Having exposed the "current global establishment’s (including Trump’s) overall plan" consisting of 8 simple steps to solve the global debt crisis,Bill Gross then goes on to say that "it pays to not fight the tiger until it becomes obvious that another plan will by necessity replace it."
Will “Trumponomics” change the course of the U.S. economy? We certainly hope so. It will be better for us all. However, as investors, we must understand the difference between a “narrative-driven” advance and one driven by strengthening fundamentals. The first is short-term and leads to bad outcomes. The other isn’t, and doesn’t.
“The problem for Trump is that we no longer reside in the 80’s where a large group of ‘baby boomers’ were entering the workforce and driving a massive wave of innovation and productivity changes. Today, we are on the wrong side of the demographic trends combined with falling productivity and labor force growth.”
"...there is a long way to go between President-elect taking office, drafting bills and getting them passed. There is even a further period of time before any actions actually passed by the Trump administration actually create perceivable effects within the broader economy. In the meantime, there are many concerns, from a technical perspective, that must be recognized within the current market environment."
Debt reduction and the visible reduction of what is seen internationally as overbearing statism in the U.S. economy will be critical to building back long-term U.S. global capabilities. The U.S. has not seen such an opportunity for strategic reversal since the Reagan Administration. But only if the incoming Administration adheres to the principles which won it the election, and avoids the compromises which the bureaucratic base of government will attempt to force on it to avoid disruption of the status quo.
"Yes, the parallels [with Reagan] are certainly there... I’ve been in touch with the Trump team. I’ve even written a book about Trump.... But those guys are going to be surprised. They just have no idea what they’re up against....I’ve seen it happen. There are alligators in that swamp."
"Markets have a pronounced tendency to rush to judgment when policy changes occur. When the Obama stimulus of 2009 was announced, the presumption was that it would lead to an inflationary boom. Similarly, the unveiling of QE1 raised expectations of a runaway inflation. Yet, neither happened. The economics are not different now. Under present conditions, it is our judgment that the declining secular trend in Treasury bond yields remains intact."
Hayek’s The Road to Serfdom described how personal freedoms are progressively eroded by the state in the name of the common good. In the main, the serfs are patient and tolerant of their masters, but in a democracy, the establishment behind the state risks being challenged. And that has happened twice this year, first with Brexit and now with Trump in America... but remember the serfs never win, as Hayek recognised.
Hillary and Obama both lose it publicly as Hillary's personal hell week turns election polls upside down. Hillary spreads hatred of Trump supporters, and Obama scolds supporters because they're more interested in one Trump protestor than in him.
From here on out politics are only relevant at the extremes - major war, corruption scandal, martial law etc.Short of that, the fiat currency/fractional reserve banking world has such institutional momentum that it really won’t matter whether Trump is picking on bankers and building his wall or Clinton is protecting Wall Street and raising taxes. Debt will keep soaring as it has under every president since Reagan and jobs will disappear as machines replace people, thus bringing the end of the current system inexorably closer.
In a recent interview with Macro Voices, Hugh Hendry is asked about the trade he has on in his fund, to which the Scotsman says that his team recently had a “eureka moment” and figured out how to design a trade, which has a negative carry when viewed in simple terms, such that they preserve the asymmetric of risk/reward while converting it to a positive-carry trade by adding another “European sovereign component to the trade”.
The Tax Foundation has an interesting analysis of Trump’s tax plan compared to Hillary’s. Hillary is negative on GDP, capital investment, wage growth, and jobs. Trump is positive on all four under two different models.