> The bond market expresses doubt that these officials will take positive action to do anything about inflation or spending.
It is farrrr more than just that. The man that heads this administration has an explicit history of directly screwing over his creditors and/or finding any means necessary to get out of paying them. You don't lend money to people like this. Unless you're a fucking idiot or a loan shark willing to break some legs into 40 trillion bone fragments.
1.3 trillion dollars are traded daily on the US bond market. What the hell is 6 billion going to do? That's less than 1/2 percent. Plus he's using short term debt to do it. Tell me how much your credit score will improve if you swap debt, but still owe the same amount. This is the most incompetent administration in history, no matter which department you look at.
No, the Fed is. The Fed has monopoly pricing power over all interest rates and yields. As the Fed only chooses to explicitly set the overnight rate, other yields are based on the expected trajectory of the overnight rate over the term.
This narrative that the bond market is finally swinging its big dick around and punishing the government is nonsense. Inflation jumped up and the Fed is now expected to be hiking rates instead of cutting for the foreseeable future. The market is pricing that in.
When sentiment around what the Fed will do next changes, and especially with the inevitable cut for a future recession, yields will plummet.
> No, the Fed is. The Fed has monopoly pricing power over all interest rates and yields.
Tell me exactly how the Fed controls the Treasury auctions and daily bond yields please.
For instance I believe if they cut SOFR while inflation is on the rise, all treasury bills/bonds yields would go up, not down in the market and in the auctions.
In extremis the Fed can buy up to every outstanding Treasury issue and commit to arbitrarily low yield targets across the yield curve. The foreign exchange value of USD would tank and inflation would be high but it can be done.
They can't buy every outstanding Treasury issue legally or practically today.
But technicians I guess they could purchase a ton through open market operations which would probably have the effect of tanking the dollar, causing hyper inflation and killing the dollar as the reserve currency of choice.
Technically the President CAN nuke the White House while he is inside the Oval Office. The President has the power to dramatically commit suicide in blindingly stupid fashion. Just like the Fed
The Fed has complete discretion to price any yield at any duration however they want. They're a monopoly. Monopolies have monopoly pricing power.
The Fed isn't actively pursuing yield curve control but that doesn't mean they aren't the driving influence. Everything is anchored by the Fed.
>For instance I believe if they cut SOFR while inflation is on the rise, all treasury bills/bonds yields would go up, not down in the market and in the auctions.
You believe incorrectly. If the Fed were to cut the IORB and RRP support rates then that would drive FFR down as the excess poorly yielding reserves would be used to bid up prices. SOFR would fall.
The market accepts negative real yields all the time. Inflation matters because the Fed changes its policy rate depending on inflation. Inflation is not the ultimate causal variable though, the policy rate it.
The anchoring effect of central bank policy is so strong that the ECB and JCB sold negative nominal yields for years. Investors were paying $x to be repaid less than $x. That makes absolutely no sense in a world where bond market investors have the ultimate pricing power.
Every transaction of existing treasuries occurs through exchanges on the open market. New issue treasuries are sold at auction. The FREE MARKET determines yields NOT The Fed.
It's not a coincidence. It's what happens when a central bank acts appropriately in a stable economy: The Fed rate and bond yields behave similarly. You're confusing correlation with causation. Check Greece over the past 20 years, then get back to me.
>The Fed rate and bond yields behave similarly. You're confusing correlation with causation.
They behave similarly because Fed policy causes yields to move... How do you think monetary policy even works? If changing the policy rate couldn't impact broader economy yields and rates then monetary policy wouldn't be able to have any effect at all. Causation not correlation is a requirement here.
>Check Greece over the past 20 years, then get back to me.
Greece isn't a monopoly issuer of their currency. They need the ECB to play ball, and the troika fucked them. It's a fundamentally different institutional arrangement.
Erm, if the fed takes over for external buyers then inflation rears it's ugly head and rates go right back up, not down. The 10 year yield doesn't really correlate with the fed funds rate, so unless they start a wave of qe it's fair to say the bond market is the big dog.
> Erm, if the fed takes over for external buyers then inflation rears it's ugly head and rates go right back up, not down.
