President Trump: The NEW one and only politics thread

It is going to be a pretty rough day in US equities on Wall Street again. At least at the open. Europe sold off. Italian debt fears, and the Italian banks are getting hit. The Chinese plunge protection team that boosted the Chinese markets on Friday and yesterday stepped aside and they sold off. So the futures were already selling off at 3, 4 am. But now earnings are coming in and 3M really disappointed, with bad foward guidance, so that started a bit more weakness. If this holds, the Dow will open around 400 points down. This has been setting up for the last week and a half. During last week's selloff, the S&P 500 bottomed at around 2710 intraday. You got the bounce, but it was really tepid and there was selling every time the buy the dippers tried to come in. So a retest of that 2710 level was in the cards. We'll get it today. We'll see if it holds. If it doesn't hold, I am not sure what the next support level below there is. If it does hold, it could end the selling. Should be an interesting day. People might want to pay attention in the morning to see what happens. This could be a pivotal day.

 

He has created a lot of uncertainty, particularly with the "Is the tarriff thing a ploy" or "is he going to take it too far"? But global equities are past dot-com bubble levels, even with this little sell off, and it's all because the debt markets were destroyed for more than a decade, flooding the world with cheap capital for people to gamble with. It's not even over. Yesterday, Netflix announced that it is issuing another $2 billion in junk bonds. The company is blowing through money, rates are rising making lending more risky to overleveraged companies, but the debt markets are still ready to reward the company -- and at an interest rate that is not commenserate with the risk. Netflix will have more than $10 billion in debt after this offering. All of it rated junk. It's stock price has gotten run up on the nonsense and is trading at an insane multiple. And that $2 billion will fund maybe 3 quarters at the cash burn rate they have been achieving. It's insanity. But the debt markets are still indulging that thanks to what central banks around the world have done to destroy all price discovery.

On the flip side, one of the regional banks yesterday, Bank of the Ozarks (OZK), reported earnings and their commercial real estate loan portfolio write-offs shocked the market. This is a really small bank, and it had to write off 2 projects in North Carolina and South Carolina and eat $46 million. If that is going to be a trend, it doesn't bode well for commercial real estate bubble that has built up over the last 10 years. The defaults, and the amount of bad debt lenders are going to have to eat, is going to be devastating.

As for Trump? The moron tied his fortunes to the stock market. So I am going to enjoy watching him try to play it off as not being his fault now, as you said. He's full of shit. He walked into a bubble, and then cheerleaded what was likely the blow off top and tried to take credit for it. But the seeds of what caused the bubble were all laid in the 8 years BEFORE he became president, and it had nothing to do with any polician's "policies." It was all central banks injecting trillions of dollars of liquidity into the global economy, via the banks, and that money turning every risk asset imaginable, from art to stock markets into a casino environment. Now they are trying to pull some of that liquidity out, and predictably you are starting to see cracks. And this is with very halting attempts to stop spiking the punch bowl. If they let the market clear on its own (with supply and demand setting the price of money). ... oy. There is a price to pay for their stupidity, unfortunately.