Looking Backwards
LB #1
There is only one place to start this week, and it is with the big beautiful debt bomb. I have been yakking on and on about the bond market and we will get to that as well, but the only reason we are in this predicament is we can’t stop spending. It doesn’t matter which party, it matters us vs them. They spend our money, take some, and leave us with less. If you have children or grandchildren, they will have a lot less. Our children are not the future our children are the past. The past sins of this and preceding generations will have to be born by the children of the future and the grandchildren.
In the Commonwealth of Kentucky stand two men strong enough to stand against their faux conservative party led by the spoiled child liberal president and say this isn’t right. Rand Paul is a senator and one we have spoke about before. He was DOGE before DOGE, he is the common sense in the looney bin known as the Seante. However, in the House there is another man named Thomas Massie. He is willing to stand on his own for what he believes to be right for his district and his party. He has been threatened by the president who called for him being primaried. He hasn’t cow towed to the intimidation and voted this week against Trump’s big, beautiful bill and Mediaite has David Gilmour tell us why.
“Rep. Thomas Massie (R-KY) broke ranks to deliver a stark warning that President Donald Trump’s “Big, Beautiful Bill” was a time “bomb” in a scathing Titanic-inspired takedown that argued the policies will send the U.S. full speed toward a fiscal “iceberg.” The Kentucky Republican broke with his party to warn that the bill — despite promising tax relief — sets the country on a path to eye-watering debt and long-term economic instability. Massie flagged how Moody’s downgraded the U.S. credit outlook, prompting higher interest rates on long-term government bonds.
“Very soon,” he said. “The government will be paying $16,000 of interest, interest alone, per U.S. family.”
He estimated that under the bill’s taxing and spending levels, the national debt could balloon by as much as $30 trillion over the next decade.
“Congress can do funny math, fantasy math, if it wants,” Massie added. “But bond investors don’t.”
“We’re not rearranging deck chairs on the Titanic tonight. We’re putting coal in the boiler and setting a course for the iceberg,” he warned.”
The bill passed by one vote 215-214 and was sent to the Senate this week. The Senate will likely make significant changes to it. Let’s hope so, because if not our situation is going to get a lot worse just like it did the first time Trump was in office. This from CNN’s Matt Egan, “The nonpartisan Congressional Budget Office estimates that President Donald Trump’s “big, beautiful bill” would pile another $3.8 trillion to that mountain of debt. That kind of extra borrowing would only amplify growing concerns about America’s unsustainable financial trajectory.
“The US is heading in the wrong direction. This bill would be one more nail in the coffin of a country falling under an enormous debt burden,” said Kristina Hooper, chief market strategist at Man Group, the world’s largest listed hedge fund…
“We don’t want to live through a Greece- or Portugal-style meltdown. We’re not close to that but we don’t even want to play with that,” said Douglas Holtz-Eakin, president of the American Action Forum, a center-right policy institute.
Concerns about the fiscal situation sparked a market sell-off on Wednesday. Investors demanded higher rates on US debt in a 20-year Treasury auction. That weak auction drove down US stocks, bonds and the dollar.
Treasury rates climbed even higher on Thursday after the House passed the bill. That, in turn, drove down US stock futures.”
LB #2
Let’s talk about the auctions for a moment, shall we? We want to make sure we run off any new listeners that might have stopped by, by accident and lord knows we don’t want them from cat videos or skin care routines by talk of their country’s financial health imploding. This from ZeroHedge,”While it wasn’t quite as catastrophic as Japan’s 20Y auction earlier this week which saw the biggest tail since 1987, moments ago the US also sold 20Y paper in what was one of the worst auctions for this tenor since its launch 5 years ago.
Overall, it was an ugly (if hardly catastrophic) auction, certainly ugly enough to send yields to session highs of 4.58%, up 4bps from 4.54% before the auction, and the 30Y yield surged back above 5.00%…”
The Santa Ana soldiers were back and advanced on the Alamo this week. Their relentless march got the 10 year yield all the way up to 4.62% before the market closed the week at 4.51%. The 30-year yield reached 5.15% this week, and this market is starting to feel like trying to keep a beach ball underwater. It’s relentless.
LB #3
Luckily, we have Donald Trump as president to counteract the Santa Ana soldiers. He sits deep inside the Alamo writing government checks as fast as possible while cashing personal ones. This is how our debt keeps rising. His debt bill is predicated by his promises to raise revenues to cover them. We have the bill for April. Gregory Korte writes for Bloomberg, “Daily revenue from US customs duties rose to a record $16.5 billion as American importers made monthly payments to the government for goods received in April.
