Friday 2/7/2025
What Could Go Wrong?
I just paid $4.53 for a dozen eggs. I don’t think Joe and the FED have quite whipped inflation.
Dennis Elam
Trump Promises a Golden Age
I have not given up on the idea that markets are at a long -erm top. This topping process is taking longer than I expected. The bull market since 1948, 1982, and 2009 is not giving up easily. Let’s examine a few assumptions about the coming Golden Age.
As mentioned, Joe Biden claimed inflation was coming down after claiming it was transitory. Yet food prices remain stubbornly high. Overall price increases are nowhere near the FED target of a 2% rise.
Trump’s idea that OPEC willingly drops the price of oil which for most is their only export seems quite naïve. It it true that would be the best way to weaken Russia’s ability to wage war. But I don’t see the Saudis agreeing to do that.
Why didn’t Jimmy Carter demand free passage in perpetuity for our Navy as a condition for giving the Canal back to Panama? Now the State Department claims that is a fact. Panama disagrees. Trying to undo a decades long treaty will not be easy. Denmark cannot defend Greenland. Look at Russian activity in the Arctic and it is clear passages around the large island are more important than ever. The US has a base their now. Negotiating a broader dual defense posture seems to make more sense than trying to take the island itself.
Make no mistake. This entire stock market rally depends on the tech sector, specifically the Magnificent Seven. Alphabet Google gapped down today off 3.6%. Amazon is down the same amount. After a huge spike up last Friday. Apple has reversed lower. This is a one product company which is quite pricey. Microsoft looks like Apple. Nvidia is still reeling from Deepseek. Did anyone really think there would not be a competitor? Tesla has turned down. Only Meta remains in an uptrend and it looks toppy.
The Russian economy is weakening But that makes Putin even more dangerous as he is unable to admit mistakes. He is more liable to ramp up the war than back off.
Political polarization is worse than ever. A One of our mayoral candidates likens the President to an abusive husband. A Congressman has already introduced an impeachment bill. Lawsuits are flying over government cutbacks.
The biggest worry should be interest rates. Remember rates bottomed at near nothing in March 2020. Now the ten-year yield has risen to 5%, corrected to 3.5%, and is now on the rise again trading at 4.5%. I expect that rate to be 6% well before he mid-term elections. No one in Congress will admit the US is on a collision course with burdensome $36 trillion in debt.
Major stock indexes are down today but that has been the case before. Gold just hit a new high, someone is worried because a gold rally is never based on good news.