Rates are a policy choice. The overnight rate is whatever the Fed says it is. Other rates are ultimately a function of what people expect the Fed to do.
If this weren't true then monetary policy would be completely useless as it would be unable to influence the broader economy. Monetary policy can only have an effect because the market responds to what the Fed does.
>The 10 year yield doesn't really correlate with the fed funds rate
I should clarify that it doesn't "always" correlate with the fed funds rate. Short term/treasury notes tend to follow the fed closely, while other metrics like inflation tend to dictate the 10 year. Now much of the time the fed funds rate is a function of inflation, so the 10 year and the fed funds appear directly linked. The chart you linked shows there is plenty of historical precedent for the 10 year being disconnected from the fed funds rate, as we are seeing right now.
Longer term yields don't follow as closely because each Fed decision impacts a smaller and smaller amount of the overall term. The market is pricing the expected trajectory of the policy rate over a 10 year period as the basis for pricing yields.
Inflation isn't the ultimate causal variable. Inflation matters because the Fed moves the policy rate in response to inflation. When they don't strongly move together yields follow the policy rate not inflation. This can result in negative real yields, sometimes for many years.
What we're seeing right now is yields all spiking because sentiment around what the Fed will do has shifted from cutting to hiking. It's all directly linked to FFR movements and expected movements.
You don't think uncertainty around the US's fiscal responsibility is influencing yields? It seems like we are incapable of reigning in deficit spending, and are instead accelerating it. Pair this with countries pulling away from the US and you have a recipe for collapsing treasury demand.
>You don't think uncertainty around the US's fiscal responsibility is influencing yields? It seems like we are incapable of reigning in deficit spending, and are instead accelerating it.
I've already linked data showing 60+ years of rising debt not causing yields to rise. Why would it start now? What's the mechanism even supposed to be? Government debt is non-government savings. How is increasing net savings supposed to push up yields?
>Pair this with countries pulling away from the US and you have a recipe for collapsing treasury demand.
Foreign investors dumping USD assets doesn't destroy those assets, it just moves those savings to someone else's account. Where those savings end up is where demand for treasuries will come from.
Also it's questionable that investors are actually pulling away. Foreign holdings of treasuries are up 7.3% since Trump took office.
The Fed is limitless in its power to price yields. Yield curve control is not a controversial concept. The degree to which the Fed chooses to use that pricing power is a different question from whether or not they do have that power. It's undeniable that they do.
You then run into some second order issue, practically limiting what you can do as a central bank. Legally, sure, limitless. Politically and policy based? No.
You run into second order issues no matter what choice is made. The economy is a complex dynamic system.
For example, fiscal dominance is coming. US politics is so broken that nothing is going to change about the trajectory of the debt anytime soon. When debt to GDP is high enough then raising rates contributes to inflation because the interest income channel dominates any of the countercyclical channels. In that situation cutting rates is the smart political and policy choice to try and limit inflation.
I have also read that the huge investment in AI is actually pulling money away from US treasuries and into these other bonds. The argument is that this is driving the interest rate up on US treasuries.
That being said, I do agree with what others have said. I would love to hear what others think about this theory.
The bond market is calling a spade a spade. And assets are over valued compared to what is coming.
Bond market are the only adults in the room right now, until Wall Street figures out how to gamify that too like they have every other investment known.
I think the crash is right around the corner, after midterms. When Trump loses control of Congress and the Senate the stock market will lose the Republican put, drop 20%, and since this is still a month and a half away, and since we’ll continue to see oil prices climb and yields climb, it’s going to break the back of the economy and that initial 20% drop will trigger a crash through margin calls that are right now spread throughout economy.
Trump will blame it on the Dems, Dems will blame it on Trump. Trump loses control of the Republicans and we’ll see political infighting over what’s left and pretty much everything descends into chaos.
Add to that the fact that Ai is not even profitable, and everything will fold like a house of cards due to the extent of circular funding. Just like we saw with telecom, orders will be cancelled and suddenly nVidia and other semi’s will be left with surplus hardware. All of this talk about Ai danger and suddenly requiring regulation is an attempt to slow purchases down and to tie the government into the crash as insurance and a scapegoat. These tech bros know the party is over and they’re just selling smoke.