That revenue, disclosed in Treasury Department data released Friday, reflects the full impact of President Donald Trump’s new universal tariffs for the first time. About two-thirds of importers pay customs duties in one monthly sum — the month after goods arrive in US ports — and the deadline for April payments was Wednesday.
If tariffs continue at the present rate, the data suggest that Trump will fall short of the $2 billion a day in tariff revenue he’s counting on to help pay for the record tax cuts included in a bill passed by the House of Representatives this week.”
I have been saying that Trump is in raising revenue mode. This is a good start. These tariffs aren’t paid by the Chinese though, are they? They aren’t paid by those awful EU citizens? No, they are paid by US companies that import their products. They will pass along some or all of the cost and we the citizens will pay higher prices, so it is a tax on us and American businesses. I am perfectly okay with that from a national debt perspective. It’s really the only way we get out of this hole if we aren’t going to stop writing checks against an account we don’t have. Higher taxes, lots lots higher. We can call them whatever people want: tariffs, wedding invitations, paint by number for all I care. They are taxes and the revenue is going to the government. I care about the math. That is about 50% of what Trump was promising. April wasn’t a fully loaded month so perhaps the collections get higher. These are the highest tariffs in 100 years so it is a start, but when Trump pivoted and dropped the rates the % collected will be less than a few weeks in April. Tariffs will not allow everyone making under $150,000 to not pay taxes so don’t get too comfortable listening to presidential promises Americans.
Looking Forwards…
LF#1
As I have noted, Trump woke up on the wrong side of the bed on Friday and reached for his phone. Scott Bessent was up early dressed in his suit, a dark serious suit with a pastel pink tie held in place by a tie pin. He was eating breakfast consisting of two poached eggs, some dry wheat toast, and a glass of orange juice. It was a perfect Friday morning heading into a holiday weekend. Bessent had calmed the markets in the last 6 weeks after the original tariff tantrum and it seemed that despite Congress’ best efforts this week Friday was going to go off without a hitch. His phone buzzed on the table, and he peered over his newspaper at it. His eyes blazed in anger as he saw what America saw. He probably saw this from Bloomberg, “President Donald Trump dug in on his threat to impose a 50% tariff on the European Union and said a potential 25% charge on smartphones would apply to all foreign-made devices, in the latest escalation of a trade war that is rattling markets and confusing businesses.
Trump on Friday reiterated his complaints about the EU, accusing the bloc of slow-walking negotiations and unfairly targeting US companies with lawsuits and regulations. The president downplayed the ability of the EU to avoid a higher tariff rate, which he said would hit June 1. “We’ve set the deal. It’s at 50%,” he said.
“They don’t go about it right,” Trump told reporters in the Oval Office. “I just said, it’s time that we play the game the way I know how to play the game.”
Separately, the president said that a potential 25% tariff he threatened in a social media post Friday morning against Apple Inc. smartphones would also apply to devices from Samsung Electronics Co. “and anybody that makes that product,” and that his administration was moving to impose the levy by the end of June.”
When he announced the tariffs on smartphones on Friday it was just pertaining to Apple so somebody maybe Bessent got to Trump and said you can’t select one company and just put a tariff on him so perhaps Donald just said put a tariff on all phones. It’s ok though, no one has a cell phone these days. Bessent does, picked up the phone and screamed at White House staffers and told them again, he is not to get his phone until he has talked to me. How many times do I have to tell you that?” Perhaps this conversation is fictional, but I am sure some variation of that played out. Later, Bessent had to go in front of the media and calm everyone down. Perhaps Trump knew that I was going to write that he wasn’t making enough revenue from his tariffs and needed to pick up the pace a little. So poor Apple and Samsung will get his ire this week and have to pay 25% more on any phones they want to bring in to Americans.
The EU on the other hand is probably going, can he not count to 90? Trump said there would be a 90-day tariff pause. We aren’t even halfway through that and Donny has gone off prematurely. Poor Melania. This seems to be a pattern with Don going off halfcocked. We are halfway through his 90 day timeline and we have 1 deal out of what was it, 180 countries? Now he just put a 25% tariff on Apple, an American company because he wants them to manufacture cellphone in America. Dan Ives of Wedbush Securities is as tuned in to tech investing as anyone and he has said an iPhone will cost $3,500 if it is made in America. Is this the math Trump wants? Will the only people in America able to afford a phone live in Mar-a- Lago? Perhaps he was despondent after his meme coin dinner where Wal-Mart steak was the entrée of choice according to participants. Reports from NBC News and analytics company Nansen were that $394 million was spent by the attendees on the Trump coin making it $1.78 million per plate. It sounded like Bessent needs to get Don in bed by a decent hour or these Twitter outbursts are likely to continue. It seems Veruca Salt’s long lost brother needs his rest.
