Latest news with #BearTrapsReport
New York Post
2 days ago
- Business
- New York Post
Stalled ‘beautiful' bill drains nation's rainy-day fund — and things could soon turn ugly for US households
Congress' dithering over President Trump's 'Big Beautiful Bill' has the potential to make life difficult in the coming months – by possibly spiking interest rates, On The Money has learned. Most Americans don't appreciate all the ways our elected officials have saddled them with trillions upon trillions of dollars in debt. The national debt stands at around $36 trillion, and needs to go higher to pay for all the stuff the House didn't cut in passing the buck to the Senate. Until Congress crafts a budget and amends that annoying law known as the debt ceiling, Treasury Secretary Scott Bessent has been tapping something known as the Treasury General Account. Jack Forbes / NY Post Design Until Congress crafts a budget and amends that annoying law known as the debt ceiling, Treasury Secretary Scott Bessent has been tapping something known as the Treasury General Account. The account, known on Wall Street bond trading desks as the 'TGA,' is needed to pay short-term bills and acts like a rainy-day fund. It's like your checking account, except hundreds of billions of dollars larger. However, it's massively underfunded and in need of cash (aka more borrowing) so the government can keep the lights on – which could mean a nasty spike in interest rates sometime this summer when the selling begins since higher yields will be needed to attract more buyers, according to the smart Wall Street folks at the Bear Traps Report. Bessent has been toying with ways to get banks to hold more treasuries as part of the capital cushion. Foreign buyers are needed but Trump's trade war makes it difficult to get saving nations like China and Japan to once again come to our rescue. 'The longer it takes for Congress to pass the bill and raise the ceiling, the more Bessent depletes the government's checking account, and therefore the more money he has to raise once the ceiling is lifted,' Bear Traps analyst Robbert Van Batenburg tells me. Bessent, right, has been toying with ways to get banks to hold more treasuries as part of the capital cushion. AP 'Yellen in the 2023 debt ceiling crisis drove this checking account down to less than $50 billion, forcing her to raise a whopping $800 billion in the summer of 2023.' To be sure, the dangerous TGA drawdown comes from overspending, but also from how spending works via the debt ceiling law. The ceiling is supposed to apply the brakes on borrowing so future generations don't have to pay for government largesse we consume today. Given our addiction to big government and debt to finance it, the ceiling is a misnomer — it's constantly flouted and amended higher, though the politics of raising it often gets messy. Charlie Gasparino has his finger on the pulse of where business, politics and finance meet Sign up to receive On The Money by Charlie Gasparino in your inbox every Thursday. Thanks for signing up! Enter your email address Please provide a valid email address. By clicking above you agree to the Terms of Use and Privacy Policy. Never miss a story. Check out more newsletters When the debt ceiling is finally raised in the coming weeks, the government might have to issue another $400 billion in additional debt just to get back to where it was at this time last year, Van Batenburg said. Yes, that's an extra $400 billion on top of the nearly $800 billion deficit this quarter that Bessent will cover once the budget deal is passed, the debt ceiling is lifted and the government goes back to mortgaging your kids' future. The full yearly deficit is likely to hit $2 trillion or more. You might be asking why we need TGA in the first place. The answer is that if we don't fully fund the TGA, it would send a terrible message to the markets that we can't pay for stuff. It could be interpreted as a default of sorts, which would send interest rates even higher. Sounds like a no-win situation for the American taxpayer.
