Macro thread - Why is the market up/down?

[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

[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.

[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 Sunday at 09:47 PM by changegonnacome

[SharperDingaan]

Trump has 7 quarters left over which to deliver results (mid-terms), trade partners will be resisting all the way, and every quarter he will be pushing against more and more domestic resistance. It also assumes that he doesn't go senile, and remains alive; lots of guns in the US, and next time it might not be his ear. It is also the trading partners that primarily benefit, and NOT the US.  

 

SD

[changegonnacome]

7 minutes ago, SharperDingaan said:

It is also the trading partners that primarily benefit, and NOT the US. 

 

Curious if could expand on this? Not quite sure what you mean.

[Gregmal]

Think he means, like in term 1, there's so many obstructionists and crooked establishment stalwarts looking to collude against allowing any real progress for anything to get done. They'll just run out the clock, which is entirely possible. 

[Parsad]

20 minutes ago, Gregmal said:

Think he means, like in term 1, there's so many obstructionists and crooked establishment stalwarts looking to collude against allowing any real progress for anything to get done. They'll just run out the clock, which is entirely possible. 

 

Guys, keep the political and conspiratorial rhetoric off of the non-political threads!  I've deleted a bunch of posts on here by both sides.

 

Greg, you said that one side gets banned and the other side doesn't, but it's mostly one side that instigates the argument.  All you have to do is go back to the political threads and count how many posts are by one side and how many are by the other.  

 

Cheers!

[kh812000]

I think you are looking at this with the wrong lens.

 

The U.S. national debt is currently $37 trillion (122% of GDP), and it’s growing at a rate of $1 trillion every 100 days. This translates to $3.65 trillion/yr of additional debt and soon it will be balloon to such a huge number that its unfixable outside of bankruptcy/dollar devaluation....  

 

So what is needed to fix the problem?

 

1. Need interest rates to come down (Trump focus is the 10 yr), so the US can roll the 7TR+ of Treasury bills at 4.4% into long term bonds at much lower interest rates... This can save at least 100-200B/yr on interest payments by do so.  Possibly bring down our run away 1.2TR+ and growing of interest payments/yr to a flat 800-900B/yr.... Easiest way to do this is to bring the US into a slowdown/recession short term.   

 

2 Cut government spending/waste.  Musk's goal is 1 TR of budget cuts.  Current Government spending is 7 TR and a 2 TR deficit/yr which is tacked on to the US debt load.   If Trump wants to balance the budget, assuming Musk is successful, he needs to cut 1 TR out of the budget ex Medicaid/SS/Defense by privatization/shutting departments/etc... Doable? Unclear...

 

3.  Tariffs.  Yes its short term inflationary but a 1x bump.  Some have calculated that 32% of US spending is from goods vs 68% services, and of that 20% is imported which implies 6.4% of total US spend.  Supposedly, the long term goal is tariff revenue of 2.5 Tr after 10 years which implies 8-10% tariff on every import.  If successful, he can cut the IRS revenue (5TR/yr currently) by 50%, eg tax rates go down 50% across the board!  I think this is the long term goal...

 

4.  Long term budget fix needs to be a reform of 4 TR of the yearly budget from Medicaid/Care, SS, defense... But I'd think that's for the next administration...

 

Clearly, Trump has no choice but to tackle this problem now or the US is doomed...

 

The US debt clock shows the severity of this problem. 

U.S. National Debt Clock : Real Time

 

 

 

 

  

[cubsfan]

2 hours ago, changegonnacome said:

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. 

 

 

 

I like your posts, cause they are thought provoking.

 

Joe six-pack is fed up with lying Democrats and Rinos alike. Therefore , he elected Trump as his savior. Call him stupid, call him a cult. He trusts him after years of being fucked over by Biden, Hillary, Obama AND RINOS.  It's a new age, a new paradigm. You all may hate it - but they "Threw the bums out".  Not that much different than the black vote - Al Sharpton, Jesse Jackson, Stacey Abrams, and Barrack Obama - get rich beyond belief, by grifting off the sentiment of black voters.

They caught on - and voted the biggest racist of them all into the White House - Donald Trump.

Hoping he might actually help them. They watched him being threatened with 300 years in prison and said - yeah, that's me -that's what they do to the black man when they don't like him.

 

Payback is a bitch.

[cubsfan]

7 minutes ago, kh812000 said:

I think you are looking at this with the wrong lens.

 

The U.S. national debt is currently $37 trillion (122% of GDP), and it’s growing at a rate of $1 trillion every 100 days.

 

Clearly, Trump has no choice but to tackle this problem now or the US is doomed...

 

Facts don't work around here. All that matters is get rid of Orange Man and Elon.

[Spekulatius]

Any recession will dramatically decrease tax income and increase the deficit. I think it’s likely that the deficit this year will be higher than last year.

[gfp]

59 minutes ago, kh812000 said:

This translates to $3.65 trillion/yr of additional debt

 

59 minutes ago, kh812000 said:

2 TR deficit/yr which is tacked on to the US debt load. 

 

Which is it?

[brobro777]

Maybe this year will be one of them years where if you eke out a 5% return, you're kicking almost everybody's ass

 

 

 

[rogermunibond]

January increase in imports mostly from gold buying.  Strange one.  Minus the gold buying, the AtlantaFed GDPNow would be 0.4% for Q1 GDP growth.  Still very weak.

 

https://www.ft.com/content/1f58f6ac-fa3c-4df8-8d13-545097838654

[gfp]

1 minute ago, rogermunibond said:

January increase in imports mostly from gold buying.  Strange one.  Minus the gold buying, the AtlantaFed GDPNow would be 0.4% for Q1 GDP growth.  Still very weak.

 

https://www.ft.com/content/1f58f6ac-fa3c-4df8-8d13-545097838654

 

wabuffo was all over that on twitter.  GDPNow is definitely not used to dealing with the data noise from tariff front-running boom followed by recessionary freeze and it will bounce around a lot more than usual.  The economy is going to slow - that shouldn't be a surprise to anyone.

[rogermunibond]

Gold buying isn't tariff front running per se.

[gfp]

33 minutes ago, rogermunibond said:

Gold buying isn't tariff front running per se.

right - that's not what I was saying.  But the GDPNow estimates were effected by both gold imports and an abrupt reversal in tariff front-running and it caused a big swing.

[gfp]

We did it everybody - it's a bull market again.  risk ON!

[Paarslaars]

2 minutes ago, gfp said:

We did it everybody - it's a bull market again.  risk ON!

Did something happen?