When the cards are called, for whatever reason, all of the positions fold one after another until the money is located. There are more than enough reasons active to trigger a collapse, and afterwards the press is going to wonder why nobody paid to any of the warning signs, just like they do every blood time this happens.
All because Trump wouldn’t lower tariffs to end inflation, and wouldn’t take a deal with Iran that he already accepted… to feed his ego.
Right now, any investment in the US is a bet that Trump will put his ego aside and save your investment and the economy.
I don't think China needs to go after Taiwan at this point. I don't think the living population has the same attachment to it as the early days of the republic. And Trump allowed them to start getting chips.
They're gaining so much international clout by being the "chill guy" at the moment. And they're seeing huge gains in commercial treaties with India and Europe. It'd be kinda short-sighted to burn that good will for an island that would still be expensive to take in terms of manpower. And China has been anything but short-sighted for the past 2 decades.
Ukraine and the new drone warfare have shown how a smaller power can resist more effectively than previously thought. I know the scale is totally different. But also, Chica kind of needs Taiwan's infrastructure to remain intact which limits their tactical options.
Obviously, I could be way off the mark on this one. And there is definitely a decent argument that if China did have an appetite for full on armed conflict atm, now seems like a great time since America seems militarily the most ineffective it has been in the last century and our leaders are not super-supportive of long-time allies.
I don't disagree with any of that, but I've also learned to doubt the wisdom of authoritarian governments. And China hasn't played their cards perfectly, they have some serious internal economic issues, which largely explains their recent nationalism. Ie., they need a new carrot to dangle in front of the mob since the money carrot isn't looking too ripe anymore.
They might, but it's important not to underestimate just what a difficult undertaking an invasion would be, even for China. Several times the difficulty of Normandy, at least.
China is winning heart and minds in Taiwan and what it is not wining its bribing.
There’s no need for China to ever invade, they’re winning at the political level by leveraging corruption.
Also a slowdown in the US is bad news for China due to the amount of exports they send to the US. They’ll be busy managing unemployment and social unrest.
While it was once unthinkable, and still should be unthinkable, US defaulting on the debt is no longer something that’s off the table.
If I am going to take the risk of being defaulted on, I wanna be sufficiently compensated for that risk that I am taking
I have a conspiracy theory: I think the bond market is forcing a reveal on the level of manipulation and fraud in the stock market right now.
A lot of companies, a lot of stocks, a LOT of the stock market are irrationally high in their valuations, despite things like poor EPS, poor financials reported on 10K's, etc. The companies with organic investing will shed their investment support if 10-year and 30-year yields continue to rise; there is a specific yield number for bonds that will entice long term investors out of their stocks and into bonds.
The longer certain investors stay "in" on some companies, and the longer those companies stay up despite weakening market support and reasons, the more exposed those companies are as being manipulated.
Sure, someone will say "I like the stock, and I don't want to get my funds tied up in bonds with a time-lock." And some investors can do that. However, I think we're going to see a lot more funds staying with certain companies because those stocks are manipulated and kept high so certain useful idiots can convert that stock value to private debt and use those funds to influence American policy and elections; or they're just manipulated to keep high because of bad debt deals before COVID, and if/when the stock drops, a lot of margin calls will trigger a transfer of collateral and assets we've never seen before.
If I may, it really seems that claims such as yours that the value of the stock market is untethered to underlying fundamentals ring hollow upon examination of the data.
Yes but those record breaking profits come at the cost of long-term health of their own businesses. Look at car companies since the pandemic, they went from increasing retail prices 30-40% to having hundreds of thousands of cars sitting on lots unsold.
There's also the fact that companies like meta and other ai players are securing loans/debt that don't appear on the balance sheet, inflating their p/l statements.
AllenIll | 23 hours ago
From the article:
> The bond market expresses doubt that these officials will take positive action to do anything about inflation or spending.
It is farrrr more than just that. The man that heads this administration has an explicit history of directly screwing over his creditors and/or finding any means necessary to get out of paying them. You don't lend money to people like this. Unless you're a fucking idiot or a loan shark willing to break some legs into 40 trillion bone fragments.
Edit: Spelling & Grammar.
