Still Faking It – Fat Tail Daily | Australian Markets

No financial analyst — no matter how brilliant his suspenders…and how gaudy his bow tie — ought to advantage any consideration except he lived by the Reagan Revolution. There, he noticed the clumsy interaction between politics and financial insurance policies.

Reagan’s promise to cut back the ability of authorities was a flop; it grew bigger than ever. But Reagan backed Volcker who succeeded in stopping the inflation that had plagued the nation. An actual growth adopted.

Young analysts don’t know how fortunate they’re. The Trump Team is probably the most bold — in phrases of new insurance policies — since Franklin Roosevelt. Almost all of them will backfire…or just fizzle out.

The press stories that the Trump Team is ‘disrupting’ issues. It is introducing ‘game changer’ new insurance policies, it says.

Hallelujah!

Things need to be disrupted – in any other case, the nation is headed for disaster and chaos.

But on nearer inspection, the sport stays a lot the identical. Fortune:

“This is going to lead to the construction of a lot of plants, in this case auto plants,” Trump stated upon asserting the tariffs in March. “You’re going to see numbers like you haven’t seen… in terms of employment. You’re going to have a lot of people making a lot of cars.”…But the U.S. plan to strengthen blue collar work could also be backfiring. President Donald Trump’s 25% tariff on imported automobiles may truly be sweeping away auto job alternatives for Americans, regardless of aiming to do the other.

The actual trigger of America’s shrinking manufacturing capability will not be the nation’s previous trade insurance policies (favoring free trade). It’s our financial insurance policies (favoring pretend money!) No disruption of US financial coverage has been proposed. So, put together for more floppy insurance policies; don’t anticipate a actual growth.

Trump’s ‘drill baby drill’ and trade battle insurance policies, for instance, will not be boosting the US oil business, both. NBC News:

President Donald Trump needs the oil and gasoline industry to “drill, baby, drill” in pursuit of his power dominance agenda, however the corporations concerned within the precise drilling and servicing of wells have as a substitute taken a beating during his first 100 days in workplace. U.S. crude oil costs have fallen beneath $65 per barrel, down more than 20% since Trump’s second time period started, making it unprofitable for a lot of corporations to spice up manufacturing, in accordance with a survey by the Federal Reserve Bank of Dallas.

The low-cost producers are within the Middle East and Russia, not within the US. And when costs go down, it’s the marginal producers — not the ‘core’ pumpers within the Saudi desert — who are suffering. Trump’s power coverage was meant to spice up US power corporations. Instead, it could be placing them out of business. Bloomberg:

Oil dropped after OPEC+ agreed to a different massive output increase, raising concern that extra provide may result in a world glut simply because the trade battle threatens demand.

Activist insurance policies all the time fail. Because they disrupt the natural, spontaneous preparations that people make on their own. Left to their own gadgets, for instance, companies trade with whomever they need…nonetheless they select. That’s what free trade is all about, not forcing different nations to comply with your labor or currency commandments.

But alongside comes the Trump Team with a ‘trade policy.’ What occurs? Trade declines…shippers and container ports are already slowing down. Bloomberg stories that a single ship, now arriving at Long Beach harbor, faces $417 million in new tariffs. Ultimately, that charge will get handed alongside to customers and buyers. People get much less of what they need, pay more for it…and the administration claims victory.

Even when the feds intention to reverse earlier coverage errors…they typically fail to do it. In the latest employment numbers, for instance, is a actual petard. DOGE, as everyone knows, has been ‘disrupting’ the federal workforce. According to the press, a whole lot of 1000’s of federal staff have been tossed out onto the streets…the entire federal institution is meant to be as quiet and gloomy as an empty morgue.

But wait. The employment numbers show complete employment rising, not falling. What occurred to these disappeared federal staff? And then, wanting nearer, we discover that the quantity of people presently employed by the federal authorities is nearly precisely the identical because it was a yr in the past when Joe Biden was president.

There have been 2,378,000 federal staff a yr in the past. Guess how many there have been final month? It was 2,379,000 (see Table B-1 within the hyperlink beneath). Total Federal employment IS down since January (and fell by 9,000 jobs in April). But it’s just about the identical this time final yr. The Establishment Survey utilized by the BLS could not but embrace terminated staff who’re nonetheless receiving severance and subsequently nonetheless counted as ‘employed.’ We’ll know more subsequent month.

What about these manufacturing jobs? The tariffs have supposedly led to many companies shifting their factories to the US. If so, they haven’t begun hiring. The latest numbers show manufacturing jobs truly went down by 1,000.

In the previous few days, America’s own Hannibal — Pete Hegseth — introduced he would cut the quantity of high-ranking generals by 20%. Newsweek:

Trump Administration Slashing Four-Star Generals in Bid to Shrink Pentagon

But wait. Team Trump intends to suggest rising the Pentagon finances by 13% to $1 trillion, an increase of $113 billion.

Disruption?

Game changer?

Not precisely.

Regards,

Bill Bonner,
For Fat Tail Daily

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.