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Bigly Economics as Markets Start to Unravel


One play fueling the post-election monster stock-market rally was the Trumpian promise of $1 trillion in new federal spending on infrastructure. But there was no trace of this huge spending plan in the 2018 budget blueprint released by the White House on March 16. Instead, the blueprint slashed the budget of the Department of Transportation by 13% and cut out some existing plans for infrastructure spending.

Among the projects cut was DoT’s $647 million in funding for the Caltrain Electrification. The budget eliminates funding to other transit projects as well, including Phase 2 of the BART (Bay Area Rapid Transit) Extension to Silicon Valley, Phase 3 of the Purple Line Subway Extension in Los Angeles and the New Starts Program, which provides about $2.3 billion a year for the Gateway Tube to relieve the 100-year-old Hudson River rail tunnels. Now, it looks like Wall Street will have to find another mirage to hype. But as I’ve been saying about Trump, the head fakes are deliberate.

What follows is a collection of second-derivative economic numbers. This concept points to a shift or pronounced change in activity. Zero Hedge has always been a good source of this for the layman.

The first two charts show Trump’s approval rating correlated to the markets. We have just seen the first break down to 37%; and finally on Tuesday, the market did some catch up. This rating is going to get much, much worse until there is a full-blown by-design crisis.

GRAPHIC: ZeroHedge

I am now noticing a number of observers that I follow who were Trump supporters are disgusted over the warmongering, the “making America Goldman again” (MAGA) staffing, general bungling and issues like Sessions going after marijuana while pedogate continues on unabated. Trump eliminated Obama-era protections on student loans, which will turn the collectors and fees loose. That is bound to have a negative consumer effect and get fence sitters on the streets. For the record, TNN has been consistent and correct about the real Trump even though is was unpopular.

SNAP’s huge bubble IPO sucked in Cousin Ralph and then cratered. These scams for the owners are about all that’s working right now, but leave the little speculator holding the bag.

CHART: ZeroHedge

By all accounts, the U.S. economy is in very bad shape, despite an unfathomable uninterrupted rally since the Trump election. Cowen’s retail team conducted channel checks and found that traffic during the third week of March declined 13.3%. Credit default CMBX for BBB retailers dropped markedly during this period.

CHART: ZeroHedge

Even with extremely low interest rates, commercial credit is seriously contracting, a classic problem in a Ponzi-financed economy.

Used car prices: the collateral for trillions in six- and seven-year sour loans: not looking well.

U.S. industrial production looks to be in about its third year of a serious recession. This recovering is what the hopesters are putting their Trump bets on [see infrastructure cuts noted above]. Autos are a key component of industral production, and new car inventories are high.

CHART: ZeroHedge

Do the punters think the Fed has their back on the stock market? This is the No. 1 dove on the FOMC on the matter.

Asset allocators are all in to equites, even higher than at 2008 peak.

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