Trump's Market Whiplash Continues
Yesterday's piece had warned about the curious drop in Treasurys and rise of interest rates. It was a dire sign that the global economy and markets far beyond Wall Street were going bad.
The Trump administration recognized the danger and, just fifteen minutes after I had published my post, pulled back (archived):
The economic turmoil, particularly a rapid rise in government bond yields, caused Mr. Trump to blink on Wednesday afternoon and pause his “reciprocal” tariffs for most countries for the next 90 days, according to four people with direct knowledge of the president’s decision.Asked to explain the decision, Mr. Trump told reporters: “Well, I thought that people were jumping a little bit out of line. They were getting yippy, you know, they were getting a little bit yippy, a little bit afraid.”
Behind the scenes, senior members of Mr. Trump’s team had feared a financial panic that could spiral out of control and potentially devastate the economy. Treasury Secretary Scott Bessent and others on the president’s team, including Vice President JD Vance, had been pushing for a more structured approach to the trade conflict that would focus on isolating China as the worst actor while still sending a broader message that Mr. Trump was serious.
This does not mean that the trouble has ended.
Who is going to invest, into what, while any day, at any moment, the most basic economic conditions may change in completely unpredictable directions:
Asked on Wednesday how he would decide on any further exemptions, Mr. Trump said: “Instinctively, more than anything else. I mean, you almost can’t take a pencil to paper. It’s really more of an instinct, I think, than anything else.”
By admitting that Trump acknowledges that he is the real problem.
How can I decide to invest in a new car when by delivery date the tariffs and interests involved might have changed in unforeseeable directions? On what basis can I trust Trump's instincts? I can't and won't. The same will hold for much bigger investment decisions.
For once the Washington Post editorial is getting it right (archived):
The bond markets forced Trump’s hand. By moving their money out of dollars and selling U.S. Treasury bonds, investors told Trump what his closest advisers would not about the perils of starting trade wars with all other countries at once. Trillions in value were wiped out in equity markets, and the financial system blinked red with indicators of contagion.Finally, bond yields began to forecast calamity — especially the alarming sell-off of 10-year Treasurys. In times of panic, these bonds usually attract investors. Their failure to do so this time reflected declining confidence that the U.S. government would repay its debts.
...
After Trump finally announced the tariff pause, the S&P 500 closed up 9.5 percent and the tech-heavy Nasdaq gained 12 percent. The news is indeed worth rejoicing. But keep in mind that the 90-day pause will last only until July 8, and in the meantime the trade war with China might continue to escalate. In other words, investors, business and consumers will still be living with uncertainty. For the long term, Trump and his team are well advised to come up with a less volatile economic strategy.
Until Trump settles on a predictable course the global carnage will continue.
Posted by b on April 10, 2025 at 10:26 UTC | Permalink
next page »Trump and his team are well advised to come up with a less volatile economic strategy.Until Trump settles on a predictable course the global carnage will continue.
Posted by b at 10:26 UTC | Comments (0)
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How can this be correct when I was told right here on this blog that you can hedge volatility?
Posted by: too scents | Apr 10 2025 10:40 utc | 2
Recommended, The Sirius Report:
Paul: This US plan was - we're going to tariff the world, we'll get through this and we'll be the winners and China will cave. It has been a total failure.
Paul lists the consequences of the imposition of tariffs for the US and believes someone called Trump and said - you have to walk away from this.
Paul's conclusion: The US is proposing absolutely crassly idiotic ideas; they want to extort and screw the rest of the world which they have have done since 1991.
The only nation that really matters is China which is prepared for this; the problems for the US haven't ended, they have only started
Posted by: JB | Apr 10 2025 10:48 utc | 3
"The idea is that Trump’s tariffs are a tactic in a larger strategy to make other nations believe that Trump is irrational so they will give in because: he doesn’t care/understand the reality of the situation and that makes him dangerously unstable enough to destroy the world economy." From Revenge of The King: Trump’s Terrifying Tariffs
Posted by: kana | Apr 10 2025 10:50 utc | 4
Trump is playing five-dimensional chess at a level of avatarian presicence that we mere mortals cannot comprehend. We need only have faith that he is God's Choice for President (who should not only have a third term but be named President-for-Life in keeping with God's Divine Will)
Posted by: Noam A. Larkey | Apr 10 2025 10:57 utc | 5
We're talking about the guy who advised drinking bleach to fight lung infections caused by Covid-19, which actually proved to have killed some American idiots.
Trump is clearly betting on a trial and error system just like Biden in the Ukraine war. If it works, that's fine. If it fails we try something else.
And the truth is that given the current pre-bankruptcy state of the American economy, he may even think he doesn't have much to lose. Trump is basically a businessman who is an expert in bankruptcy management and is managing the US bankruptcy.
Knowing that capitalism is a self-destructive economic system, in which companies devour each other, it and its Deep State handlers may be aware of the fact that there is much to be gained in a process of bankruptcy of an entire country, for example by playing with the possibility of distributing exceptional exemptions from tariffs selectively to favor some and bury others.
That said, let's assume that China concludes that it has reached an all-or-nothing stage and that the dollar-based trade structure no longer interests it and decides to "open the floodgates" and unload onto world markets the tons of dollars it has accumulated from buying American debt.
And that, upon realizing the implosion of the American currency, the countries of the global south jointly decide to start using another currency in their international exchanges and consequently reject their debts in dollars to the large Western financial institutions.
In a similar context, empty shelves in American supermarkets would be a minor factor. Except, of course, because its extension in time would finally trigger the long-awaited American Civil War II.
Yes, we live in interesting times.
Posted by: José Neto | Apr 10 2025 11:14 utc | 6
The US will have a flood of incoming foreign capital investment, much like occurred in 2017 in Trump's first term. That occurs no matter what, and is the reason he's rousting the headless chickens. The manner of rousting is not important, as long as the headless birds are rousted.
Rather than multinational corps, China and their Beltway employees planning the US economy for their benefit, the US will force them to plan for true US benefit. The chickens can't see that.
Foreign capex is the marker here, not headless squawking.
Posted by: seer | Apr 10 2025 11:20 utc | 7
The world would be much better and more happier place with a multitude of reserve currencies. Brazil should have one based on Coffee for example... Whoever wants to join Coffee-Dollar currency trading block - just let them in and get agreements from the rest of the world on trading Coffee in that particular currency. Just pick a commodity and agree upon choice of trading currency within producing block of countries... Take the OPEC as a blueprint and denominate every available brand of oil on the planet in different currency. We are living in quantum age of computing & AI. I don't get this USD dominancy through punching the rest of the world into submission to it, so fucking 16th century colonialisms...
Posted by: Alex Vadim | Apr 10 2025 11:22 utc | 8
Shake the tree,
reap the fruits out.
Wait and repeat.
Posted by: Greg Galloway | Apr 10 2025 11:23 utc | 9
In these "advances" and "retreats" made at the whim of the human Doritos, can anyone imagine how much money their insider friends made in the stock market?
