The second quarter of 2025 began in April with a trade war firestorm and ended the month of June with a Taco Fiesta creating hope for change, hope and change, and some spare change for the middle and lower class if they decide to look under their sofa cushions.
The House and Senate are hellbent on passing the Big Beautiful Bill which will spend money at a faster pace than a “real housewife” of Orange County unleashed on Amazon and Saks Fifth Avenue without restraint.
Meanwhile the President of the United States spent the last day whining about AT&T’s service and once again attacking Jay Powell and the Federal Reserve.
Maybe’s he’s having cell phone problems because he’s starting to type messages that make Bill Ackman look like he’s using semaphore. Once again, Trump manages to display a lack of any working knowledge our nation’s interest rates and how they work which should reassure everyone in the financial world.
Markets are at all time highs despite suspect breadth. Bond markets are behaving relatively well despite trading far too loose and wild in the shorter end of the curve as highlighted by this author an an almost nightly basis due to US dollar instability and funding issues in Japan.
After the July 4th holiday period expires and the great big beautiful bond busting bill passes, it will truly be interesting if President Trump continues to insist on one of his major pre-election complaints that he appears to actually be succeeding on.
From Marketwatch, July 18, 2024:
Trump and Vance want a weaker U.S. dollar. Be careful what you wish for.
This excerpt highlights the ongoing philosophical conflict the American business and public are enduring now:
By picking J.D. Vance as his running mate, former President Donald Trump has sent an unmistakable signal that, should he return to the White House in January, weakening the U.S. dollar would be a policy priority.
Both men have expressed skepticism about the economic benefits of a strong dollar. Instead, they see it as an obstacle to a revival of U.S. manufacturing, which has become central to both of their political identities.
Yet the problem with a “weaker dollar” policy is that a nation, even a world reserve currency nation, will have to print more dollars to sustain the obscene levels of spending being promoted in the BBB this week and worse, eventually lead to a resurgence of inflation that no matter who is the Fed Chair, the central bank would get the blame for.
The first half of 2025 ends with the US Dollar performing poorly, which is an understatement:
Everyone during the 2008 period highlighted the “housing price bust” of 2007-2009 which indicated to the masses that because their home values were crashing, there was no inflation in the land. Except in oil, gold, silver, some consumable items, shrinkflation, etc. while ignoring the fact that the devaluation in the dollar was due to a loss of faith in the currency due to incompetence and malfeasance by America’s institutions.
Then the US experienced a long, slow decade of recovery in the US Dollar until the Fed under Powell and the ramping of Covid bailout policies and rampant government spending finally created the higher inflation that some insane people thought would be necessary to offset the theoretical deflationary aspects of the pandemic.
Here we are today, with no pandemic, some deflationary impulses from an overvalued housing market, a few soft commodity prices coming down, and a trade war which has everyone confused as to where prices will go yet President Trump and the GOP are proposing to be more inflationista promoters than Biden, Carter, and Obama combined!
The discontent with the lack of coherent policies is best reflected by the title picture of an inverted Alfred E. Neuman of Mad Magazine fame. Because that’s not the only thing to end the second quarter inverted once again:
If the first half of this year wasn’t fun enough, buckle the hell up for H2! Because the summer of ’29, er ’69 is about to get one hell of a lot hotter.
