Interesting article on The Bulwark site today:
Follow the Money - by Jonathan V. Last - The Bulwark
"When the New York Stock Exchange opens on Monday at 9:30 a.m. we will see just how seriously the world takes the assault Elon Musk and Donald Trump launched on the American system of government.
What follows is a guide for interpreting the drop."
"First, some ground rules. The securities markets have a system of circuit breakers to halt massive declines. There are three circuit breakers that are measured by calculating a percentage decline in the S&P 500 from the close of the previous day: Level 1 (7 percent), Level 2 (13 percent), and Level 3 (20 percent). If Levels 1 or 2 are tripped before 3:25 p.m., all trading is halted for 15 minutes. If Level 3 is tripped at any point in the day, trading is halted for the remainder of the day."
"Last Friday the S&P closed at 6,041. Trading ended at 4:00 p.m., per the norm, but at 1:15 p.m. a selloff started when reports of Trump’s proposed tariffs against Canada and Mexico hit the wires. In less than three hours,
Here are the S&P’s circuit breaker numbers for Monday:"
Level 1: 5,617
Level 2: 5,255
Level 3: 4,832
"For context, since 2008 we have only had seven S&P drops greater than 7.6 percent in a single day:
"The two worst of these were in March 2020 as the markets began to grasp the full ramifications of COVID. The other drops all took place at the opening of the 2008 financial crisis.
So those are the kinds of events that trigger large-scale panic in the markets: global pandemics and global financial meltdowns.
Will Monday’s pullback register on those magnitudes? Or will it be more modest and hold under 7 percent?"
2. Tea Leaves
"The answer to that question will tell us what the markets believe about Musk’s and Trump’s intentions. Here are four scenarios:
(1) Drop is < 5 percent: The markets do not believe that Trump’s tariffs on Mexico and Canada are likely to remain in place. Nor are they especially concerned by the reports of turmoil in Washington over the weekend. They basically believe everything is normal and that Trump will quickly revert to par, allowing the broader economy to continue more or less as normal.
(2) Drop is 5 percent to 7 percent: The markets are concerned that Trump’s tariffs will impact the American economy in the near term and that this movement could trigger broader recessionary risks. They believe that Trump might be responsive to market pressure, but they aren’t sold on this hope.
The markets are focusing all of their attention on the tariffs—trying to divine how long they’ll be in place and what the magnitude of the damage will be. They haven’t begun to process what went down at Treasury over the weekend.
3) Drop is 7 percent to 9 percent: The markets are spooked. It’s not a full-blown panic, but no one knows which end is up or what the exit strategy might be. The fear is that tariffs have opened a Pandora’s box that, combined with instability in Europe and the increased potential for instability in Asia, raises the possibility that things could get bad.
Though no one is ready to start speculating on just what this land of bad might look like."
(4) Drop is > 9 percent: A selloff of this magnitude would suggest absolute panic at the worst level in living memory. (Other than COVID and the 2008 financial crisis, you’d have to go back to the crash of 1987 to find an analogue.)
"At this level, the market is signaling that it has no confidence in the near-to-medium-term American economy and cannot even begin to price the tail risk."
The author makes the point that,
"The financial markets are the only thing that can stop Trump’s reign of chaos."
Interesting. The market is interesting as it reflects the thinking and algorithms used by many multiples of analysts and computer programs. The market drop this morning was small .No signs of panic. It bounced back after the tariffs against Mexico were paused. And finished the day at less than a 1 1/2% drop, depending on which index. Only the Russell 2000 closed at a greater than 1% loss. The market May assume that trump will reach a deal with Canada so that the world economy doesn’t get dragged down by a tariff war. The market appears unconcerned by the assault on our laws and constitution reflected in trumps actions, and in Musks. Trade wars do concern them but right now there is no great worry going on with the Wall Streeters. But perhaps they haven't absorbed the fact that Musk has taken over Treasury computers and data bases.
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ReplyDeleteThey all lost ground but not much.The NASDAQ and the Russell lost more than 1%. The S&P lost 0.78%. The Dow lost 0.28%.
ReplyDeleteThe stock market is one indicator of national stability and prosperity, and because it fluctuates daily, I guess that's why people pay attention to it and assume it reflects national confidence in the American Way of Life. My understanding is that the market took a fairly big plunge of 500 points in the a.m., but recovered Trump paused the tariff on Mexico and was in talks with Canada. Tariffs were also paused there.