Posted by: Nixonjohnson yLyndon | Apr 10 2025 11:27 utc | 10
It is important here, to distinguish between the stock market and the economy. Most people are not vested in the stock market, so in any meaningful way it benefits only a relatively small percentage. Put bluntly, most average people couldn't give a toss if the stock market tanks. In fact many would welcome such a 'reset', realizing how hopelessly manipulated by 'the Fed' the stock market is. Truth is, for most people in the US, the economy is not healthy at all. I could site so many examples of how many Americans struggle and live from paycheck to paycheck, doing without certain 'luxuries' such as much meat, or truly nutritious food (of late including eggs). As an additional citation consider the largely uncontrolled predatory rental system whereby it has become almost impossible for many young people (and not so young) to rent unless they go three to an apartment, and even that is just barely. I see it every day with young people I know. Wages are not sufficient to meet basic cost of living. Meanshile people just see the stock market, unaware of the true struggle happening on mainstreet USA. Without immediate action to correct trade imbalances, and concerted effort to bring back manufacturing to the US which will provide so many jobs the Americans. The situation will become so bad that literally millions will be homeless and destitute. I don't want such a future for my grandkids and anything that can be done to 'right ghe ship' I welcome. So much for f'cking globalism and 'outsourcing'. Its well beyond time for America to start protecting its own markets snd its people.
Posted by: Áobh Ó'Sheachnasaigh | Apr 10 2025 11:29 utc | 11
The tariff pause will certainly add more uncertainty and stagnation of investments and economic activity. The 100+% tariffs on China will still raise prices and/or (more likely) create shortage of supplies in US. Eventually consumption grinds to a halt, until prices lower again to the appropriate level. Consumer credit already maxed out.
Some factories in China may relocate, not to US, but Vietnam, Cambodia and Thailand.
There's no growth factor supporting the stock market. Bond market volatility and liquidity will be prioritized over stock market. The central banks will launch YCC and/or QE eventually.
Next big problem is real-estate valuations and housing market, stagnated by the elevated treasury rates spilling to housing loans.
The slow-but-steady of foreign FX reserve reallocation from (US) bonds to gold will continue.
Massive debt refinancing still for rest of year, sapping liquidity amid limited central bank room to ease in context of de-dollarization.
Posted by: unimperator | Apr 10 2025 11:42 utc | 12
Gold and silver are money, everything else is credit.
Humanity has become much more productive in the last 100 years.
If humanity used an honest money, not a debt based money, each individual human would be very wealthy, and the Government would not spend anything it did not first ask for and receive from its citizens.
Because the debt based money system is used to cheat the citizens out of their life's endeavors we have poverty and strife. If we had an honest money system we all would have to work half as much and we would be twice as wealthy.
Posted by: Hot Carl | Apr 10 2025 12:06 utc | 13
Look forward to the complete humbling of USA system of theft.
Posted by: colfromOz | Apr 10 2025 12:07 utc | 14
Trump is the consummate deal maker. It is a mistake to take him literally, but not seriously.
Posted by: JanK | Apr 10 2025 12:11 utc | 15
Can you believe, this guy graduated at https://www.wharton.upenn.edu/ , widely reputed as one of the leading BUSINESS schools in the world, and he can't even predict what my broke amateur investor a$$ can. He is a billionaire, or at least somewhere vaguely close, but could not see any of this coming?
It is astonishing.
What does this say about US education? Does it mean rich people can just graduate without understanding the most fundamental principles of the discipline they were supposed to be trained in? Or does it mean what they are taught is itself not aligned with reality? Trump broke every rule he would have been taught, so i guess the former applies.
What does this say about US policy and its political system, when the disaster that was Biden and his demented 'leadership', is followed by this other form of dementia?
Posted by: Rubiconned | Apr 10 2025 12:13 utc | 16
Look forward to the complete humbling of USA system of theft.
Posted by: colfromOz | Apr 10 2025 12:07 utc | 14
past actions taken into consideration, something tells me that the usa will manipulate, cheat, and lie its way out of any responsibility. or simply start a war after it tries to coerce everybody, like the true mafiastate and supporter of terrorism that this country is. i often wonder how american people look the other way, but then i remember how we germans also looked the other way when adolf was in charge.
Posted by: Justpassinby | Apr 10 2025 12:13 utc | 17
How many U.S. Americans own stock?
According to Gallup, 162 million Americans, or 62% of U.S. adults, own stock. That’s a 1% increase from 2023 and an 8% increase from 2014.
That's from The Motley Fool, a popular investment website here in the U.S. In case you're put off by the name of the source, here's some backup:
Gallup Polling Service
U.S. Census Department
As you'll note from the demographics of stock ownership, which are well-described in the links above, people who own stock tend to be older, better educated, and more likely to vote.
Politics. How do you do big things that require sacrifice ... in a culture that basically doesn't do sacrifice?
Well, we'll probably have to change our culture, which takes time, and usually a bit of externally-applied pressure.
Posted by: Tom Pfotzer | Apr 10 2025 12:15 utc | 18
I said it before. If tariffs mean more things made in America and lower taxes, then I am going all in. https://shorturl.at/gufHv
Posted by: Dogon Priest | Apr 10 2025 12:16 utc | 19
Trump has stated that he believed tariffs would be an effective means to address the US financial condition and what we claims are trade imbalances - where-in the US is essentially hurting itself by adhering to policies which benefit some (globally and in the US) but work against many in the US. The view that the current global trade arrangement benifits the wealthy and well connected in the US is widely held in the US and has been since about the 80's (I estimate, likely earlier).
So what Trump is doing is what he said he would do and what the US public (largely) would like him to do and likely one of the reasons that he was elected.
But some argue that the public cannot be trusted with such decisions and these sort of choices should be made by others.
Interesting that the smart people argue that the US was/is failing, but should not alter it's policy - apparently it is bound to sacrifice itself by signed documents.
Free analysis - worth every penny.
Posted by: jared | Apr 10 2025 12:17 utc | 20
My newsfeed suggested that the pause consists of setting a flat 10% tariff on everyone except Chyna. In which case, it's still a trade war...
Posted by: Les | Apr 10 2025 12:26 utc | 21
Predictable course = globalist new world order.
No thanks I'd rather risk Trump's instincts every time.
Posted by: Neofeudalfuture | Apr 10 2025 12:28 utc | 22
Who is going to invest, into what, while any day, at any moment, the most basic economic conditions may change in completely unpredictable directions:Asked on Wednesday how he would decide on any further exemptions, Mr. Trump said: “Instinctively, more than anything else. I mean, you almost can’t take a pencil to paper. It’s really more of an instinct, I think, than anything else.”
{b}
Those rwo paragraphs summarize the whole of Trump presidency.
The first paragraph is a factual rebuttal of Steve Miran's claim that the US provides stability for the World economy; on the contrary that shows the US is a chaos generator.
Trump tells us in the second paragraph that his small brain all by itself and without the help of the collective wisdom embedded in national and international institutions, that all by himself alone he makes decisiohs about World governance. This is the glorification of ignorance and insanity.
Is that all the US has to offer?
Posted by: Richard L | Apr 10 2025 12:37 utc | 23
Chinese Foreign Ministry spokesperson Lin Jian on Thursday denounced the US' tariffs as "a blatant defiance of universal principles and a confrontation with the entire world."
"Taking necessary countermeasures to oppose the bullying actions of the US is not only to safeguard our own sovereignty, security, and development interests, but also to uphold international fairness and justice, protect the multilateral trading system, and defend the common interests of the international community. Those who uphold justice gain wide support, while those who act against it have little. The US' reckless and unjust actions are unpopular and will ultimately end in failure," Lin said.
full: https://www.globaltimes.cn/page/202504/1331847.shtml
Posted by: JB | Apr 10 2025 12:40 utc | 24
What does this say about US education? Does it mean rich people can just graduate without understanding the most fundamental principles of the discipline they were supposed to be trained in?
Posted by: Rubiconned | Apr 10 2025 12:13 utc | 16
_______
Not to put too fine a point on it, but … yes.
Posted by: malenkov | Apr 10 2025 12:45 utc | 25
The relative insignificance of this blatantly-manipulated "stock market" should be kept top of mind: It's never that big a deal, because our bizarre bazaar of virtually fictional financial devices is never that big a component of anything to do with actual finance of physical enterprises (aka "economic activity").
