David Stockman’s take on the economy and markets after Donald Trump’s inauguration is probably prescient. From Stockman at daily reckoning.com:
I believe the shock of Donald Trump’s election will soon be vastly exceeded by an even more shocking shutdown of Washington governance within days of the inauguration.
For the first time since the 1930s there will be a crash on Wall Street and a recession on main street, but the Imperial City will be powerless to remedy either.
That’s because financial history is not circular; it’s cumulative and all the fiscal and monetary artifices, expedients and frauds that can be deployed by the state to maintain the illusion of prosperity and soaring financial asset prices will have finally been exhausted.
With the Fed pitifully impaled on the zero bound for 96-months running, it has become evident to even the bubble vision cheerleaders that the massive monetary stimulus of the last two decades is over and done. The only thing left in the Fed’s arsenal is sub-zero interest rates, and that option does not have even a remote prospect of getting off the ground.
Donald Trump won the election against all odds, and that he did so on the back of a populist uprising that is unmitigated bad news for Wall Street. Brandishing whatever the present day equivalent of torches and pitchforks might be, the people will surely descend en masse on the Eccles Building if the Fed even hints at the possibility of imposing negative rates on savers and retirees.
Nor can the market be rescued through the backdoor of some kind of antiseptic QE that showers gamblers with unspeakable windfalls and stir the populist political pot to a full boil.
To continue reading: Wall Street’s Calling the Sheep to the Slaughter — Again!