Qeltar_ | 20 hours ago
He literally just bragged openly about debasing the currency lol.
TrevorBo | 15 hours ago
Lutnick has already been doing that with tether for years
Kytyngurl2 | 4 hours ago
With children too, I hear
geomaster | 19 hours ago
donald trump bankrupted multiple times.
bessent ran a hedge fund that lost 90% of assets
truly buffoons at the highest level of government
TrevorBo | 15 hours ago
Not buffoons. Just greasy.
heyheyhey27 | 14 hours ago
Not mutually exclusive, and in fact I would argue they're correlated.
FearlessPark4588 | 20 hours ago
I also don't trust the Treasury
looks like the vigilantes are making their debut
Affectionate-Panic-1 | 9 hours ago
Trump won't be president in 10 years.
matjoeman | 5 hours ago
His successor could be.
sereneandeternal | 23 hours ago
The bond market is the big dog.
It may be easy for Trump and his cronies to manipulate the stock market, but not so easy with the bond market.
And Bessent’s desperate attempts simply further erode trust.
Remote-Resource1172 | 22 hours ago
Are you saying increasing the buyback to $6 billion from $2 billion was insufficient to convince investors that Scott Bessent “is the house now?”
HowdyDiarrhea | 14 hours ago
He is the house. A crack house.
bjdevar25 | 10 hours ago
1.3 trillion dollars are traded daily on the US bond market. What the hell is 6 billion going to do? That's less than 1/2 percent. Plus he's using short term debt to do it. Tell me how much your credit score will improve if you swap debt, but still owe the same amount. This is the most incompetent administration in history, no matter which department you look at.
AnUnmetPlayer | 21 hours ago
> The bond market is the big dog.
No, the Fed is. The Fed has monopoly pricing power over all interest rates and yields. As the Fed only chooses to explicitly set the overnight rate, other yields are based on the expected trajectory of the overnight rate over the term.
This narrative that the bond market is finally swinging its big dick around and punishing the government is nonsense. Inflation jumped up and the Fed is now expected to be hiking rates instead of cutting for the foreseeable future. The market is pricing that in.
When sentiment around what the Fed will do next changes, and especially with the inevitable cut for a future recession, yields will plummet.
snark42 | 20 hours ago
> No, the Fed is. The Fed has monopoly pricing power over all interest rates and yields.
Tell me exactly how the Fed controls the Treasury auctions and daily bond yields please.
For instance I believe if they cut SOFR while inflation is on the rise, all treasury bills/bonds yields would go up, not down in the market and in the auctions.
Mirageswirl | 20 hours ago
In extremis the Fed can buy up to every outstanding Treasury issue and commit to arbitrarily low yield targets across the yield curve. The foreign exchange value of USD would tank and inflation would be high but it can be done.
snark42 | 19 hours ago
They can't buy every outstanding Treasury issue legally or practically today.
But technicians I guess they could purchase a ton through open market operations which would probably have the effect of tanking the dollar, causing hyper inflation and killing the dollar as the reserve currency of choice.
Mirageswirl | 19 hours ago
There is no legal limit to the size of the Fed balance sheet.
Spezalt4 | 16 hours ago
Technically the President CAN nuke the White House while he is inside the Oval Office. The President has the power to dramatically commit suicide in blindingly stupid fashion. Just like the Fed
Mirageswirl | 6 hours ago
Yep, the President invited Iranian attacks on Los Angeles and San Diego just yesterday. Nothing is off the table.
AnUnmetPlayer | 19 hours ago
The Fed has complete discretion to price any yield at any duration however they want. They're a monopoly. Monopolies have monopoly pricing power.
The Fed isn't actively pursuing yield curve control but that doesn't mean they aren't the driving influence. Everything is anchored by the Fed.
>For instance I believe if they cut SOFR while inflation is on the rise, all treasury bills/bonds yields would go up, not down in the market and in the auctions.
You believe incorrectly. If the Fed were to cut the IORB and RRP support rates then that would drive FFR down as the excess poorly yielding reserves would be used to bid up prices. SOFR would fall.
The market accepts negative real yields all the time. Inflation matters because the Fed changes its policy rate depending on inflation. Inflation is not the ultimate causal variable though, the policy rate it.