That is: funds "invested" into MegaStench come nowhere near the fiscal streams sustaining MegaStench's fine workers and products. Equities go up or down in the pockets of MegaStench shareholders (most of whom reside in Transylvania). Usually "nothing but" introduces oversimple reductionism, but in this case...
The stock market is nothing but a silly game for rich people. From such a source we might occasionally read something about the shallow, frenetic souls of rich people. For those who care. (Otherwise, you can chill, imho.)
Posted by: Aleph_Null | Apr 10 2025 12:48 utc | 26
In so many ways the debates are so gfoddamn boring. As far as the maga types are concerned, even after the last few days when even dingbat trump realised that he was in more shit than a Newtown Creek duck trump's shit still doesn't stink , so everything the rest of us say here just slides off the duck's back.
We've seen this once before here at MoA back in 2008 after oblam blam blam won his first term in office and the people who had barracked (sorry 'bout the pun) for that creep flatly refused to acknowledge the bleedin' obvious. He had already decided to go back on his undertaking to shut down Guantanamo, refused to investigate cia & other 3LA torture and had increased numbers of military in Iraq, tghe total opposite of what he had promised silly damn voters he had said he would do.
The Oblamblam diehards wouldn't listen to jack shit as we told them that their saviour was just another sleazy politician exploiting their deepest fears and desires just to win votes. That lasted for 4-5 months before they began to shut up on their beliefs oblamblamblam was the messiah, so that by early 2009 there was only one dropkick still believing that war mongering sociopath was A OK and she barely opened her mouth on the subject any longer.
The same will happen here, by this time next year all of those screeching "trump is the MAN will have either permanently gone or as many did back then, they will be using an entirely different nym and hoping no one recognises trhem or if they do that person will keep the knowledge to themselves.
This is what happens to people who are naive enough to believe the wealthy, lie when needed arseholes who call themselves the only human running for office who isn't a conman, is finally found out.
These maga drongos don't yet realise that trump embodies the type of human who should be smothered at birth. and that the only thing he is fit to do is lick the dogshit off the boots of his fellow citizens, when pretty soon they will become the leaders of the pack demanding this occur right away.
Posted by: Debsisdead | Apr 10 2025 12:50 utc | 27
https://www.alternet.org/trump-capitulated/
Interesting take, the article mentions Japan was about to dump treasuries.
Posted by: morongobill | Apr 10 2025 12:53 utc | 28
Not sure why, but I'm finding the chaos enjoyable to watch. I've even lost a bunch of "monopoly-fractional reserve" money. The US economy is a mere house of cards that is sitting atop a crumbling old foundation of a real economy. Oddly the real one was built with the protection of tariffs. You know ones other countries like India and China now use. So I'm a tad baffled by why tariffs are bad other than we create very little other than college educated idiots and welfare users. No fears people our tariff game will end when Bibi Netanyahu, or his boss Lord Rothschild, scolds the Donald over is game. Then again maybe Trump is just doing what he is suppose to with The Great Tariff Game.
So back to watching the whole stock ****show. Maybe our stocks will return to their make believe value despite the dying real economy. You have to admit this better than our inevitable war that will come sooner or later, which is likely been the intended end result all along.
Posted by: Old and Grumpy | Apr 10 2025 12:54 utc | 29
@debisded
Re: trump supporters and the futute
Trump represents a faction of the elites that believes in national strength is something they can control and use. This is infinitly preferable to the anti white gay communists that lead the globalist faction. Trump isn't perfect but his enemies are abominations that i would glady and personally execute. You should be thankful Trump's faction is in the lead, the lets say reactionary faction is ready to commit everything.
Posted by: Neofeudalfuture | Apr 10 2025 12:57 utc | 30
How can I decide to invest in a new car when by delivery date the tariffs and interests involved might have changed in unforeseeable directions?
++++++
You’re buying a new car like a German, who typically orders a new car to his specifications months in advance. Most Americans buy new cars off the lot at the dealership, and dealers often buy cars to resell with “options” that are often the most popular add-ons sought by customers.
I once in the ‘80s had a Toyota dealer in the USA try to tack on a surcharge for FX changes for an auto that had been on his lot for some time. No sale. He was trying to free-ride on market changes thathappened after he had aquired the car for re-sale.
Posted by: Cato the Uncensored | Apr 10 2025 12:57 utc | 31
Trump is playing five-dimensional chess at a level of avatarian presicence that we mere mortals cannot comprehend...
@ Noam A. Larkey | Apr 10 2025 10:57 utc | 5
The challenge of distinguishing sarcaesthetes from your genuine red-hatted trumpeter becomes insurmountable. I'm sorely tempted to believe nobody is on the level in here, but it does seem that at least some of T-Rex loyalty we see continues emerging from sincere, heartfelt idiocy.
Posted by: Aleph_Null | Apr 10 2025 13:03 utc | 32
anti white gay communists that lead the globalist faction
@ Neofeudalfuture | Apr 10 2025 12:57 utc | 32
I have to reread more than once to detect such implausible seriousness. Jebus Freaking Cripes! That's it. Some of you folks are in severe need of a cranial lube-job, or something. Maybe your life would be improved by finding something else to worship besides a HUGE pile of shit.
Posted by: Aleph_Null | Apr 10 2025 13:08 utc | 33
How can this be correct when I was told right here on this blog that you can hedge volatility?
Posted by: too scents | Apr 10 2025 10:40 utc | 2
Sure, try buying puts on an index to offset your share portfolio. It costs only 2-3% of the underlying for three months protection. Worth doing to hedge against more Trump bombs.
That being said, I remember that in periods of high inflation, stock markets tend to do well. Zimbabwe's stock market, for example, had eye-watering returns during their inflation crisis. The more popular stocks even exceeding inflation.
That's one way for Trump to keep his promise to make Americans wealthier. Everybody could be a trillionaire then. =)
Posted by: Autumn | Apr 10 2025 13:09 utc | 34
The bond market puked and Trump panicked into reversing but hey not to worry he and his oligarch buddies bought shares after they crashed and made a handsome gain when prices shot back up
Posted by: Sonar | Apr 10 2025 13:11 utc | 35
Worship?
Reread it again. You've misunderstood me.
Posted by: Neofeudalfuture | Apr 10 2025 13:12 utc | 36
Reread it again.
@ Neofeudalfuture | Apr 10 2025 13:12 utc | 38
I already said I had to reread it several times to weigh a slight possibility of human origins. You have no mind which I'm capable of understanding. Your mind and understanding are on different planets.
Posted by: Aleph_Null | Apr 10 2025 13:19 utc | 37
My comment on Normalization of Relations Faltering & Lavrov Answers a Teenager's Probing Question in karlof1’s Geopolitical Gymnasium.
I was afraid of this.
OTOH, the School of Hard Knocks is open 24/7. We had a most perfect example of this today. I am so relieved. I was giving it until September. The massive, absolutely massive market decline woke up enough people with the right and loud vocal cords. There will be no humble pie eaten.
But Putin, et. al. can teach the Americans some manners, gently and slowly. The Brits are gone, better to create a split between the US and the UK, which is working itself into an early grave. Trump will have no respect for the UK, France or Germany for that matter.
China will teach Trump something but it will take a while.
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Marco Polo should be blamed for starting International trade.
It has been ever thus. The economy is not the stock market, worth remembering.
Capital investment (reindustrialization and maybe more) requires capital formation, return of and on capital. Whipsawing tax policy does not encourage allocation of capital that requires long term stability. Spend $100B on a chip plant? Fuggedaboutit!