ReplyDeleteWe are entering a trade war with China, which will almost certainly slap retaliatory tariffs on us. I'm not sure that's all bad if it means Americans will manufacture more stuff here.
Today all the indices are up. A trade war with China is a different issue than a trade war with our allies in the EU, Canada and Mexico. Trade with Canada and Mexico combined is 3 times greater than with China. But the last time trump put tariffs on China they started buying their soybeans and corn and other things ( mostly ag I think) from other countries. This cost American taxpayers $ billions in farm bailout payments. I don’t know how many American cars they buy. Probably they buy smaller cars from Asian and European companies. The main reason to switch some production from China to the US would be national security, not lower prices, because that won’t lower prices. It may create some new jobs, but losses in our exports due to tariff retaliations will cost us other jobs.
DeleteThanks, interesting. I do remember farmers at church coffee hour freaking out about prices dropping last time around. This county lives and dies on corn, soybeans, and dairy, tho didn't seem to discourage them from voting Trump back in. All the dairy operations hire migrant workers now. So will be interesting to see how things go when Musk-Trump turn their attention to ag, esp if ICE comes calling.
DeleteThe non urban part of our state also depends heavily on corn, soybeans and dairy. Not to mention beef and pork. And they have a lot of immigrant workers.
DeleteRecently our governor issued a statement of support for Trump's immigration measures. I thought that was odd until I read between the lines and figured out that he was signaling that we weren't a sanctuary state. Nothing to see here, ICE. Nobody here but us chickens (and pigs, and cattle).
Seems to be a pattern forming. Trump invokes a tariff in retaliation for some supposed problem like drugs or immigration. The tariffed countries say “ok, whatever” and pledge to do something about the problems though who knows and what are the metrics. It’s the Trump Theater Hour in CGI. China’s another case altogether. That can have real consequences and I don’t know how you fake your way out of that one.
ReplyDeleteBoth Mexico and Canada had apparently already announced programs they were setting up to help secure the border and drug trafficking on their sides. But trump is saying that it was his own amazing negotiating skills that got them to agree.
DeleteAnne, exactly right.
DeleteLatest in the “the light at the end of the tunnel is the headlight of an oncoming diesel engine” news. Little Marco made a visit to El Salvador. The president of that country offered to take AMERICAN prisoners into his system. Little Marco repeated what Bukele said , saying it would be applied to dangerous American criminals. Now we know where the political prisoners will be sent. Maybe I should start learning Spanish.
ReplyDeleteBukele offered to take American prisoner, for a price. You can bet it won't be cheap.
DeleteProbably less expensive than US prisons. Musk will give it his blessing as a government cost saving move. Meanwhile, they’ll make Israel criticism an antisemitic crime and away they go. This is really nasty but it was voted for.
DeleteIn addition, it’ll be a way to punish beyond the restrictions of the Constitution. Getting sent to a central american prison sounds like a real nightmare. Well, maybe you can bribe your way out.
DeleteIt isn't clear if this is only for non-citizen, undocumented prisoners, or for others too. Either way, it isn't good. But it might be better to be imprisoned in El Salvador than Gitmo. Like you say, there are ways of getting out.
DeleteSpeaking of El Salvador, I wonder how our friend Gene Palumbo is doing.
DeleteIt appears to me that Trump is now just punching buttons to see what happens, he actually had no governing plan. In WaPo this morning he is on record as saying that we should just take over Gaza and kick the Palestinians out. And that he wants a nuclear deal with Iran (Hello! We had one. But he torched it last time). What even the eff is wrong with the guy? We already know he is nuts. By this time anyone who thinks he is just playing four dimensional chess is nuts too. But this is a new level of crazy. This reminds me of someone who is in assisted living and reaches the point where he has to be moved into the cognitive care unit.
ReplyDeleteGaza isn't a surprise. Sonny Boy Kushner has been tickling Trump with the idea of a real estate development in there since Israel started bombing it to smithereens. Panama and Greenland are basically real estate deals Trump wants to do, too. As he never tires of saying, he is a crackerjack wheeler-dealer on real estate development, though there are bankruptcy cases that would indicate otherwise. However, if anything gets built, there will be golden faucets and lucite chandeliers.
DeleteMeantime, where is Congress?
Jamie Raskin and Ilhar Oman were knocking on USAID's door last week to protest in the streets. They got the door slammed in their face by DHS cops sent in by Rootin Tootin Pet Shootin Sec Noem. Schumer sputters at a lectern sometimes. Repubs are silent, but hard to talk when your mouth is full.