The anchoring effect of central bank policy is so strong that the ECB and JCB sold negative nominal yields for years. Investors were paying $x to be repaid less than $x. That makes absolutely no sense in a world where bond market investors have the ultimate pricing power.
OddlyFactual1512 | 20 hours ago
Every transaction of existing treasuries occurs through exchanges on the open market. New issue treasuries are sold at auction. The FREE MARKET determines yields NOT The Fed.
AnUnmetPlayer | 19 hours ago
What a crazy coincidence this is then.
OddlyFactual1512 | 16 hours ago
It's not a coincidence. It's what happens when a central bank acts appropriately in a stable economy: The Fed rate and bond yields behave similarly. You're confusing correlation with causation. Check Greece over the past 20 years, then get back to me.
AnUnmetPlayer | 8 hours ago
>The Fed rate and bond yields behave similarly. You're confusing correlation with causation.
They behave similarly because Fed policy causes yields to move... How do you think monetary policy even works? If changing the policy rate couldn't impact broader economy yields and rates then monetary policy wouldn't be able to have any effect at all. Causation not correlation is a requirement here.
>Check Greece over the past 20 years, then get back to me.
Greece isn't a monopoly issuer of their currency. They need the ECB to play ball, and the troika fucked them. It's a fundamentally different institutional arrangement.
Test-NetConnection | 20 hours ago
Erm, if the fed takes over for external buyers then inflation rears it's ugly head and rates go right back up, not down. The 10 year yield doesn't really correlate with the fed funds rate, so unless they start a wave of qe it's fair to say the bond market is the big dog.
AnUnmetPlayer | 19 hours ago
> Erm, if the fed takes over for external buyers then inflation rears it's ugly head and rates go right back up, not down.
Rates are a policy choice. The overnight rate is whatever the Fed says it is. Other rates are ultimately a function of what people expect the Fed to do.
If this weren't true then monetary policy would be completely useless as it would be unable to influence the broader economy. Monetary policy can only have an effect because the market responds to what the Fed does.
>The 10 year yield doesn't really correlate with the fed funds rate
Yes it does. Certainly way more than it correlates with debt and deficits.
Test-NetConnection | 18 hours ago
I should clarify that it doesn't "always" correlate with the fed funds rate. Short term/treasury notes tend to follow the fed closely, while other metrics like inflation tend to dictate the 10 year. Now much of the time the fed funds rate is a function of inflation, so the 10 year and the fed funds appear directly linked. The chart you linked shows there is plenty of historical precedent for the 10 year being disconnected from the fed funds rate, as we are seeing right now.
AnUnmetPlayer | 8 hours ago
Longer term yields don't follow as closely because each Fed decision impacts a smaller and smaller amount of the overall term. The market is pricing the expected trajectory of the policy rate over a 10 year period as the basis for pricing yields.
Inflation isn't the ultimate causal variable. Inflation matters because the Fed moves the policy rate in response to inflation. When they don't strongly move together yields follow the policy rate not inflation. This can result in negative real yields, sometimes for many years.
What we're seeing right now is yields all spiking because sentiment around what the Fed will do has shifted from cutting to hiking. It's all directly linked to FFR movements and expected movements.
Test-NetConnection | 5 hours ago
You don't think uncertainty around the US's fiscal responsibility is influencing yields? It seems like we are incapable of reigning in deficit spending, and are instead accelerating it. Pair this with countries pulling away from the US and you have a recipe for collapsing treasury demand.
AnUnmetPlayer | an hour ago
>You don't think uncertainty around the US's fiscal responsibility is influencing yields? It seems like we are incapable of reigning in deficit spending, and are instead accelerating it.
I've already linked data showing 60+ years of rising debt not causing yields to rise. Why would it start now? What's the mechanism even supposed to be? Government debt is non-government savings. How is increasing net savings supposed to push up yields?
>Pair this with countries pulling away from the US and you have a recipe for collapsing treasury demand.
Foreign investors dumping USD assets doesn't destroy those assets, it just moves those savings to someone else's account. Where those savings end up is where demand for treasuries will come from.