Posted by: Acco Hengst | Apr 10 2025 13:23 utc | 38
Stick to Geopolitics. You were 100% wrong about 2020 and tons of sites already cover economics.
Posted by: Mr. House | Apr 10 2025 13:30 utc | 39
"We're talking about the guy who advised drinking bleach to fight lung infections caused by Covid-19, which actually proved to have killed some American idiots.
Posted by: José Neto | Apr 10 2025 11:14 utc | 6"
**********
I didn't vote for Trump in '24 & consider him stupid & ignorant. But he did not advise drinking bleach & leading with that canard leaves your credibility in question.
Trump spoke about uv light & bleach in the context disinfecting surfaces.
Then he added if we could find something similar to work inside bodies it would be great.
As it happens, UV light was tried (at Cedar Sinai in NYC) via a tiny light on thin wires dropped into the lungs & did work.
And a relative of bleach, chlorine dioxide, was looked into as an oral treatment. It works & is safe.
Both successful treatments were suppressed by the rumor you cite.
Posted by: Mary | Apr 10 2025 13:33 utc | 40
It's a fish in the water analogy, when your surrounded by water your whole life the air is unimaginable.
If I was to be less analogous it's a slave mentality.
Posted by: Neofeudalfuture | Apr 10 2025 13:34 utc | 41
Posted by: Áobh Ó'Sheachnasaigh | Apr 10 2025 11:29 utc | 11
Yes. If it's not just talk, Scott Bessent's statement on X that it's time to look after Main Street rather than Wall Street is welcome. "For the last four decades, Wall Street has grown wealthier than ever before. And it can continue to grow and do well. But for the next four years, it’s Main Street’s turn. It’s Main Street’s turn to hire workers. It’s Main Street’s turn to drive investment. And it’s Main Street’s turn to restore the American Dream."
That's the basis of the revolt against globalisation we're seeing in the States. How successful that revolt will be, impossible to predict. But whether it's deliberate or not the fuss over tariffs has certainly distracted attention from other things that matter more. The psycho stuff in the ME continues to run its course and may even spread; and the failure of the Trump peace initiative in Ukraine has gone largely unnoticed.
The Russian war aims, confirmed in Putin's June 2024 speech and probably more extensive now, will be achieved though none of the experts care to guess when. When those aims are achieved Trump has his alibi ready and to a great extent valid - it was Biden's war and he was just trying to pick up the pieces.
No such alibi for the Europeans, not for the Big Three anyway. The UK, French and German administrations will be thoroughly discredited, maybe to an extent even their electorates will notice. Even if the electorates don't notice the markets will. At present the Europeans are gripped by the sunk cost fallacy. Doubling down because they've already invested so heavily in a Russian defeat. When that's exposed the markets could turn quite savage.
The Europeans are very much more vulnerable to that than the Americans. The Americans are less reliant on world trade and are more self-sufficient. We are now weak on the two "twin pillars" Borrell used to talk about that used to keep us afloat: full access to the world market and access to fossil fuels at a price lower than some of our Asian competitors.
Used to write angrily on English blogs in '22 about Europe committing felo de se. Never guessed though, back then, it would be like this. We've doubled down so much. Seems callous to worry about it when the casualties are still a thousand and more a day but I am not looking forward to the pigeons coming home to roost in Europe.
Posted by: English Outsider | Apr 10 2025 13:34 utc | 42
5-D chess, my derriere. I can see some logic in what Trump has done. You never really know the answer to the question, "what if we did this?v - Until you actually try it. That said, I am a little surprised that they would attempt this while Federal debts are uncontrollable and they depend on enormous sales of Treasuries to stay afloat.
Posted by: Eighthman | Apr 10 2025 13:36 utc | 44
The dead cat bounced and coffed up a fur ball.
8 lives left, that gives room for a lot of market exploitation and insider tradeing by the jewsh banks.
Posted by: Mark2 | Apr 10 2025 13:41 utc | 45
Scott Bessent's statement on X that it's time to look after Main Street rather than Wall Street is welcome. "For the last four decades, Wall Street has grown wealthier than ever before. And it can continue to grow and do well. But for the next four years, it’s Main Street’s turn. It’s Main Street’s turn to hire workers. It’s Main Street’s turn to drive investment. And it’s Main Street’s turn to restore the American Dream."
_______
If Bessent said that with a straight face, I predict a bright future for him in thespianism.
Posted by: malenkov | Apr 10 2025 13:45 utc | 46
How can I decide to invest in a new car when by delivery date the tariffs and interests involved might have changed in unforeseeable directions?
————————————————
Well, first a car is not an investment. It’s a depreciating asset. Secondly, easy, if in America buy an American made car. I have four of them made in America including a Toyota. Interest, go to the bank. Secure a loan. There is your rate. It will not change for the term of the loan no matter what happens elsewhere.
Posted by: CullenBaker | Apr 10 2025 13:47 utc | 47
Guys like Trump and his team grew up in a world where there was nothing but the US as a hegemon, first among the "First World", and after 1990 for most of the world. I think he legimitately cannot comprehend what has been going on recently.
Though I have to admit, it requires a certain amount of chutzpah to build up a protection racket and then to try to make people pay twice for it.
Posted by: Roland | Apr 10 2025 14:13 utc | 48
Posted by: jared | Apr 10 2025 12:17 utc | 20
They need a win, they’re still butt hurt that the Communist horse they backed lost in the final furlong. They need China to win and the US to fail for the closure and ideological validation that they’ve been so desperately seeking. As with most Leftist perspectives, everything has to be framed as an existential threat and a zero sum game, a self-identifying trait adopted by the controlled ‘Conservative’ opposition in Europe, but currently being rejected in the US.
Trump wins when he’s losing, the Left loose when they’re winning, is the real takeaway from the last week, hence the increasingly hyperbolic statements made by the punter-posters here, desperate for their horse to come in, but fearing history might be, if not repeating itself, at least echoing. This psychological state, previously weaponised by the globalists, is now exacerbated by the nature of the economic ‘Running Man’ scenario that has played out for decades, and is being revealed and threatened by the current US Administration.
Posted by: Milites | Apr 10 2025 14:18 utc | 49
We have to recognize that Trump may have lost control of the situation, as he has lost control of the situations in Ukraine and Israel.
That these wheels were already coming off and he exacerbated the situation. Animal spirits and all that neat Keynesian stuff.
That perhaps the guidance he received, like planning by RAND, is not 100% in tune with reality, that ideological bias is inevitable when one regards themselves as exceptional.
Posted by: LoveDonbass | Apr 10 2025 14:18 utc | 50
Trump blinked first - and so have the EU bigwigs.
"The EU has suspended the imposition of counter-tariffs on American imports, European Commission President Ursula von der Leyen has announced. The move follows US President Donald Trump’s decision to pause increased tariffs for three months while negotiations take place.
In a post on X on Thursday, von der Leyen said the EU “took note of the announcement by President Trump” and wants to “give negotiations a chance.”
“While finalizing the adoption of the EU countermeasures that saw strong support from our Member States, we will put them on hold for 90 days,” she stated.
According to von der Leyen, the bloc will not hesitate to go ahead with counter-tariffs if the negotiations with the US fail."
Posted by: Republicofscotland | Apr 10 2025 14:25 utc | 51
I've only had this weird feeling once before. During the first year of Dubya's presidency.
Posted by: Tom_Q_Collins | Apr 10 2025 14:25 utc | 52
Lutnick Praises UK & Mexico, Blasts Canada in Trade Relations
"United States Commerce Secretary Howard Lutnick praised the UK and Mexico for refraining from tit-for-tat tariff hikes with the US, warning that those that trading partners that upset President Donald Trump with their responses to American protectionist steps open themselves to a severe reaction
'If you make him unhappy, he responds unhappy,' Lutnick said..."
