I cannot scribble poetry – an ode, sonnet or ghazal to the eternal beauty of the US Treasury bond market and I was not born in the hood with the raw genius of homeboy Ice Cube, so gangsta rap is out too. Yet it is horrifying to see Scott Bessent try and fail to manipulate the $31 trillion US bond market, the granddaddy of every debt bazaar on the planet, by ordering a double on long maturity bond buybacks. Scott waved his Magic Wand but did not stop the waves like King Canute. Soft yield curve control failed since it is too little, too late for monetary abracadabra by the Trumpeter’s Chief ju-ju/fiscal witch doctor. All Hunky Dory Scotty did was to enrich those of us whose credere was with Dr. Copper and not with poor sad sack ex- King Dollar which I happily shorted up the wazoo after he flashed a buckaroo SOS to moi via his Yen flutter with the Bank of Japan, Soft yield curve control 101 on Planet Forex.
Inflation risk has gone from the sublime to the ridiculous the moment Trump attacked Iran and plunged the energy market into its worst supply shock since the 1973 Saudi oil embargo. Iran‘s military junta has now trapped Trump in the limbo of a forever war and will not let him wiggle out of it or his failed art of the deal over Hormuz which will not reopen for next six year like Nasser’s Swiss canal did after June 6,1967.
This means the $2 trillion budget deficit doubles to $4 trillion as the world economy sinks into a stagflation quagmire. Kevin Warsh’s inflation mandate is now history. His real mandate is to help Scotty sell as much junk paper to the offshore money markets as humanly possible and he will either play ball or feel the jackboot of King Donny nudge his pinstriped derrière. Elementary my dear Watson.
This time the wolf is here as the next Ice Age in global finance begins but does not end in Gringolandia. The macro tempest that is coming in the financial markets will make us all nostalgic for the happy days of 2008 or 2012, when Super Mario’s bazooka was all it took to save Europe from Club Med’s sovereign deadbeats. Now America faces a classic EM style sovereign debt spiral of our lifetime and all the Trumpster, Scotty and Kev can do is fiddle - fiddle while the American Rupee goes up in smoke. Money will not talk but scream in agony at a decibel count that will be heard all over the world. Remember, that all we do in life echoes through eternity even beyond Elysium. Strength and honor!
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