Also it's questionable that investors are actually pulling away. Foreign holdings of treasuries are up 7.3% since Trump took office.
FearlessPark4588 | 20 hours ago
the Fed wants you to think its the big dog but even the Fed is limited in what it can do
AnUnmetPlayer | 19 hours ago
The Fed is limitless in its power to price yields. Yield curve control is not a controversial concept. The degree to which the Fed chooses to use that pricing power is a different question from whether or not they do have that power. It's undeniable that they do.
FearlessPark4588 | 19 hours ago
You then run into some second order issue, practically limiting what you can do as a central bank. Legally, sure, limitless. Politically and policy based? No.
AnUnmetPlayer | 19 hours ago
You run into second order issues no matter what choice is made. The economy is a complex dynamic system.
For example, fiscal dominance is coming. US politics is so broken that nothing is going to change about the trajectory of the debt anytime soon. When debt to GDP is high enough then raising rates contributes to inflation because the interest income channel dominates any of the countercyclical channels. In that situation cutting rates is the smart political and policy choice to try and limit inflation.
Newsie-News | 22 hours ago
I have also read that the huge investment in AI is actually pulling money away from US treasuries and into these other bonds. The argument is that this is driving the interest rate up on US treasuries.
That being said, I do agree with what others have said. I would love to hear what others think about this theory.
RIP_Soulja_Slim | 22 hours ago
https://www.dallasfed.org/research/economics/2026/0210-searls-aifinancing
082426grateful | 23 hours ago
Make that 2 of us.
The bond market is calling a spade a spade. And assets are over valued compared to what is coming.
Bond market are the only adults in the room right now, until Wall Street figures out how to gamify that too like they have every other investment known.
TrevorBo | 15 hours ago
Wall street loves to shit where they eat. The people who control the actual economy would never allow that intermingling.
Prestigious_Load1699 | 12 hours ago
The Fed is the other adult in the room.
Thank God.
PlanetCosmoX | 18 hours ago
I think the crash is right around the corner, after midterms. When Trump loses control of Congress and the Senate the stock market will lose the Republican put, drop 20%, and since this is still a month and a half away, and since we’ll continue to see oil prices climb and yields climb, it’s going to break the back of the economy and that initial 20% drop will trigger a crash through margin calls that are right now spread throughout economy.
Trump will blame it on the Dems, Dems will blame it on Trump. Trump loses control of the Republicans and we’ll see political infighting over what’s left and pretty much everything descends into chaos.
Add to that the fact that Ai is not even profitable, and everything will fold like a house of cards due to the extent of circular funding. Just like we saw with telecom, orders will be cancelled and suddenly nVidia and other semi’s will be left with surplus hardware. All of this talk about Ai danger and suddenly requiring regulation is an attempt to slow purchases down and to tie the government into the crash as insurance and a scapegoat. These tech bros know the party is over and they’re just selling smoke.
When the cards are called, for whatever reason, all of the positions fold one after another until the money is located. There are more than enough reasons active to trigger a collapse, and afterwards the press is going to wonder why nobody paid to any of the warning signs, just like they do every blood time this happens.
All because Trump wouldn’t lower tariffs to end inflation, and wouldn’t take a deal with Iran that he already accepted… to feed his ego.
Right now, any investment in the US is a bet that Trump will put his ego aside and save your investment and the economy.
Prestigious_Load1699 | 12 hours ago
A pretty dark scenario you describe.
anadem | 11 hours ago
Pretty spot on. So where does the prudent person put their savings?
Fossilhog | 10 hours ago
If you think this is imment? Cash is pretty much the only place as every other asset is going to crash to try and cover debts.
I'm open to other suggestions though!
anadem | 3 hours ago
> Cash is pretty much the only place
Cash seems pretty unattractive when the orange guy is so determined to collapse the dollar. Gold?
Fossilhog | 2 hours ago
If the bubble pops soon, many will be selling their paper gold/silver to cover debts. Then they'll probably run up a few months after.
So yeah, cash is bad due to inflation. But I'd rather take the -3% hit than something much bigger.
PlanetCosmoX | 6 hours ago
I’m picking dividend stocks that have low multiples and are utilities that are required for survival with growth on the horizon due to AI.