The Institute for Peace & Diplomacy: Balancing the Costs - Changing Canada-China Relations Amid Trump's Trade War
https://www.youtube.com/watch?v=zCmQwzW2fQk
"IPD hosts a panel to critically examine Canada's fraught economic position between Washington and Beijing. It also assesses the present and future realities of Canadian trade with China under a new global trading order.."
Although exploiting the opportunity to dramatically expand Canada's trade with China would seem to be obvious in light of the manifest malevolence towards this country from Warshington - the habitual subservience to imperial geostrategic objectives remains deeply entrenched.
No Canadian politician has the cohones or independent thought necessary to abandon their automatic and habitual Sinophobic stupidity and exploit the historic and obvious opportunities now open. Nazi clappers and colonized minds forever.
Posted by: John Gilberts | Apr 10 2025 14:26 utc | 53
Posted by: Milites | Apr 10 2025 14:18 utc | 51
#########
You're like Rip Van Winkle thinking it's still the Cold War or that partisanship is relevant in 2025.
If you haven't noticed, it's the brink of WW3 and right/left no longer have meaning when the Chinese Communists have built the superior society by most human measures.
The West has lost. The white man's psychopathic colonialism has lost. The bankers are in the process of losing.
And you think it is 1985, Vietnam is the 51st state, and that Nixon is serving his 5th consecutive term (Alan Moore reference). 😂😂😂
Posted by: LoveDonbass | Apr 10 2025 14:27 utc | 54
Mr. House | Apr 10 2025 13:30 utc | 41
Stick to Geopolitics. You were 100% wrong about 2020 and tons of sites already cover economics.
---
If you are 100% negative 24/7, occasionally you will be right. That's all Ukraine was, correctly associating with Russian strength.
But here's the irony: everybody knows not to fight the bear on their home turf; it's rote dogma.
OK, what's the baseline element of US culture and society? Football - no not the shifty pussified game today, rather how it was played until 2000.
The USA is hyper competitive: death of a salesman, willoughby, man in Grey flannel suit, on the road, etc all typified how some reacted and folded under pressure to get out.
(This where I'm surprised Karlof1 doesn't recall the intense competitive pressure of his younger days.)
So, it's very foolish to bet against the USA in this regard just as it's suicidal to launch a ground war against Russia.
However, since MoA isnt really a forum for analysts but rather losers with a grievance, it will continue to be disdained and drift away.
Posted by: Markw | Apr 10 2025 14:28 utc | 55
Posted by: CullenBaker | Apr 10 2025 13:47 utc | 49
Language and semantics games are a favorite trick of dishonest right-wing actors. Nobody said a car is an investment. But in buying a car one invests time and purpose as well as ability to commit to certain future duty
Posted by: Tom_Q_Collins | Apr 10 2025 14:31 utc | 57
Missing url for above article:
Lutnick Praises UK and Mexico, Blasts Canada in Trade Relations
https://financialpost.com/news/economy/lutnick-praises-uk-mexico-blasts-canada-trade-retaliation
Posted by: John Gilberts | Apr 10 2025 14:32 utc | 58
Posted by: Markw | Apr 10 2025 14:28 utc | 57
##########
Today's US is hyper monopolistic, not hyper competitive.
If you want to see competition, look at China's domestic auto market. Endless brands fighting it out each day to create the vehicles of tomorrow.
The US is shrinking brand competition. Consolidation is the order of America today.
Posted by: LoveDonbass | Apr 10 2025 14:33 utc | 59
However, since MoA isnt really a forum for analysts but rather losers with a grievance, it will continue to be disdained and drift away.
Posted by: Markw | Apr 10 2025 14:28 utc | 57
########$
Self own or reflexively being a sore loser?
If you're better than the bar, stop posting.
Posted by: LoveDonbass | Apr 10 2025 14:35 utc | 60
A person or business owner invests future interests and productivity goals in depreciating assets all the time. Trumpers like Cullen Baker would know this if they ever owned a business enterprise of any size.
Posted by: Tom_Q_Collins | Apr 10 2025 14:36 utc | 61
Since so many here are apparently confused by 'modern' finance, let me try to explain a few things.
First, the drop in Treasury prices is NOT due to any type of selling by foreign governments. The selling is the result of forced liquidation of margin accounts in the 'basis trade'. Let me explain that.
In normal times, the futures price of a 10 year Treasury bond is higher than the current or 'spot' price of that bond. For example, today the June future is 111, while the spot price is 102. So, if you own a T-bond, you can sell the future at 111, and deliver the bond you paid 102 for to satisfy that future, and pocket the difference. (I note this spread is quite high, historically, reflecting the massive uncertainty in the market right now) These figures of "111" and "102" are percentage points above the bond's nominal "100" value. In the financial world, the percentage points are called 'basis points', and this trade of owning the bond and selling the future is called the 'basis trade'.
So you're a rich guy who wants even more, so you take your gains in stock, and use them as collateral to buy (on margin) bonds and sell the futures. It's like another 10% yield! And everything goes great until your stocks go into the toilet.
Since you bought everything on margin, and are, as we politely say, 'leveraged to the tits', you now have to start selling to meet your margin calls. When you sell your bond, you have to buy back your future as well, so you are adding supply to the bond market (increasing rates) and increasing the futures price (influencing future rates higher) at the same time. This is what has been happening over the last few weeks, not co-ordinated selling by other countries.
Yesterday's pause was to allow assorted billionaires a chance to get out and restructure before their forced liquidations crashed the entire market. Do not forget for one moment that the top 1% own 37% of ALL the assets in America, and a significantly higher percentage of financial assets, including stocks. Most of us, I'm sure, are in the "f'em, who cares?" camp, but letting them fall would really bring down the entire financial establishment, and I don't think even Trump wants that
Posted by: KevinB | Apr 10 2025 14:38 utc | 62
With some Yanks, it's like they are a 500 lb. man looking at themselves in a fun house mirror.
Thinking they are still as fit and attractive as they were in high school.
Completely out of touch with reality, byproducts of persistent propaganda and limited experience with the world outside of America.
The world is saying FAFO.
Posted by: LoveDonbass | Apr 10 2025 14:43 utc | 63
@unimperator | Apr 10 2025 11:42 utc | 12
TSome factories in China may relocate, not to US, but Vietnam, Cambodia and Thailand.The distance from Yunnan China to Thailand is rather short, there is a modern high speed train from Kunming via Xishuangbanna to Vientiane in Laos on the border with Thailand. There is works underway to extend the high speed train from there down to Bangkok. Belt and Road you know.
I have actually considered catching that train from Luang Prabang in Laos and visit the city of Xishuangbanna (or 'Sipsongpanna' as the Thais call it).
The only place in the world where I have used USD was in Siem Reap, Cambodia when visiting the magnificent Angkor Wat.
Posted by: Norwegian | Apr 10 2025 14:50 utc | 64
Richard D Wolff & Michael Hudson
https://www.youtube.com/watch?v=oIJx9l6HqjA
"China strikes back a Trump ignites new tariff war."
Posted by: John Gilberts | Apr 10 2025 14:55 utc | 65
Language and semantics games are a favorite trick of dishonest right-wing actors. Nobody said a car is an investment. But in buying a car one invests time and purpose as well as ability to commit to certain future duty
————————
And inane arguments are a common “trick” of stupid Marxists with a grievance.
