MAD Macro - Bibi and Trump, Peace Our Way

Bibi, We Did It. Peace Our Way in the Middle East

Lead Me, Follow Me, or Get Out of My Way

Special MAD Macro Vacation Edition

MAD Macro – Waiter at the White House last night while Bibi and Trump were having dinner.

Trump, “Bibi, do you think we will ever win the Noble Peace prize for crushing Iran and the proxies?”

Bibi, “I doubt it, not going to happen, but I am nominating you anyway. The world hates us. We could solve world peace through strength, but no one would care because we killed the bad guys. Remember they don’t know who the bad guys are.”

Trump, “Funny, I think killing the bad guys is a good thing. I guess our bad guys are the Democrats’ good guys.”

Bibi, “Listen we have done some good things, but no will care until we die.”

Trump, “Well, my secret security staff tells me we are both likely to be assassinated. So when we do win, who do you want to accept your award?”

Bibi, “ Not sure, maybe I’ll ask Schumer. That would be funny. How about you asking Elon Galt Musk?”

Trump, “Not Elon, he wants to solve our deficit problem. He bugs me, I don’t care about the deficit. I will be dead when it’s a problem. He should go to Mars. Zero deficit problem on Mars.”

Elon is starting a new party. The deficit hawk party. Good luck with that. Elon thought global warming was the big world problem so he built Tesla, the best electric car in the world. Then he thought man needed to be interplanetary, so he built SpaceX to take man to Mars. Now that he has been spending time in Washington, DC, he realizes that the deficit is actually the biggest risk facing mankind. Sadly, Elon Galt Musk and his new party have no chance of solving mankind’s biggest risk, the U.S. government deficit. Now that Elon is entering the real political war, he should watch the General Patton movie. General George Patton had some great quotes. The best might be, “No bastard ever won a war by dying for his country. He won it by making the other poor dumb bastard die for his country.” Good luck Elon, solving the U.S government deficit problem is harder than self-driving cars or going to Mars.

Larry Summers hates Trump, so I was interested in reading his views on the BBB. After all, Larry was correct when he said the Tin Man’s big beautiful Inflation Reduction Act spending would be inflationary. I assumed he would be most upset about the potential risks from adding to the U.S. deficits. Larry’s NYT article is linked here. It’s titled, “Lawrence Summers: This Law Made Me Ashamed of My Country”. Lawrence made sure his name was in the title. I was wrong, he is most upset about the modest cuts to Medicaid spending. Trying to control spending is not something Lawrence cares about. Keep spending as long as you raise taxes on the private sector. Lawrence is correct about one thing this bill does, “undermine national security by exhausting the government’s borrowing capacity”. Trump is expecting economic growth to help reduce the deficits. He might get lucky and be right, but cutting more spending and shrinking the size of the government would help. Lawrence, on the other hand, would like to kill economic growth with more spending and higher taxes on the private sector. Sadly, both Trump and Lawrence might be wrong. The debt crisis might be here already. If long rates start rising and the curve starts to steepen we will know that the BBB is a problem.

Markets are close to unchanged after closing lower yesterday. Trump Tariff Man is back in action after passing and signing his BBB on Friday. No rest for the Tariff Man. The WSJ has Trump’s letter to Japan’s Prime Minister, linked here. It’s titled, “Read an Annotated Version of Trump’s Tariff Letter to Japan”. It’s worth reading, we have no chance for trade agreements. Trump Tariff Man is focused on trade deficits, not fair trade agreements. If only he would focus on budget deficits the way he obsesses over trade deficits. I still think markets are in for a summer selloff. The BBB and tariff wars could raise long rates and steepen the yield curve. Not a good environment for expensive risk assets.

I updated the U.S. Dollar Index, U.S. 10yr yield, U.S. 10yr-2yr yield spread, WTI crude oil, NY copper, spot gold, NYSE Arca Gold Miners Index, bitcoin, Strategy, S&P futures, S&P futures weekly, NASDAQ 99 futures and DOW futures charts below.

The dollar is unchanged and interest rates are higher. The curve is also a little steeper. It will be important to watch long rates and the curve as the market reacts to the BBB.

Crude oil, copper and gold are all close to unchanged. The NYSE Arca Gold Miners Index should also open unchanged. Bitcoin is a little higher testing the all time highs. Strategy should also open a little higher. Michael Saylor took last week off and did not buy more bitcoin. He said, “some weeks you just need to rest and HODL”.

S&P, NASDAQ and DOW futures are all close to unchanged.

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Unless otherwise stated, Bloomberg is the source of all data and charts.

S&P 500 futures are a type of derivative contract that provides a buyer with an investment priced based on the expectation of the S&P 500 Index’s future value. Nasdaq 100 futures are commodities futures products traded within the equity futures sector. West Texas Intermediate (WTI) oil is a benchmark used by oil markets, representing oil produced in the U.S. Brent Crude Oil is a blend of crude oil recovered from the North Sea in the early 1960s, whose price is used as a benchmark for the commodity's prices. The U.S. dollar index (USDX) is a measure of the value of the U.S. dollar relative to the value of a basket of currencies of the majority of the U.S.'s most significant trading partners. UBS Bloomberg Constant Maturity Commodity Index is a total return rules-based composite benchmark index diversified across commodity components from within specific sectors. Index performance is not illustrative of fund performance. It is not possible to invest directly in an index.

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