News Forecasters put out a recent Market Watch post on August 6, 2019. In this report, we were worried about the U.S. treasury bonds breaking higher (yields lower – yields are inverse the price). Apparently, this is what is happening. Values are reaching generational lows, indicating there is trouble ahead for the U.S. economy. The stock market is still holding, though it should be noted that stock prices do not take in consideration currency debasement – so they would not crash too similar lows. We repeat here that the bond market is quite significant, in that it is ten times the size of the U.S. stock market in terms of market capitalization.
This spells trouble for the Trump economic miracle. Bond prices now are very close to where they were when Trump got elected back in 2016. If you recall stocks crashed on the initial understanding that Trump was going to be the next US president. The Trump economic miracle is one of the chief issues that Trump supporters tout. If this is in jeopardy where do we go from here? If Trump does not get elected in 2020, will this usher in a new age of U.S. socialism, as almost all the candidates on the Democratic party side have strong socialist leanings? If socialism comes to America, stock prices will have to be significantly reevaluated. Keep your helmets on.
Note an interesting panic email from the Fed to Zerohedge. The Fed reads Zerohedge … hmmm? Bring in the Plunge Protection team, though we hear they are looking for a new boss. Maybe now Fed Chair Powell will start working with Trump. QE4 coming? Maybe Trump will have to cock his Twitter gun.