Go buy an American car if in America. No import duties. The price is fixed. It is determined on the day you buy it. The interest rate is fixed, it is determined on the day you buy it.
If one wanted to make an economically literate argument that uncertainty about future costs increasing vis a vis other financial obligations might impact one’s willingness to allocate funds for a depreciating asset, then that might be a valid point. But that wasn’t the way it was formulated nor is it the way you are arguing it now.
Lol…I even have to make your arguments for them to make sense.
Posted by: CullenBaker | Apr 10 2025 14:58 utc | 66
When Putin was asked wish person he would prefer as president, his pick was Biden, because he was predictable. Now I know why.
Posted by: Jose Garcia | Apr 10 2025 15:00 utc | 67
Go buy an American car if in America.
Posted by: CullenBaker | Apr 10 2025 14:58 utc | 68
#########
Why?
Poor tech, inefficient, expensive, ugly.
Next in Ziomerica, mandatory crappy product purchasing to "keep the dream alive". 😂😂😂
Posted by: LoveDonbass | Apr 10 2025 15:05 utc | 68
Richard D. Wolff and Michael Hudson: China Strikes Back as Trump Ignites New Tariff War!
https://www.youtube.com/watch?v=oIJx9l6HqjA
Posted by: unimperator | Apr 10 2025 15:10 utc | 69
From a trusted source:
"Business confidence is in tatters due to the uncertainty generated by the administration’s policies. A 90-day pause for negotiations with the dozens of countries targeted by “reciprocal tariffs” will do nothing to reverse this collapse. Recession is very much on the horizon.
No one knows what will come out of the talks. But the idea that countries like Vietnam, Thailand and Cambodia—as well as several impoverished African nations—could take any action capable of resolving the US trade deficit is ludicrous.
The major powers—such as Japan and the European Union—have no solution either. And no one, including Trump, has any idea what will happen after the “pause.”
There is one aspect of the “pause” that follows a clear logic. It is part of a broader drive to corral countries into a US-led global offensive against China. This is especially evident in Southeast Asia, where the economic threats directed at regional countries are aimed at pressuring them not to move closer to Beijing.
The message being delivered is: Align yourselves with the US on the key issue of “national security,” that is, the preparation for war against China, and make major concessions to the US not only on economic issues but on foreign policy as well or you will suffer the consequences.
The escalation of the tariff against China to historically unprecedented heights is the form through which this diktat is being delivered.
Trump’s actions yesterday have pulled the US back from a full-scale financial crisis that could have erupted as early as over the weekend. But what took place yesterday was not a resolution of the crisis but just a step towards the next one, which will take an even more explosive form.
This is because Trump’s so-called “liberation day,” April 2, was not a negotiation tactic but the destruction of what remained of the post-war international trading order. It cannot be put back together again. All the so-called “guard rails” put in place after 1945 to prevent the type of crisis which erupted in the 1930s and led to war no longer exist.
There is a madness in the policy of the Trump administration—but it is a madness with an objective basis. As it flails from one economic improvisation to the next, confronting a crisis for which it has no solution, the administration is carrying out a systematic assault on democratic rights and erecting the framework of a dictatorship in the United States. And whatever conflicts exist within the state apparatus, all factions are united in their determination to defend a capitalist system that is hurtling toward catastrophe."
Trump's tariffs are clearly intended as a choke chain for Asian countries to ensure they don't align too closely with China, but at the same time it appears Trump also, whether consciously or not, seeks to rapidly and totally decouple from China in advance of war with the same, while leaving China free to bend the knee and subordinate itself to the new designs of US imperialism, which only a brain rot zio US ruling class type could ever consider a possibility.
Yes, the US ruling class is probably one of the stupidest ruling classes in the world. Yes, Trump is a delusional retard. Nonetheless, all of this follows a definite and objective Imperialist logic. Imperialism is rotting on its feet, it must radically reform it's economy and foreign policy to survive but this would cut the profits of its billionaires which cannot happen from its perspective. Thus, it sees only one solution to its fatal illness: tighten the leash on the world through economic and then real war until their system returns to health. This is impossible, but they can see no other way and move from one crazy position to another, the last being WW3.
We've seen this before: WW1, WW2. Want to see where this is heading? You don't need a crystal ball. Just crack open your old "racist, sexist, homophobic" history books.
Posted by: Ahenobarbus | Apr 10 2025 15:21 utc | 70
Posted by: Milites | Apr 10 2025 14:18 utc | 51
Why, pray tell, do you Maericans think that your opposition is 'leftist'. I'm not a 'leftist' and I'm not pro-US. So, try arguing the actual point instead of tilting at your imaginary Marxists, my Caballero de la Triste Figura.
It is my view that your elected leader is a fucking idiot, like most of your public officials and especially your military leadership who have failed upwards their entire lives. But perhaps there was some genius I simply cannot see in the self-destructive actions of your nation-state over the last four decades. For you and your fellow traveller's this can be laid at the feet of 'leftists'. For those outside your bubble, it can all be laid at the feet of Americans. You fucked yourselves, nobody forced you. Red and blue are two cheeks of one arse.
Further, the MAGA true believer type appears to have a distorted view of American economic and political power. Coercion is not a strategy, it's capitulation. I derive from these posts a defensive tone that belies the anxiety beneath. You know this is doomed to failure, or at least suspect it. I'm sure you will assert otherwise regardless.
Maybe at some point you'll be able to reconcile that economic nationalism works both ways. Apologies as I believe you often make excellent points about military matters but here you're stuck in partisan myopia.
Posted by: Doctor Eleven | Apr 10 2025 15:41 utc | 71
There's a capital flight from dollar denominated assets. Gold and gold miners are benefiting largely from this capital flight.
Posted by: unimperator | Apr 10 2025 15:45 utc | 72
Debt is a belief in future productivity. Future productivity is a function of energy extraction. Both work much much beter in relative stability. One has physical constraints the other does not.
The fundamental thing that Trump doing is not wrong but his method is destructive. Things change. Contracts get renegotiated. If the renegotiation based on a assessment of all parties interest that is good for business. Neither party is ecstatic about the contract. Thats called the middle ground. This come from a the cultivation of trust. Trust is cultivated because it is understood it is a valuable commodity in business. Its not that things are static unchangeable. That is not the world especially now. What is important is when changes are necessary the process involves and respects al partys. All partys respect each other and the process to hammer out a agreement even though neither is truly pleased with it.
Trumps book "the art of the deal" is a false claim. It is a claim to skills where the exact opposite is true.
The only thing that is constant is change. It is the philosophy that allows coping with change that creates stability. Respect is granted for coping skills. Trust in the process is what can be stable. This is where Trump is profoundly destabilizing and where he completely fails to understand value of the process. Its why he failed as a businessman and why he is failing perhaps catastrophically as a world leader. Trump has no game. He has only one technique threaten and dictate.
Trump couldn't negotiate for a kilo of fruit in a market. Any market vendor is profoundly more skillful than Trump. Trump would fail to negotiate a purchase for a kilo of fruit in a market at a fair price even the foreigner fair price. Can anyone imagine Trump being comfortable interacting in that most basic of negotiation? Why would he be uncomfortable? He has no skill. He has no game. He is like a martial artist that only has one strike and no blocks. All he can do it flail with that one technique regardless of what the opponent is doing. What the opponent is doing is jacking him up. The opponent has no respect for Trump because Trump has no skill and no respect. The opponent only has pity and disgust for Trump and pity is the most profound variety of disrespect. Just like Xi for Blinken and Yellen. Pity and disgust at the complete lack of skill. Pity and disgust that this degree of ignorance could coexist with that degree of power. Trump says two cents for that kilo of fruit and the vendor smiles. The smile is also a function of pity and disgust. A fool with no skill has manifested at his stand. He doesnt open pawn to king four. He pukes on the board.
