefited immensely.
Marjorie Taylor Greene made a few stock purchases this week. I was kinda thinking the near term bottom was close to being in.
Your guarantee has been fulfilled. I understood the magnitude of it and here we are.
The uncertainty, that is the problem. What will he say tomorrow ? The next day ?
H-Man, he isn’t folding, just trying to push the envelope. Wants to find out the boundaries and if they can be breached.
Release the “Trump the Caveman” memes…
Perhaps. But if he actually had been a caveman, Trump would never have survived his coming of age test.