Yesterday, Treasury prices rose and yields had their biggest one-day fall in over two weeks.
The Trump boomlet seems to be fading.
Lion of Queens
We left off yesterday after exploring one of two major directions for the next four years.
President Trump could really ‘go to war’ with the Deep State. And lose.
If this were to happen, investors would almost certainly get caught in the crossfire.
But don’t worry. This is extremely unlikely. The only way to bring the Deep State to heel is to cut off the EZ money funding that feeds it.
Mr Trump has not even suggested it. It’s not going to happen, not voluntarily at least.
Today, we explore the more likely possibility: The Lion of Queens will lie down with the swamp foxes of the Potomac…and together they will feast on the poor little lambs who elected him.
What would Donald do?
Reader feedback in the Diary Mailbag is running against us at a rate of about 2-to-1.
Most dear readers want us to give’The Donald’ a break. Many think we are criticising him. One even went so far as to suggest we were a ‘Hillary-loving closet liberal.’
Alas, our lonely mission is to look…to laugh…to try to understand. Nothing more.
Novelists often invent characters. They put them in a situation. Then they ask: What would this character do?
‘Character is fate,’ said the ancients.
So today we ask: WWDD? What would Donald do?
Little by little, we come to understand Mr Trump better. He is a scoundrel and a cad, a tough hustler from beyond the East River, shrewd and egomaniacal. But we say that with as much admiration as disgust.
And little by little, we have a clearer idea of what he may do. He is what he is. He will do what he will do.
We are not criticising; he may be just what we need. Every empire has to come to an end. Trump might be the man for the job.
Moneymen and gunmen
Immediately after his election victory, Mr Trump brought the most powerful swamp critters — the moneymen and the gunmen — to his Trump Tower HQ in Midtown Manhattan.
He loaded up his cabinet with Goldman and Pentagon alumni. Then he backed away from slashing the benefits promised by Obamacare, saying his new plan would provide coverage for all the sheep.
And now, Trump’s pick to lead the Department of Energy, former Texas governor Rick Perry, says that when he pledged to abolish the department while campaigning for the presidency in 2012, he didn’t know how important it really was.
As Perry put it at his confirmation hearing last week:
‘In fact, after being briefed on so many of the vital functions of the Department of Energy, I regret recommending its elimination.’
Trump’s momma didn’t raise no fool.
Protected by big money, big guns, big oil, and big medicine, he will be free to spar with the less-important Deep Staters — academics, the media, the bureaucracy, businesses, foreigners, and the small fry.
Enemies of the people
Neither Republican nor Democrat, neither Liberal nor Conservative, this is the essence of Trumpismo — keeping the cronies off balance while remaining the hero of the little guys.
Delighting the guys in the red hats, Team Trump will take on a few token ‘enemies of the people’ and keep the cash flowing to the most powerful insiders.
What will be the result? A boom on Wall Street? GDP growth of 4%? A catastrophic depression?
Who knows? Lucky presidents are better than smart ones. And Mr Trump is famously lucky. He could even be both.
But tomorrow, we will look at why Trumpismo cannot really make America great again… And we introduce a radically new, simpler, and better way to understand the political economy.
For Markets and Money, Australia