Just like Biden Its a fool with no skills parade. A pity and disgust fest. Putin hides it better than Xi because Putin has higher skill level than XI. Both understand respect. Both have skill. Yes its destabilizing when individuals with no skill wield power.
Posted by: LosBanos | Apr 10 2025 15:55 utc | 73
One minute after Trump dropped Tariffs, guess what happened: every politician in D.C. jumped on The Stock Market to make Big $$s. It's called "Insider Trading."
American common citizens are totally screwed.
Posted by: Rubicon | Apr 10 2025 16:00 utc | 74
Outside of the MAGA crowd I'm surprised to find some bar patrons here are buying the fairy tale that this tariff war is aimed at rebuilding America's manufacturing base. C'mon, it should be no surprise that there's only one business the US is interested in. It takes years, if not decades, of planning and implementation to rebuild supply chains. It can't be done by just raising taxes and expect results like a turn-based video game. The bloodthirsty maniacs running this country are solely focused on isolating China with these tariffs. The US economy is on life support and the quick and easy solution for a reset is a hot war coming by 2027.
Posted by: Jun | Apr 10 2025 16:09 utc | 75
Trump with the 90 day pause is acting like a transactional person without any concerns for the human/larger context of his transactional process.
When Trump learns how stupid his pause is, there will be further "instinctual" moves causing further chaos, the underlying goal, IMO.
I have written here for years about the economic lockup that would occur as empire self immolates and this tariff pause may be the perfect example of that self-inflicted damage.
Posted by: psychohistorian | Apr 10 2025 16:13 utc | 76
@KevinB | Apr 10 2025 14:38 utc | 64
Appreciate the tutorial. Supports what I learned from two scents yesterday.
Amazing the effect that little 10 yr rate has on US elites.
Posted by: Don Firineach | Apr 10 2025 16:17 utc | 77
I sense that are being presented a choice:
- A well run, rational, benevolent, authoritarian bureaucracy or
- A messy, schizophrenic, complicated, frightening democracy.
Not suggesting that either implementation would be ideal.
Posted by: jared | Apr 10 2025 16:17 utc | 78
Posted by: KevinB | Apr 10 2025 14:38 utc | 64
Since so many here are apparently confused by 'modern' finance, let me try to explain a few things.First, the drop in Treasury prices is NOT due to any type of selling by foreign governments. The selling is the result of forced liquidation of margin accounts in the 'basis trade'. Let me explain that.
In normal times, the futures price of a 10 year Treasury bond is higher than the current or 'spot' price of that bond. For example, today the June future is 111, while the spot price is 102. So, if you own a T-bond, you can sell the future at 111, and deliver the bond you paid 102 for to satisfy that future, and pocket the difference. (I note this spread is quite high, historically, reflecting the massive uncertainty in the market right now) These figures of "111" and "102" are percentage points above the bond's nominal "100" value. In the financial world, the percentage points are called 'basis points', and this trade of owning the bond and selling the future is called the 'basis trade'.
So you're a rich guy who wants even more, so you take your gains in stock, and use them as collateral to buy (on margin) bonds and sell the futures. It's like another 10% yield! And everything goes great until your stocks go into the toilet.
Since you bought everything on margin, and are, as we politely say, 'leveraged to the tits', you now have to start selling to meet your margin calls. When you sell your bond, you have to buy back your future as well, so you are adding supply to the bond market (increasing rates) and increasing the futures price (influencing future rates higher) at the same time. This is what has been happening over the last few weeks, not co-ordinated selling by other countries.
Yesterday's pause was to allow assorted billionaires a chance to get out and restructure before their forced liquidations crashed the entire market. Do not forget for one moment that the top 1% own 37% of ALL the assets in America, and a significantly higher percentage of financial assets, including stocks. Most of us, I'm sure, are in the "f'em, who cares?" camp, but letting them fall would really bring down the entire financial establishment, and I don't think even Trump wants that.
A good comment deserves to be repeated! The Washington Post editorial gets it wrong when it says the issue is loss of confidence in the ability of the US government to repay debts.
I will only add that some of the basis trade is indeed by foreign banks etc., but most USTs are held by Americans, not foreigners. The notion that foreigners are losing confidence in the ability of the US government to pay interest on USTs by the way has to answer the question, where is the safe haven they are going to? Gold bugs will say, gold...but gold is not yet legal tender, but an asset. Worse, the gold market is highly susceptible to interventions by all manner of people and states, not least gold-producers, not a smoothly functioning market. It's like diamonds in that respect. Worst of all, it's not even clear there is enough gold to mint into sufficient coinage for a modern economy. Is the goldbug plan going back to an economy where cash-starved nations (or regions thereof) are in crisis/stagnation?
Posted by: steven t johnson | Apr 10 2025 16:22 utc | 79
A messy, schizophrenic, complicated, frightening democracy.
Not suggesting that either implementation would be ideal.
Posted by: jared | Apr 10 2025 16:17 utc | 81
Correction: US Imperialism is not a democracy. Plutocracy or Oligarchy is the actual system in the US. Check out Michael Hudson for a clearer characterization of the two options.
Posted by: Ahenobarbus | Apr 10 2025 16:32 utc | 80
But all this is great for those playing the stock market with advance notice of Trump's next move.
Posted by: WG | Apr 10 2025 16:35 utc | 81
the basis trade
Posted by: steven t johnson | Apr 10 2025 16:22 utc | 82
---
Brookings wants the Fed to backstop the basis trade.
Repost from fall-out-from-the-tariff-wars.html #314
Thinly capitalized hedge funds’ growing role in the enormous and rapidly expanding market for U.S. Treasury securities poses a clear and present danger to financial stability that warrants a new approach from the Federal Reserve during times of extreme market stress, suggests a paper discussed at the Brookings Papers on Economic Activity (BPEA) conference on March 28....
The vulnerability arises because the hedge funds, which are more lightly regulated than broker-dealers, finance their Treasury holdings almost entirely by borrowing against them. Thus, any number of shocks can lead the hedge funds to quickly exit the trade, requiring the broker-dealers to step in, at least in the short term.
The authors recommend that the Federal Reserve, in periods of extreme stress, be prepared to take over the hedge funds’ positions. As before, the Fed could stand ready to purchase Treasury securities but it would also, as the hedge funds do, take offsetting short positions in derivatives.
...
https://www.brookings.edu/articles/treasury-market-dysfunction-and-the-role-of-the-central-bank/
Dumping their risk onto the plebs is the Brookings way.
Posted by: too scents | Apr 10 2025 16:36 utc | 82
But all this is great for those playing the stock market with advance notice of Trump's next move.
Posted by: WG | Apr 10 2025 16:35 utc | 84
---
There is more that one market. Abuse of the pricing mechanism destroys markets. Other markets are beckoning and that is the crux of the problem.
Posted by: too scents | Apr 10 2025 16:41 utc | 83
One billion $ so far just to bomb the Houthis. Whatever amount DOGE could ever manage to squeeze out of the failing government, the Ziocon and other Ashkenazi parasites would immediately spend and three times more. There is and there never was any chance to save US, by neither Trump nor his soon to be replacement Vance. Parasitising by US on its Eurotrash and 5-eye vassals only prolongs the agony.
Posted by: Kiza | Apr 10 2025 16:45 utc | 84
Very infrequent commenter here. I'm hoping that what Trump is planning, assuming he has a plan, is a mere ten percent tariff for nations that are willing to play ball, and much more punitive tariffs for nations such as China that won't. The fact that China is digging its heels into the ground, though, is the big reason why yesterday's financial market surge seems to be getting mostly erased today.