Which is natural gas.
So you get dividends plus appreciation due to energy based inflation driven by Ai.
Fossilhog | 10 hours ago
Well yeah, but the real question is will this be the opportunity China takes to go after Taiwan?
Hard to imagine a Trump white house and Dem Congress working well together on the front during a possible even greater recession.
Cilhairol | 7 hours ago
I don't think China needs to go after Taiwan at this point. I don't think the living population has the same attachment to it as the early days of the republic. And Trump allowed them to start getting chips.
They're gaining so much international clout by being the "chill guy" at the moment. And they're seeing huge gains in commercial treaties with India and Europe. It'd be kinda short-sighted to burn that good will for an island that would still be expensive to take in terms of manpower. And China has been anything but short-sighted for the past 2 decades.
Ukraine and the new drone warfare have shown how a smaller power can resist more effectively than previously thought. I know the scale is totally different. But also, Chica kind of needs Taiwan's infrastructure to remain intact which limits their tactical options.
Obviously, I could be way off the mark on this one. And there is definitely a decent argument that if China did have an appetite for full on armed conflict atm, now seems like a great time since America seems militarily the most ineffective it has been in the last century and our leaders are not super-supportive of long-time allies.
Fossilhog | 6 hours ago
I don't disagree with any of that, but I've also learned to doubt the wisdom of authoritarian governments. And China hasn't played their cards perfectly, they have some serious internal economic issues, which largely explains their recent nationalism. Ie., they need a new carrot to dangle in front of the mob since the money carrot isn't looking too ripe anymore.
Cilhairol | 4 hours ago
Very fair point.
Cdub7791 | 2 hours ago
They might, but it's important not to underestimate just what a difficult undertaking an invasion would be, even for China. Several times the difficulty of Normandy, at least.
PlanetCosmoX | 6 hours ago
China is winning heart and minds in Taiwan and what it is not wining its bribing.
There’s no need for China to ever invade, they’re winning at the political level by leveraging corruption.
Also a slowdown in the US is bad news for China due to the amount of exports they send to the US. They’ll be busy managing unemployment and social unrest.
OffSidesByALot | 20 hours ago
While it was once unthinkable, and still should be unthinkable, US defaulting on the debt is no longer something that’s off the table.
If I am going to take the risk of being defaulted on, I wanna be sufficiently compensated for that risk that I am taking
vertigo3pc | 22 hours ago
I have a conspiracy theory: I think the bond market is forcing a reveal on the level of manipulation and fraud in the stock market right now.
A lot of companies, a lot of stocks, a LOT of the stock market are irrationally high in their valuations, despite things like poor EPS, poor financials reported on 10K's, etc. The companies with organic investing will shed their investment support if 10-year and 30-year yields continue to rise; there is a specific yield number for bonds that will entice long term investors out of their stocks and into bonds.
The longer certain investors stay "in" on some companies, and the longer those companies stay up despite weakening market support and reasons, the more exposed those companies are as being manipulated.
Sure, someone will say "I like the stock, and I don't want to get my funds tied up in bonds with a time-lock." And some investors can do that. However, I think we're going to see a lot more funds staying with certain companies because those stocks are manipulated and kept high so certain useful idiots can convert that stock value to private debt and use those funds to influence American policy and elections; or they're just manipulated to keep high because of bad debt deals before COVID, and if/when the stock drops, a lot of margin calls will trigger a transfer of collateral and assets we've never seen before.
Prestigious_Load1699 | 12 hours ago
In contrast, overall EPS of the S&P500 is at all-time highs:
https://www.macrotrends.net/1324/s-p-500-earnings-history
Buoyed by skyrocketing corporate profits:
https://fred.stlouisfed.org/series/CP
If I may, it really seems that claims such as yours that the value of the stock market is untethered to underlying fundamentals ring hollow upon examination of the data.
teshh | 7 hours ago
Yes but those record breaking profits come at the cost of long-term health of their own businesses. Look at car companies since the pandemic, they went from increasing retail prices 30-40% to having hundreds of thousands of cars sitting on lots unsold.
There's also the fact that companies like meta and other ai players are securing loans/debt that don't appear on the balance sheet, inflating their p/l statements.