Macro thread - Why is the market up/down?

[rogermunibond]

Bessent wants commercial banks/private credit to be the monetary transmission mechanism and not the Federal govt.  No wonder Jamie Dimon loves him.

 

If Bessent's low growth (adjustment period) takes too long or causes a recession, then he will be axed.  Trump doesn't have the patience for a long 18-24 month adjustment.

 

https://singjupost.com/larry-kudlow-interviews-scott-bessent-at-the-economic-club-of-new-york/

[cubsfan]

11 minutes ago, dealraker said:

The least successful businessman I have ever followed bar none.

 

Gotta love this stuff. What does that say about the cesspool called the Democratic Party.

 

Maybe they can convince Justin Trudeau to give them lessons on leadership.

[dealraker]

17 minutes ago, cubsfan said:

 

Gotta love this stuff. What does that say about the cesspool called the Democratic Party.

 

Maybe they can convince Justin Trudeau to give them lessons on leadership.

Won't argue with that.

 

Edited Friday at 02:54 PM by dealraker

[Spekulatius]

3 hours ago, rogermunibond said:

Pay attention to what Bessent says.

 

https://www.cnbc.com/2025/03/07/treasury-secretary-bessent-says-economy-could-be-starting-to-roll-a-little-bit.html

 

PS doesn't he look a bit like Homelander from the Boys.  freaky

Yes, indeed this worth watching. He  literally says that the shit is starting to hit the fan and there is no Trump put.

[Gregmal]

3 hours ago, rogermunibond said:

Bessent wants commercial banks/private credit to be the monetary transmission mechanism and not the Federal govt.  No wonder Jamie Dimon loves him.

 

If Bessent's low growth (adjustment period) takes too long or causes a recession, then he will be axed.  Trump doesn't have the patience for a long 18-24 month adjustment.

 

https://singjupost.com/larry-kudlow-interviews-scott-bessent-at-the-economic-club-of-new-york/

Seems equally as likely and pretty obvious IMO that Bessent and the Trump team are trying to strong arm Powell into lower rates. They know people are wusses when it comes to market volatility, and they know that there's a great degree of influence given to the rhetoric. Nothings even happened yet and we're less than 1.5 MONTHS into year 1 of the term. Think they're perfectly fine playing these games and kitchen sinking anything they can assign to the previous regime for the next few months in order to accomplish the lower rate objective. If people wanna freak out and sell their stocks that's on them. 

[Xerxes]

Full interview 

 

 

[Spekulatius]

Bessent can’t do much. He is just the glorified clerk balancing the check book for his boss.

Edited Friday at 06:01 PM by Spekulatius

[Xerxes]

8 minutes ago, Spekulatius said:

Bessent can’t do much. He is just the glorified clerk balancing the check book for his boss.

for sure, he has the uncomfortable job explaining the ying and yang. 
 

but the guy has good credentials. They could have chosen a full throttle populist like Pete H. (Current head of pentagon) to lead treasury. 

[rogermunibond]

Bessent worked for Druckenmiller and Soros.  He's no dummy.  But he works for someone who Druckenmiller called a "blowhard" and couldn't vote for.

[Gregmal]

People also easily overlook that nobody needs to do anything in terms of the word "do" actually meaning "action". As long as you can manipulate the markets via rhetoric and get them to react close enough to how you want, the effects can be the same. 

[Castanza]

12 minutes ago, rogermunibond said:

Who Druckenmiller called a "blowhard" and couldn't vote for.

 

So he said publicly

[cubsfan]

22 minutes ago, rogermunibond said:

Bessent worked for Druckenmiller and Soros.  He's no dummy.  But he works for someone who Druckenmiller called a "blowhard" and couldn't vote for.

 

Druckenmiller's solution was to inflate and spend his way out of the debt.

 

Good think he's not in charge.

[rogermunibond]

Druckenmiller?

 

Please link to where he says that.

 

He's been an inflation and debt/deficit hawk since I began reading his commentary.

 

https://www.bloomberg.com/news/articles/2023-05-02/druckenmiller-warns-us-debt-crisis-worse-than-he-imagined?embedded-checkout=true

[cubsfan]

9 minutes ago, rogermunibond said:

Druckenmiller?

 

Please link to where he says that.

 

He's been an inflation and debt/deficit hawk since I began reading his commentary.

 

https://www.bloomberg.com/news/articles/2023-05-02/druckenmiller-warns-us-debt-crisis-worse-than-he-imagined?embedded-checkout=true

 

Oh, yeah - my bad.. here is the link I'm referring to - I got Druckenmiller and Tudor-Jones mixed up.

Apologies!

 

 

[brobro777]

It feels like volatility may stay elevated throughout the year

 

Should be good opportunities in futures and options for gamblers haha

[Spekulatius]

9 hours ago, brobro777 said:

It feels like volatility may stay elevated throughout the year

 

Should be good opportunities in futures and options for gamblers haha

Trump is making volatility great again

[brobro777]

7 hours ago, Spekulatius said:

Trump is making volatility great again

 

That and tobacco continuing to outperform SPX from last year - that sounds good, baby!

