MAD Macro - Now We Know
Now We Know Who’s in Charge
U.S. Politics- a Galaxy Far, Far Away
I don’t understand how the Tin Man’s family can ignore the NYT. It’s the only paper they read. Every writer and opinion writer at the NYT seems to be following the NYT Editorial Board’s lead. It’s time for the Tin Man to give up. He is rusted stiff and the oil can won’t work. In a way, it’s too bad because Woodrow Wilison and FDR managed to be presidents when they were incapacitated. Why in the world can’t the Tin Man remain as president when incapacitated? The world has changed. iPhones have ruined everything. The mainstream press tried to cover for the Tin Man, but those damn iPhones ruined everything. Anyone can make a cheap fake of the Tin Man. I do admire the Tin Man’s new schedule. Start work at 10 am, nap at 2 pm, then relax at 4 pm. When I am 81 that’s definitely going to be my schedule. The only difference is that between 10 am and 2 pm I am going to play a round of golf and hopefully shoot my age. Then lunch and a nap. Holman Jenkins has an interesting opinion article in today’s WSJ, linked here. It’s titled, “Was There a ‘Biden’ Presidency?” It asks the obvious question, who has been running the country? MAD Macro readers know, Jake and Jill.
The WSJ has a new political article out early this morning, linked here. It’s titled, “Biden Is Like Yoda. Inside the Big Money Battle to Salvage the Democratic Ticket.” It’s a fun article. Apparently, some of President Biden’s top donors have latched on to a “Star Wars” analogy: President Biden is like Yoda – old and frail yet wise and influential – whereas Trump is like Jabba the Hutt, a gluttonous and powerful gangster. Funny but sad. The Democratic donors are right about one thing. U.S. politics has entered a galaxy far, far away. We knew this presidential cycle would be crazy but the last week is beyond crazy. I still think the Tin Man will pull out of the race soon, despite Jill and Hunter’s pleadings. Jake the Snake Sullivan and Obama will take over.
All of this crazy political stuff matters for markets. Our enemies are watching closely. The geopolitical risks are real. With the Orange Mad King I looking like he will win in November, the U.S. yield curve is starting to steepen on expectations for pro-growth policies and continued unsustainable fiscal spending. Steeper curve and possible debt crisis. With the Tin Man, or Yoda, in charge for the next few months, China, Russia, Iran or Little Rocket Man might do something stupid. Jay Powell sounded dovish yesterday, which helped markets. Jay could ease before the election, but it won’t fix the world’s political problems. I could be crazy like the world, but I think gold and commodities will rally on the rising geopolitical risks. Markets are mixed this morning after a nice rally to new all-time highs for the S&P and NASDAQ 100 yesterday. Tesla led the market higher yesterday which probably makes Elizabeth Warren crazy. Maybe she will try to step in for the Tin Man. Bitcoin is lower today, not sure why. Because of tomorrow’s holiday we get a few important economic numbers today: weekly jobless claims, a day early, Challenger job cuts, ADP employment change, Durable Goods and ISM Services Index. Then, the big one, the monthly employment report Friday morning. Jay Powell seemed to indicate that any new signs of weakness in the labor market would trigger a Fed easing.
I updated the U.S. Dollar Index, Japanese yen, U.S. 10yr yield, U.S. 10yr-2yr yield spread, WTI crude oil, NY copper, spot gold, bitcoin, S&P futures and NASDAQ 100 futures charts below.
Interest rates and the dollar are close to unchanged this morning. The Japanese yen keeps falling. Dollar/yen is making new highs. This might become a problem if the yen keeps declining.
Crude oil is unchanged, gold and copper are higher. Bitcoin is lower and could test the important support of 56,500 to 59,000 again.
S&P and NASDAQ 100 futures are unchanged this morning.
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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.
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