We’re all waiting anxiously to see whether Trump’s bold initiatives usher in a golden economic era. If this is going to happen, we should see the Dow Industrial lurch toward 100,000 at any time. Just a few short weeks ago, you could have counted me among the skeptics. It is a habit that has become deeply ingrained in me after writing collapsitarian essays and editorials for the last 30 years. However, I have been so wrong about this for so many years that I would never, ever insist that such a seemingly outrageous rally is impossible. Skeptics aside, there are perhaps 80 to 100 million Americans rooting with all their might for the President to fall on his face. This is Trump Derangement Syndrome at its stupidest and most hateful, since a really bad year for the President could mean our children will have to suffer through a Second Great Depression.
The good/bad news is that we should know soon how things are likely to turn out. That’s because the stock market is in fly-or-die mode, so dangerously pumped with crazy, Wall Street hype and AI hubris that it cannot possibly sustain altitude unless investors decide to go all-in, and soon. It would be a peculiar time for stocks to take flight, since U.S. consumers are tapped out and falling increasingly behind on car and house payments, and GDP shrank by 0.4% in the first quarter. We may have entered a recession, and it has the potential to become a devastating one because, publicly and privately, the nation is so deep in hock. It is not yet so deep, however, that an adroitly engineered bear squeeze could not prevent a potentially fatal, contractionary mindset from taking root.
America Ascendant
The graph above holds the key to our best hopes and worst fears. It shows TLT, a proxy for Treasury bonds, in a so-far mild upturn within the context of a horrific bear market that began in March 2020. I’m convinced we are witnessing the start of a major bull-market in T-Bonds, and that this is a good time to start buying them hand-over-fist. Bonds are rising on investor perceptions that Trump is fully in charge of the nation’s fortunes. America is ascendant at a time when Europe, under feckless leadership, is circling down the toilet. This has begun to drive global capital into Treasury paper, lowering long-term rates. This dynamic can only feed on itself, and it is why a golden era, even if illusory and unable to outlast Trump’s leadership, is hardly unthinkable.
