From 3 Hours To 3 Seconds; The Imploding U.S. Balance Sheet; T2DF
From 3 Hours To 3 Seconds
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Japan A Seller of Treasuries as U.S. Balance Sheet implodes?
What do I think of the spending bill making its way through Congress? My opinion has not changed since Trump, Speaker Johnson and the GOP pushed through the Continuing Resolution back in March. The U.S. needs fiscal austerity as its current financial position is its greatest threat. Not China, not Iran.
If the United States was a company ($37 trillion net debt position, an additional $70 trillion in unfunded liabilities), it would not qualify as a high yield security, it would be “D”-rated for default. This is why China sold U.S. Treasuries and went long gold. Japan could do the same. Its $1 trillion Treasury position could easily become $700 billion over the next year. I suspect that if Trump’s ultra-liberal spending program comes into effect, Japan will start to trim Treasuries. We will know because the Fed will have to back stop Japan’s selling as there won’t be enough buyers between private investors and sovereign wealth funds. We could see the Fed announce its next QE abomination once this disaster of a fiscal spending plan gets rammed through.
What does that mean for equities? The equity market is likely to climb higher until the credit market ultimately breaks it with a broken Treasury auction or two and a spike in the 10-year. Japan could be that catalyst.
The TEK2day Founder CEO Index (T2DF) Has Outperformed the Nasdaq Composite and Nasdaq 100 Year-to-Date