Posted by: venuspluto67 | Apr 10 2025 16:59 utc | 85
Trump and his team are well advised to come up with a less volatile economic strategy.
Until Trump settles on a predictable course the global carnage will continue.
Posted by b at 10:26 UTC | Comments (0)
---
How can this be correct when I was told right here on this blog that you can hedge volatility?
Posted by: too scents | Apr 10 2025 10:40 utc | 2
_____________________________________________
MY 2 CENTS as a trader: A hedge is, in theory, always possible… but, in practice, it can be difficult and/or expensive.
Posted by: Liberator | Apr 10 2025 17:04 utc | 86
@Posted by: Liberator | Apr 10 2025 17:04 utc | 89
the hedge: socialize the losses, privitize the gains
Posted by: KOB | Apr 10 2025 17:09 utc | 87
TRUMP’s tariffs are plainly stupid and show a remarkable ignorance of ECONOMICS and FINANCIAL MARKETS.
One cannot RE-INDUSTRIALIZE the US that way. TRUMP has FAILED LAMENTABLY and this failure weaken American influence in everything.
If one CANNOT TRUST the US in finance, one CANNOT TRUST the US AT ALL.
Posted by: Liberator | Apr 10 2025 17:10 utc | 88
Posted by: too scents | Apr 10 2025 10:40 utc | 2
You can hedge your portfolio or trade vokatilitt
Posted by: Mario | Apr 10 2025 17:10 utc | 89
"Both successful treatments were suppressed by the rumor you cite."
Posted by: Mary | Apr 10 2025 13:33 utc | 42
I recall fact checking that highly partisan exchange and found the same information.
There is a hydrogen peroxide lung treatment inhaled ti treat certain conditions. IIRC, it was supported by anecdotal reports but not by studies.
Ivermectin had studies and history but as was typically the case, during covid valid studies were not done.
The main problem seemed to be how Trump presents information.
Posted by: David G Horsman | Apr 10 2025 17:13 utc | 90
A hedge is, in theory, always possible
Posted by: Liberator | Apr 10 2025 17:04 utc | 89
---
Explain the theory that volatility, which is a random variable, is hedgeable.
Counterparties have an equivalent understanding of probability and when aggregated they have much deeper pockets.
Posted by: too scents | Apr 10 2025 17:16 utc | 91
Posted by: too scents | Apr 10 2025 16:36 utc | 85 Yes.
But there is precedent for Brookings' recommendation...
In 2020 the threat was so great that the Fed stepped in with absolutely massive purchases. Jerome Powell used asset purchases ten times the size of those employed by Ben Bernanke to stabilize the system in 2008-9. To soak up panicked selling and to put a floor under the Treasury market, the Fed bought $1.6 trillion in a month.The threat here was the notorious freeze in US treasuries auctions, as in, nobody was buying. This is a quote from Adam Tooze at https://adamtooze.substack.com/p/chartbook-370-is-a-treasury-market?utm_source=post-email-title&publication_id=192845&post_id=160925289&utm_campaign=email-post-title&isFreemail=true&r=2rylou&triedRedirect=true&utm_medium=email
Posted by: steven t johnson | Apr 10 2025 17:19 utc | 92
But there is precedent for Brookings' recommendation...
Posted by: steven t johnson | Apr 10 2025 17:19 utc | 95
---
Sure. Look past the obvious asymmetry. The groups gambling on the basis trade are doing it for their own benefit and that is why when their trade blow up they go begging for Joe Public to hold their bags.
Where are the customer's yachts?
Posted by: too scents | Apr 10 2025 17:23 utc | 93
and that is why when
---
That was bad grammar. My gist is that these chosen traders expect to pawn off their losses on people who didn't share in their winnings.
It is a crooked game.
Posted by: too scents | Apr 10 2025 17:26 utc | 94
@ 68 "Go buy an American car if in America."
If American cars are so great.
Why wont America allow Chinese cars to openly compete in their market?
Could it be the fact that Chinese quality outshines American made, and has to be hidden under an American label?
https://www.businessinsider.com/lincoln-nautilus-luxury-suv-review-tech-big-screen-china-d2025-2
Posted by: golddigger | Apr 10 2025 17:28 utc | 95
@Posted by: steven t johnson | Apr 10 2025 17:19 utc | 95
There was also this
When we tallied the New York Fed’s “trade amount” column for the fourth quarter of 2019, the New York Fed’s repo loans came to $4.5 trillion. But when we set up a new column that adjusted the loans by the number of days in the term, the Fed’s repo loans for the fourth quarter of 2019 came to $19.87 trillion, or 4.4 times the “trade amount” column.
Just six trading houses received 62 percent of the $19.87 trillion, as illustrated in the chart above. The parents of three of those firms, JPMorgan Chase, Citigroup and Goldman Sachs, are shareowners of the New York Fed. The New York Fed is allowed to electronically create the trillions of dollars it loans at the push of a button.
and then the magickal virus came along and saved the day...
Posted by: KOB | Apr 10 2025 17:30 utc | 96
oh no!
Wall Street is seeing big red again!
I never get tired of wanking to it.
So much red.
And please spare me the lectures about the little guy getting the shaft because of "insider trading", the stock market is all "insiders", and there are days institutional yrading is literally 98% of the volume.
The stock market is for big club you aint in members.
And if you invested your retirement into 401Ks... thats on you You took the risk and bought the hussle, with dreams of easy money.
Posted by: UWDude | Apr 10 2025 17:32 utc | 97
Posted by: KevinB | Apr 10 2025 14:38 utc | 64
>>>
Much simpler than that.
Higher yield (or higher IRs which it's what has happened because Captain DJT) implies higher future prices [directly proportional to each other]. Hence this widens the basis instead of converging to the spot price. This turns into not gains since you need to purchase the future to deliver the spot cash price at a higher price of which you originally sold it for.
Posted by: pepe | Apr 10 2025 17:33 utc | 98
turns into losses not gains, left the losses out... my bad
Posted by: pepe | Apr 10 2025 17:34 utc | 99
Posted by: Ahenobarbus | Apr 10 2025 16:32 utc | 83 This is typically misleading. The US is more or less a bourgeois democracy, a form of the dictatorship of capital. The bourgeois democratic state defends bourgeois property, which means in today's world, is dedicated to imperialism in its modern neocolonial form. The genius of bourgeois democracy is that it uses concessions to the working classes to moderate class struggle, dividing the working class and settling dispute within the bourgeoisie itself via a mechanism of formal elections---which are highly manipulated. The manipulation is not some conspiracy against abstract democracy, it is an essential part of bourgeois democracy.
The notion that if some unnamed we could only have so-called real democracy, the state would not be imperialist, is a populist delusion that there is some sort of political fix that ignores property and the classes owning that property. The opposite of democracy is not plutocracy or oligarchy in the sense meant here but proletarian democracy, a state that defends public property in the means of production. There is no democratic collaboration of equal classes, there is a hierarchy, unwritten but real, despite the legalities of elections, in either bourgeois or proletarian democracy. In proletarian democracy, remnants of the bourgeoisie are subordinated not exterminated. (Well technically a bourgeois is liquidated when their property in the means of production is socialized, whereupon formally the ex-bourgeois becomes just another citizen with equal human rights.)
Posted by: steven t johnson | Apr 10 2025 17:34 utc | 100
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b: Until Trump settles on a predictable course the global carnage will continue.
That is not going to happen, so, in other words, turmoil will be permanent.
Posted by: Biochar | Apr 10 2025 10:34 utc | 1