Yahoo
17-05-2025
- Business
- Yahoo
China Could Sell Its US Holdings Without Having To 'Give In,' Says Expert: 'Risk Asset Prices Are Trump's Achilles Heel'
Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. As the U.S. and China move toward initiating trade talks, this expert says that China could use 'geopolitical game theory' by selling all its U.S. holdings, which could force the administration to cave in without any negotiations. What Happened: According to economist Craig Shapiro, the macro strategist at Bear Traps Report, China can skip any trade talks using the 'geopolitical game theory,' and sell its U.S. stocks and bonds, as the flight of capital could force the U.S. to retract the tariffs. Trending: In terms of getting money back, . He said that President Donald Trump was vulnerable to the changes in the price of risk assets, which could be triggered by a selling spree from China. 'Risk asset prices are Trump's Achilles heel as we have already learned. A little pressure on the tape and all the extra tariffs will be gone by the weekend without China having to actually give in on anything,' said Shapiro in his latest X other ways in which the U.S. stands to lose amid the tariff battle include the loss of revenue from the U.S. companies that sell to China. Data highlighted by Kevin Gordon, the director and senior investment strategist at Charles Schwab & Co., Inc., shows that U.S. companies made $1.2 trillion in revenue selling to Chinese consumers.' 'The bottom line is that if the US has to decouple completely from China, it would result in a significant decline in earnings for S&P 500 companies,' stated Gordon in his X post. Why It Matters: Following a hiatus since the trade war's inception under President Trump, the U.S. and China are set to hold high-level trade discussions in Switzerland this weekend, their first major engagement. Adding a layer of cautious perspective, Marko Kolanovic, former Chief Strategist at JP Morgan, also commented on the news of potential U.S.-China negotiations. In a social media post, Kolanovic warned against premature optimism concerning the nature of other geopolitical conflicts. He suggested that the initial contact between the two economic powerhouses should not be interpreted as an end to the trade war, highlighting the potentially lengthy and complex nature of such Next: Maximize saving for your retirement and cut down on taxes: Schedule your free call with a financial advisor to start your financial journey – no cost, no obligation. Deloitte's fastest-growing software company partners with Amazon, Walmart & Target – Last Chance to get 4,000 of its pre-IPO shares for just $0.30/share! Image via Shutterstock Send To MSN: Send to MSN This article China Could Sell Its US Holdings Without Having To 'Give In,' Says Expert: 'Risk Asset Prices Are Trump's Achilles Heel' originally appeared on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Bloomberg
28-04-2025
- Business
- Bloomberg
Why We're in ‘Trading Places' Territory
Opinion Newsletter John Authers, Columnist Save To get John Authers' newsletter delivered directly to your inbox, sign up here. In the climactic scene in Trading Places — easily the funniest film about commodity trading ever made — Mortimer Duke realizes he has lost his fortune in the day's trading, and screams, 'Turn those machines back on!', thinking that if trading could only start again, things would go back to normal. Larry McDonald of Bear Traps Report offers this as a market analogy:
Yahoo
19-04-2025
- Business
- Yahoo
This is the new investing portfolio for the next 10 years
Listen and subscribe to Opening Bid on Apple Podcasts, Spotify, Amazon Music, YouTube or wherever you find your favorite podcasts. The tech mantra of "adapt or perish" could also be good advice for your investment portfolio. And anyone utilizing what is known as a "60/40" portfolio strategy should take note of the changes coming. "For the last 40 years, whenever we go risk off, so down in stocks, bonds have gone up," said Lawrence "Larry" McDonald, founder of the Bear Traps Report, during a conversation with Yahoo Finance Executive Editor Brian Sozzi on the Opening Bid podcast (see the video above or listen below). "That's history." However, times have changed. "The old portfolio was your 60/40 stocks, bonds [and a lot of] growth stocks," he said. "That was the 2010-to-2020 portfolio." This embedded content is not available in your region. The author of the Bear Traps Report, McDonald helps investors demystify markets and politics while sleuthing the right investments for themselves. He has also authored two books that tackle this phenomenon, including "How to Listen When Markets Speak" in 2024. The allocation of 60% stocks and 40% bonds was logical because it allowed investors to balance growth with stability. It has served investors since its introduction as part of the Modern Portfolio Theory in the 1950s by American economist Harry Markowitz. The approach has been popular for investors with longer-term timelines and some ability to tolerate risk. In the past, when stocks took a beating, bonds stepped in to stand in the gaps. For instance, when Lehman Brothers fell and the Great Recession took hold in 2008, investors lost $8 trillion in stock value but made $3.5 trillion back in bonds. Similarly, during