LF#2
It seems that not only does misery love company but also petulance. We move to Elon Musk as he slinks away from DOGE and goes back to his financialized empire built on fake videos and cars built on government tax credits. DOGE is touting $170 billion now in savings although most government experts say that savings will not even come close to being realized, but merely spent elsewhere. Now Musk is firing up the excuse meter and pointing it in the exact direction I told you he would. This from ZeroHedge, “When Elon Musk joined the Trump administration with the goal of eliminating waste, fraud and abuse through the Department of Government Efficiency (DOGE), he set a lofty $2 trillion goal…On Tuesday, Musk said it was up to Congress to make it happen.
“The ability of Doge to operate is a function of whether the government, and this includes the Congress, is willing to take our advice,” Musk said while speaking at an economic forum in Qatar.
“We are not the dictators of the government. We are the advisors, and so we can, we can advise, and the progress we’ve made thus far, I think, is incredible,” Musk continued. “Doge team has done incredible work, but the magnitude of the savings is proportionate to the support we get from Congress and from the executive branch of the government in general. So, we’re not the dictators we all the advisors.”
This sums up Musk and Trump in a nutshell. They promise $2T, people get excited. They get in to the bowels of government, they underperform by 90%, they blame others, they leave after enriching themselves. Rinse and repeat. People elect them on promises or buy their stock, or their meme coins, or whatever else they are selling, trips to Mars, solar shingles, tariffs are great. These ideas are opium to the masses, and both of these charlatans are masters of spoon-feeding this opium in precisely the right dosage. Meanwhile, the only ones that benefit are the drug dealers.
LF#3
While the opium dealers dine in private clubs paid for with public dollars, the rest of the population continues the suffering of living in the land of exploitation. This is from ZeroHedge, “Last month we noted that Americans are increasingly tapping Buy Now, Pay Later (BNPL) financing to pay for daily essentials — even groceries — according to a Lending Tree survey, in which 41% of those polled say they were late on payments over the past year, which is up from 34% in last year’s survey. About three-quarters of the late-payers say they were late by no more than “a week or so.” A whopping one-third of Gen Z BNPL-tappers say they’ve used the financing for groceries. Similarly, 16% of users have tapped BNPL for food delivery or takeout.”
Let me pause for a second, we are about to get a 25% tariff on smartphones and 39% of the users of Klarna are using short term financing for technology. 41% of these people have made late payments on this short term stuff? It gets better though, “In an absolute shocker that you’ll never believe (unless you read ZeroHedge) – Klarna, the Swedish financial technology firm known for its “buy now, pay later” (BNPL) offerings, reported a sharp increase in losses for the first quarter, driven by a rise in consumer defaults and economic unease in the United States. The company posted a net loss of $99 million for the three months ending in March, more than double its $47 million loss during the same period a year earlier. The deterioration comes amid a rise in customer credit losses, which climbed 17 percent year-on-year to $136 million, underscoring mounting concerns about the financial health of U.S. borrowers.”
I’m sorry you poor silly Swedish company. Consumer defaults, meaning they didn’t pay? Naaah. Are you not familiar with doing business in America? Americans borrow but we don’t pay. We have chronicled right here at the CTPC about Elon Musk just refusing to pay rent and he called it a good business decision. Donald Trump building buildings that didn’t make sense to anyone else and then when it came time to repay the money he said, no I won’t repay, I’ll sue you instead. Americans borrowed for college and just took 5 years and said we won’t pay them back but we will buy a $4,000 Peloton on credit though. We will buy houses and then have to give them back because we refuse to pay.
I had a conversation this week with Austerity Jones, our former contributor, and she said that she is hearing some in financial circles believing that Trump’s plan is to just not pay the debt. What will countries do? We have the military, and they don’t. That is a fascinating question that I want to leave you with and spoil your holiday weekend just like Trump spoiled Bessent’s. I like to pride myself on thinking outside the box and it appears that Trump does too. It appears I stay within the bounds of morality, and perhaps I should widen my lens when dealing with someone completely without a moral compass. Now, my weekend is ruined as well.
Sincerely Yours,
C Thomas Printer
The Dow Jones finished trading …at 41,603.
The 10-year Treasury bond is at …4.509%
The price of Brent Crude is … at $64.78 per barrel .
The price of gold is … at $3,357/oz.
The price of silver is … at $33.64/oz.
I leave you with this from the information superhighway, what do you call a belt with a clock on it? A waist of time.
Thank you for listening today and you can find all of our articles and more on our website cthomasprinter.com.