Capitol Farce – Fat Tail Daily | Bonds & Fixed Income

‘Don’t f*** round with Medicaid…’

Advertisement

–Donald Trump to House Republicans

We remind readers that we don’t take sides…nor can we think about that we all know the long run. Our objective is merely to attempt to perceive the Primary Trend and thus keep away from the Big Loss.

Being on the best facet of the Primary Trend is the true key to growing long-term wealth.

So far this century, traders beat the stock market (the Dow) three to 1, simply by being within the best, most secure asset class — gold. Can that go for one more 25 years? We don’t know…that’s why we’re taking note of the farce now enjoying out on Capitol Hill.

We additionally remind ourselves that the Primary Trend will not be decided by what people need…or what they count on. Instead, they get what they deserve… formed by patterns of historical past moderately than the aware efforts of those that stay in it.

In the news yesterday… Barrons:

The bond market’s May meltdown has taken a flip for the more serious.

Long U.S. bonds bought off Wednesday, pushing their yields by way of their 5% ceiling…. Bond yields and costs transfer inversely. The rise in yields was exacerbated by a disappointing 20-yr U.S. Treasury public sale.

That 5% stage has been the final cap on the 30-yr for about 20 years, and the security hasn’t closed above it since October 2023. The 10-yr Treasury’s yield, at 4.539% on Wednesday, has moved previous its own psychological threshold of 4.5%.

Why are bonds promoting off? Congressman Thomas Massie instructed us yesterday. Bond consumers have eyes and ears. They see Congress recklessly passing one other large spending/large debt funds…and so they “realize we aren’t fiscally responsible.”

Bloomberg:

Congress Pulls Tax Cut All-Nighter With SALT Fight Unresolved

Once the House passes the invoice, the Senate may take weeks — if not months — to revise and approve the laws.

The Republican funds proposal…already more than 1,000 pages of exceptions, {qualifications}, ifs and maybes… is getting more sophisticated all of the time.

We can simplify. The thought is to cross a ‘big, beautiful bill’ that adjustments all the pieces… however nothing. Some spending will likely be cut. Some will increase. Some people will get a juicy plum (keep studying)…others will get lumps of coal. The ‘all nighters’ decide which group has the stamina, insomnia, or lobbyists to get what it’s after.

Here’s one other headline from yesterday. USA Today:

Senate unanimously approves invoice to create tax deduction for money

The deduction would solely apply to money suggestions and could possibly be claimed by people who earn up to $160,000, which might rise together with inflation.

Wow. Not a single member of the Senate thinks that suggestions must be handled like some other kind of income. Not a one of them, apparently, is nervous about raising deficits by lowering taxes.

This is a signal of a nation that’s not prepared for a main change in direction…one that’s not determined for reform.

And how about this? Donald Trump went over to Capitol Hill. His mission: to make sure Republicans didn’t truly attempt to cut spending. In addition to telling them to not ‘f*** with Medicaid,’ he instructed them that he didn’t need ‘anything meaningful’ cut, however was as a substitute targeted on ‘waste, fraud and abuse.’

This is what you’d count on…from a chief who will not be serious about actual disruption. No need to make sacrifices. No need to change course. No need to cut ‘anything meaningful’. Things are mainly OK; simply trim out the ‘waste, fraud and abuse.’

Are we already headed to a $60 trillion national debt…with curiosity funds that may take up half of all tax receipts? What’s the large fear? We’ll cut taxes on suggestions…and make the deficits even bigger.

Have Medicare rolls doubled…to 80 million people (Trump himself added 10 million of them during his first time period) since Obama expanded this system? Do they not price $11,600 per individual? And couldn’t $4 trillion be saved by turning back the eligibility requirements to the pre-Obama period?

Couldn’t America actually be made Great Again if some elementary adjustments had been made?

Nah, by no means thoughts…don’t f*** with it.

Regards,

Bill Bonner,
For The Daily Reckoning Australia

All advice is basic advice and has not taken under consideration your personal circumstances.

Please search impartial financial advice concerning your own state of affairs, or if doubtful concerning the suitability of an investment.