COVID-19, the $9 trillion investors lost in stock was somewhat offset by the $4 trillion they gained on bonds. Since February 19, however, investors have lost an estimated $9 trillion, but bonds have yet to offset the losses. This stark contrast "has a lot to do with [trust]," McDonald said. "Congress broke the back of trust around the $37 trillion of debt, but that's up $11 trillion the last four years." The 10-year Treasury (^TNX) yield has risen to 4.3%, Just last week, as tariff concerns rippled through markets, the 10-year yield advanced 50 basis points to about 4.5% — the most in more than two decades. "Trump came along with a sledgehammer and said, 'We're going to change the world order on trade,'" McDonald said. Plus, global investors "have just been hit over the head with this huge amount of debt the United States has." About $4.5 trillion in tax cuts stand to expire as part of the Tax Cuts and Jobs Act of 2017. The expiration is slated for Dec. 31, 2025. The House recently passed a budget bill that includes trillions of dollars in cuts to taxes and government spending. The plan would cut taxes by about $5 trillion. It could also add $5.7 trillion to the government's debt, according to news reports. "The new portfolio that we line up in the book is a portfolio of kind of hard asset companies," McDonald said. "There's so many metals that are strategic for just this whole AI revolution." McDonald pointed out the role metals like copper, palladium, or platinum play in construction and tech, including the build-out of robotics. "Silver's outperforming the Nasdaq, gold's outperforming by 30%, and that's not the norm here," he noted. "In terms of the bond market's sustainability as a safe haven, those days are starting to slowly go away, and that means [investors will] own different types of bonds." Three times each week, Yahoo Finance Executive Editor Brian Sozzi fields insight-filled conversations and chats with the biggest names in business and markets on Opening Bid. You can find more episodes on our video hub or watch on your preferred streaming service. Grace Williams is a writer for Yahoo Finance.
Yahoo
16-04-2025
- Business
- Yahoo
How to invest in Nvidia successfully during Trump tariff turmoil
Listen and subscribe to Opening Bid on Apple Podcasts, Spotify, YouTube or wherever you find your favorite podcasts. Not too long ago, Nvidia (NVDA) seemed unstoppable. If recent market woes and the Nvidia pullback have investors down, they should consider the bigger picture, according to Lawrence "Larry" McDonald, founder of the Bear Traps Report. "You can make a lot of money by investing in the power infrastructure plays," he told Yahoo Finance Executive Editor Brian Sozzi for an episode of the Opening Bid podcast (see the video above or listen below). This embedded content is not available in your region. He added that Nvidia's forecasts include $3 trillion in growth and that copper has a bright future related to it. "If you really, really listen to Jensen [Huang] and the Nvidia gods, the only way they get to their growth trajectory is with a lot more copper." "If you look at the copper or oil names, they're down 30, sometimes, 25% off the highs," he said. "The future looks great for them because the valuation setup is so skewed." McDonald is no stranger to helping the average investor through turbulent market moments. Among other things, the Bear Traps Report aims to demystify political policy risk for investors and related investment strategies. McDonald is also the author of two books, including 2024's "How to Listen When Markets Speak." Plenty of speculation and concern had gripped investors related to Trump's tariffs and their impact on technology. Markets have responded accordingly. Read more: The latest news and updates on Trump's tariffs The boost to 145% tariffs earlier this month on Chinese goods resulted in consumers bracing for sticker-shock prices on items such as iPhones. Meanwhile, Apple (AAPL) reportedly flew $2 billion worth of iPhones from India in March just before the first round of tariffs took hold. Nvidia had to take a $5.5 billion charge this week because of fresh restrictions on its AI chip exports to China. In an April 10 note, Citi analyst Atif Malik maintained a Buy rating on Nvidia but lowered estimates "to align with our revised hyperscaler capex model of +35%/+15% spend reflecting mostly lower Microsoft capex concerns and higher risk of pause in enterprise investments amid uncertainty around the global economy due to ongoing trade war," he wrote. McDonald said despite his interest in copper as a way to play AI, Nvidia remains poised for AI greatness. It may just take a bit for the stock to work higher again. "You can make a lot of money by investing in the power infrastructure plays," he said. McDonald also noted that there are many ETF opportunities for investors looking to get into the space. "You're investing in a basket of companies that are going to power AI for the next 30 years," he said. Three times each week, Yahoo Finance Executive Editor Brian Sozzi fields insight-filled conversations and chats with the biggest names in business and markets on Opening Bid. You can find more episodes on our video hub or watch on your preferred streaming service. Grace Williams is a writer for Yahoo Finance.