I asked my local school board about their contingency plan for the Dept of Ed's impending demise. They don't have one.
Raber's been calling our senators and idiot rep in Congress daily, but just goes to VM "because of the high volume of calls." I expect they're sobbing quietly in the bathrooms of their birth-assigned genders.
I have no response from my letter blitz to congressional reps.
Both Senators and most Congress people in Maryland are Dems. Jamie Raskin is our Congressman. I’m trying to figure out who I can write to. Even though they don’t respond, I know from my DC experience that someone on their staff keeps track of the sentiments expressed by the constituents via phone or letter or email. So don’t give up. It’s being recorded. But now they are all not only terrified of trump, they are terrified of Musks pledge to fun their future primary opponents.
ReplyDeleteBoth our senators in Mich are Democrats. They need to hear get messages to get off their duffs and figure out how to stop the avalanche of crazy because the Repubs won't do it.
DeleteFirst step is to get rid of Musk and DOGE so they're not fighting the insanity on two fronts.
Good point., I will contact all of them, because so far they are slow off the mark in defending their Constitutional authority.
DeleteOne thing is for sure. These boys sure know how to demoralize millions of people quickly, and I’m talking about government employees who got their nastygrams, not through the chain of command, but directly. Whether you’re a hard working, competent employee or a dud, you got the same email. Anne, living in MD, you must be picking up some vibrations from the neighborhood. The Pseudo-Department of Government Efficiency isn’t making things very efficient. Everyone is concentrating on how to make decisions on their personal life since apparently no one appreciates the work they were doing anyway. But that’s ok. Musk must be in sexual ecstasy. He formerly could only push around 150,000 employees. Now he could terrify 2.5M in one shot.
ReplyDeleteThere is a protest downtown today and apparently in other cities. Unfortunately I can’t go. We have a new caregiver,. She’s been. Rey good but she’s not agency so I can’t call for a replacement. She was sick yesterday and couldn’t come. Today she is here for a few hours, basically just to get my husband out of bed and then back. No time to go downtown. If he stays in bed too long he gets pressure wounds. Yesterday he was there all day because I can’t move him out of bed into the wheelchair and back.
ReplyDeleteI can't march either, but I can be an awful burr in somebody's rear with my big mouth. One uses the gifts one has. And, as Jim noted on another thread, prayer to ask God to strengthen the weak is never amiss.
DeleteFrom my contacts in the government, I get a picture of mass psychological depression. The uncertainty is highly destructive. Activity and interaction has plummeted. People that cared no longer care. They thought they had a purpose but Elon is treating them like worthless trash. No doubt, a portion of the population is reveling in this. If any of this lot makes a careless, nasty, smug statement in front of me, I’m not sure what I might do in that situation. There’s a lot of steam building up. With the Idiot-in-chief making big macho threats against the world, it’ll be interesting to see how they’ll get the support they need from an abused workforce. Bullets and bombs don’t grow on trees. Anybody who volunteers for the armed forces in these times will be very sorry.
DeleteI feel that Elon treating people like worthless trash will be his undoing. No one voted for him. No one is going to cry if Trump fires him and his DOGE boys. I hope that happens sooner rather than later. We'll still be stuck with Trump, but at least we wouldn't have to deal a battle on two fronts.
DeleteThe thing that strikes me about Elon is that he has no clue what the agencies and people that he "feeds into the wood chipper"as he so elegantly puts it, actually do.
Looking elsewhere than the Trump media show is a good idea. All the people who are upset by his latest sayings and doings just reinforce the idea that he is a powerful person. Their dismay delights the Trump faithful and cautions anyone with any independence of what might befall them should they oppose Trump.
ReplyDeleteMarkets however are not the best place to look; they are more part of the problem rather than the solution. Jean's reports of the effects of the Trump administration on farmers is a better place to look.
However, in the end it is most likely that unforeseen events will be the only thing to bring down the Trump administration and our nation as well. Covid last time did that, although Trump tried to avoid it with Operation Wrap-Speed.
Trump does a good job of surrounding himself with people he can fire for any of his initiatives that go wrong. He can manipulate events and their coverage to underline that both cabinet officials and foreign leaders are just apprentices when it comes to Trump.
The events that will undo Trump will most likely cause a great deal of suffering to us all. There will much collateral damage.
In the meantime, keep safe, take care of the important people and things in your lives.
Jack, I think you are right about unforeseen events. They happen to every president. And Trump going around stirring up hornets' nests is likely to precipitate unforeseen events.