 

[changegonnacome]

Something old and something new below-

 

"The trouble with tariffs, to be succinct, is that they raise prices, slow economic growth, cut profits, increase unemployment, worsen inequality, diminish productivity and increase global tensions. Other than that, they're fine." David Kelly, JP Morgan Chief Economist, 2025

 

Ronald Reagan, Former President and GOP Conservative Hero 1987 on tarrifs:

 

 

Big picture - I'm with Reagan.

 

On the macro - the market is sniffing out trouble.....the re-privatization of the US as Bessent says is inherently rocky....you really are trying to transition a significant portion of the workforce from one sector to another while also chopping off the flow of cheap labor at the bottom of the labor pyramid...the reason it is a pyramid is BECAUSE of immigration....without it , due to demographics it starts looking like an inverted pyramid..a bunch of old people collecting cheques supprted by a smaller and smaller base of workers......if that weren't enough....that they are also embarking on a kind of import substitution strategy via tariff's is quite novel.

 

I can see the grand vision (kind of):

 

- shrinking immigration twinned with import substitution for domestically produced goods should see the bottom quartile or bottom half's bargaining power increase resulting in real wages increases in this segment (big Q is whether real wages can outpace tariff price increases on the basket of goods this group consumers)

 

- tax cuts, Bessent would argue, will see tariff revenue re-distributed to folks feeling the pain of said tariffs related price increases....tax cuts plus increased bargaining power on real wages.....might see "main street' win for the first time in a couple of decades

 

- the re-privatisation of the US will see Government workers off the the Treasury payrolll transferred into this re-industrialization wave that will require more private sector workers...such that the deficit shrinks

 

- Rates - the above will come with economic weakness in the short term perhaps creating the backdrop to allow Powell to cut short term rates.......the fiscal budget deficit shrinking or on a more sustainable path plus changes to bank holding rules - will allow for long term treasuries to fall

 

The plan has merit - i think the issue with it.....is (1) for all the talk of fiscal spending discipline I'll believe it when I see it - this is Pork barrel DC....not too mention medicare & social security (the untouchables) are on a predetermined unstoppable climb (2) all this tariff revenue talk assumes that other countries don't have agency - as Reagan said we are very likely to see very very damaging retaliatory escalations here.....net net you may end up with higher prices & given the puts/takes a static industrialized base.....higher prices, domestic producers protected from competition and so less efficient leading to lower overall aggregate consumption.......this is how this experiment goes wrong.

 

Trump is rolling the dice on a plan which to my mind is quite contrary to free market ideals.......the target of this plan is bottom 50% of Americans......put another way the stock market is a secondary or tertiary measure fo the success of this plan.

[cubsfan]

17 minutes ago, changegonnacome said:

Trump is rolling the dice on a plan which to my mind is quite contrary to free market ideals.......the target of this plan is bottom 50% of Americans......put another way the stock market is a secondary or tertiary measure fo the success of this plan.

 

Pretty damn good post. You hit it - bring some prosperity for those left behind. Yup.

[Gregmal]

Yup. Any wonder the elitists are so angry lately?

[changegonnacome]

Im with you both on the bottom 50% doing better - Bessent is also correct in saying the current development model with all the economic returns accruing to the top 10% is an unstable equilibrium…let them eat cake doesn’t work out well in the end….ask the Queen of France. 

 

The grand plan may work in theory but in practice you’ve got some serious potential timing /implementation mismatches….for example….higher prices on imports but the tax cuts don’t work out….or maybe they do….but the retaliatory tariffs from other countries hurt existing exporting US industry before the theoretical tariff protected ones get to be scaled up.

 

Big picture however is quite simple - a tariff is a tax….if you want less of something (production/consumption) you tax it….this plan at its heart is trading productivity growth & efficiency which equates to broad GDP growth for something akin to tariff welfare payments to the bottom 50%.

 

The real implementation issues are huge (1) it takes time for the above, years (2) it only works if you shrink the federal & state budgets to free up the space….the problem with this is that IMO this plan requires a MAGA controlled WH, Senate, House for more than four years to get it fully implemented such that the benefits of re-shoring can be felt by Joe Sixpack….the timing mismatches, the dislocations just don’t allow you to land the airplane in a country with an election cycle & margins like the US….. Joe 401k who starts hurting & Joe Sixpack who doesn’t quite understand why he lost his job at Jim Beam…is going to be voting the MAGA’s out at the mid-terms & then at the next Presidential (& don’t forget so much of this plan relies on the Presidents executive authority re:tariffs)

 

This whole thing will turn out to be a highly disruptive but ultimately failed economic experiment…the US political system just doesn’t allow for something as radical as this to get completed in its entirety such that all the costs and benefits can fully flow through to the underlying voter as the theory suggests it might. 

 

 

Edited 8 minutes ago by changegonnacome