IN THIS ISSUE 8 min read 🏦 Bank bluster 😮💨 E-cig empire 😟 Tariff talk
One bad week is a blip. Two in a row could be just a minor reversal. But three straight is hard to sugarcoat. Last week the TSX and S&P were both down 3%, the NASDAQ dropped 4%, and the formerly high-flying Magnificent 7 sank more than 5%. Trump has backed off on some tariffs (for now, anyway), but investors are clearly spooked. So is it time to join the sell-off party? We can’t answer that for you! But, as we unpack below, you can always find a reason to sell, and it’s worth noting that stocks have slumped this much 30 times since March 2009. In every case the end felt nigh, and in every case you were better off buying the dip.
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Yes everything is trending lower. Here’s an interesting perspective: 9 trillion of US debt will mature in 2025. This is about 25% of their total debt. A 1-2 % difference on the interest rate on this colossal debt will impact the capacity to spend of the whole US government regardless of political inclinations and approach to taxation. To avoid a rising interest rate on that debt there is a need to cause a crisis and create a reason for low interest rate. The current administration’s official narrative calls for a short lived volatility: because at the end of 2025 it won’t matter as much and hopefully the US government will then stop pouring gasoline on the fire. Also this process can help further reduce debt with inflation and help friends that are asset rich.
My thesis is a crescendo of crisis until June-July then decrescendo with successful negotiations after August. Best time to buy leap calls would be early summer if that thesis stand the test of time.
https://finbold.com/9-trillion-of-us-debt-will-mature-in-2025-should-investors-be-worried/