Daily Missive

Punched in the Face

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November 7, 20243 minute, 44 second read



Punched in the Face

Bill Bonner, writing today from Baltimore, Maryland

That’s it. I’m voting for Trump.”

Such were the words of [a member of our own household] when she got back from the grocery store on Monday.

I got a single bag of groceries. I’m sure it would have cost me about $50 a few years ago. Now, it’s $120. It’s no wonder Trump has so much support.”

With these thoughts the country veered away from ‘more of the same’… to… more of the same. And today, we celebrate the exquisite blockheadedness of our great democracy.

The stock market reacted yesterday… anticipating easier credit. The Dow rose more than 1,500 points.  And the world’s 10 richest people ended the day $64 billion dollars richer.

During the four years of the Trump Team, 2016-2020, the US saw the greatest wingding of government spending in history. The federal budget went from $3.8 trillion in outlays during Obama’s last year, to $7.2 trillion in Trump’s last year. The nation had never seen anything like it… with trillions out the door and down the drains in stimmies, PPP loans, and the like.

And then, as if that weren’t enough, the Biden Team came into office and added another $1.2 trillion of boondoggles and giveaways.

What happens when you add that kind of money to the economy? Milton Friedman, recently channeled by Elon Musk, explained:

Inflation is made in Washington because only Washington can create money, and any other attribution to other groups of inflation is wrong. Consumers don’t produce it. Producers don’t produce it. The trade unions don’t produce it. Foreign sheiks don’t produce it. Oil imports don’t produce it. What produces it is too much government spending and too much government creation of money and nothing else.

Chad Champion adds empirical evidence:

A recent study out of MIT showed that “the overwhelming driver of that burst of inflation in 2022 was federal spending, not the supply chain.” Recall that there was about $7.5 trillion in additional spending from March 2020 when COVID hit, through December 2022.

Trump planted wicked seed. Biden (and Harris) fertilized it and reaped the bitter harvest. Price increases showed up the year after Trump left office, with inflation ramping up to a 7% annual rate in the first quarter. In June, 2022, inflation hit a 9% rate. And while the rate of inflation has come down since then, the effect of sustained inflation at relatively high rates has raised prices across the board.

During the Biden years, the cost of energy rose 34%. Car insurance went up 56%. Hotels 45%. Peanut butter, 41%. The price of the basic Ford F-150 went from $30,000 in 2019 to $39,000 today — up 30%. The price of a new house rose from $380,000 in 2019 to more than $500,000 today — a 25% increase.  

More than any human being on the planet, Donald Trump was responsible for these price increases. He was where the buck should have stopped. Instead, he passed out trillions of bucks. These are the bucks that raised consumer prices… and turned people against the Biden Team, helping Donald Trump retake the White House.

And now, apart from the personal wackiness and unpredictability of the man himself, the Trump Team will stick with the Primary Political Trend... which is toward more spending, bigger deficits and more debt. Investment markets know what time it is.  Barrons:

Treasury debt gets ‘punched in the face’

The Treasury market, arguably the world’s financial backbone, is seeing yields erupt higher as investors respond to the big shifts that could come from a second Donald Trump presidency. This isn’t a buying opportunity. The yield on the 10-year note, a metric that sets rates on mortgages and credit cards, leapt Wednesday to close at 4.425%, its highest end-of-day value since July, from 4.290% on Tuesday.

Bloomberg:

US Treasury yields surged — with the 30-year rising the most since the global flight to cash in March 2020 — as investors piled back into bets that Donald Trump’s return to the White House will boost inflation. 

Donald Trump is, after all, a “low interest guy.” As a leveraged New York real estate speculator, he understands as well as anyone what artificially low interest rates can do for rich people with financial assets. But as we’ve seen, ultra-low rates have a wretched effect on the real economy and real people with real jobs.

That is the indiscreet charm of American democracy. The politicians do the wrong thing for the wrong reasons.  And the public, bloodied and abused, then re-elects the scoundrels who did it to them.

Regards,

Bill Bonner 


It’s Still Early Days for Gold

September 17, 2025Addison Wiggin

With gold prices continuing to push higher – and with central bankers buying hand over fist – gold miners should continue to see expanding profits.

That’s in sharp contrast to the rest of the market, where any potential slowdown in AI could cause a break lower.

The Fed, bending to political winds, is likely to join its global counterparts in cutting interest rates today. There’s more yet to the story for gold and the gold miners – as we forecast a year ago.

It’s Still Early Days for Gold
Dave Hebert: How Long Could That $1.8 Billion Powerball Jackpot Fund the Government?

September 16, 2025Addison Wiggin

Our fiscal reality is clearly unsustainable. With the passage of the “Big Beautiful” budget reconciliation bill, Congress has already given itself permission to grow the national debt to $41 trillion. Interest payments on the national debt are already the second-most-expensive item on the federal budget, behind only Social Security (and ahead of defense spending). As the national debt continues to grow, debt service will become our number one spending obligation. History suggests it’s only a matter of time until we hit that limit and, unless things change, once again raise the debt ceiling. This cannot continue indefinitely.

Dave Hebert: How Long Could That $1.8 Billion Powerball Jackpot Fund the Government?
When Trust Runs Thin, Markets… Rally?

September 16, 2025Addison Wiggin

Bloomberg’s September survey of economists found that the majority are “somewhat or extremely worried” that the Fed’s decisions will be influenced by political loyalties.

If that happens, borrowing costs for the U.S. government rise as risk premia creep into Treasury markets.

Public confidence is already threadbare.

In 2001, 74% of Americans trusted Alan Greenspan to do the right thing. In 2025, only 37% say the same of Jerome Powell. For the first time, trust in Trump to manage the economy is higher than trust in the Fed chair.

When Trust Runs Thin, Markets… Rally?
The Tech Meltup, Exhibit A

September 16, 2025Addison Wiggin

Overall, the S&P 500’s RSI hit 70, the low side of overbought territory — for the entire index.

“Fed rate cuts tomorrow are likely priced in,” writes portfolio director, Andrew Packer, “it may not trigger a selloff, but at these levels,  investors may be disappointed with a .25 cut.”

Tech investors will remain bullish on the prospect of multiple rate cuts over the next few meetings.

But be wary of any indication the Fed tries to rebuff Trump’s overtures and, God forbid, remain independent tomorrow.

The Tech Meltup, Exhibit A