DeleteAnd looking elsewhere than the Trump media show is a good idea. Sometimes I think the purpose of the media show is to distract us from what is taking place out of the line of sight.
Katherine - Sometimes I think the purpose of the media show is to distract us from what is taking place out of the line of sight.
DeleteI think so too. The whole phony tariff thing with Canada and Mexico for example.
The Senate just confirmed the guy who was head of the Project 2025 agenda as head of the WH budget office.
Matt Bai, Post columnist, compared Musk's approach to fed spending to David Stockman's, Reagan's resident Boy Genius, now an old man still flogging his plan.
ReplyDeleteBai says the difference between Stockman and Musk is that Stockman actually analyzed spending and applied some cost-benefit analysis and long-term outlooks on what he proposed to cut, means test, or phase out. His suggestions were drastic, but some of them made sense.
Musk's m.o. is pretty much "it's broken, smash it now, start over."
Bai seems entranced with and in awe of Musk, eager to find brilliance in his approach. I suppose it's one way of staving off the evidence that Musk and associates are basically hopped-up autistics dancing gleefully around the ashes of government institutions and shredding people's lived in their AI machine.
And if some of that info gets downloaded and sold on the sly to line Elon's customers, yay! More $$ to blow up rockets! Whee!
Musk is an arsonist. I don't know what he thinks he's going to start over with after he burns it all down.
DeleteI'm still fuming over his comment about USAID, that he fed it into the wood chipper this week. That has to be the single most offensive comment I've heard this year. He takes an organization that is America's humanitarian face to the world, that helps the poorest of the poor, and fed it into the wood chipper to pay for more tax cuts for billionaires. I know what I'd like to feed into the wood chipper.
What gets built back up will be what's good for the oligarchs.
DeleteAnd there's not a nonMAGA mother alive right now who wouldn't like to cut her a switch for his hind end. His seat would be too hot to sit in a chair and type mean stuff into his Twitter feed or to skip around USAID hallways pulling pictures out of frames like some deranged nihilist pixie boy.
Tesla sales are going down in Europe and even here, I think. Legacy car companies are getting into the act. The Chinese make a car just as good for a fraction of the price. The Cybertruck is a joke. The writing is on the wall. If he doesn’t get his hands in the government’s deep pockets, he won’t become a trillionaire. That’s what it’s all about.
DeleteI think I’m finally giving up on my Trumper relatives. Got into a discussion on FB with one of them. I can’t deal with this anymore. I’m not spending my Easter with them, I’ve already decided. And maybe nothing ever again. To them, all this chaos is abstract and remote. To me, it’s real and happening to real people.
DeleteI get it, Stanley. I've kept my relatives and in-laws at arms length when it comes to religion, politics, and health care decisions. Sadly, things will catch up with them.
DeleteI got blowback from a sister-in-law about taking my chemo "poison pills" ... until she got cancer and realized that her holistic Amish salves and tart cherry juice didn't work and went full bore on chemo and surgery. Poor soul died a year later.
Church people here griping because MSU discovered a bunch of Canada geese died of avian flu and the vet is advising them to keep their cats inside and their dumb dogs on leashes. "Why aren't they doing something about that??" Duh. Cuz you elected Trump who is gutting research and solutions for public health problems.
The following from WAPO
ReplyDeletehttps://www.washingtonpost.com/business/2025/02/07/january-jobs-unemployment-rate/
Average hourly wage growth accelerated, rising by 4.1 percent over the past 12 months, to $35.87 an hour, outpacing the rate of inflation and boosting workers’ pocketbooks.
Those pay gains could give the Federal Reserve more reason to wait to lower borrowing costs.
Job gains continued to be powered by a handful of service-related sectors, including health care, government, retail and social assistance. Health care, which faces the growing demands of an aging baby boomer population, added 44,000 jobs. The public sector created 32,000 jobs, and retail payrolls rose by 34,000
Employment levels barely budged in other major industries — including construction, manufacturing, wholesale trade, transportation and warehousing, information, financial activities, professional and business services, and leisure and hospitality. Mining, quarrying, and oil and gas extraction industry lost about 8,000 positions.
Despite strong gains at the end of the year, annual revisions released Friday provided evidence of a softer labor market in 2024 than previous estimates had indicated.
Friday’s report solidified President Joe Biden’s record of going an entire term without a single month of job losses
So, while Biden had a good record on the economy (although he took a hit on inflation) evidently that was softer than thought, only a few sectors, notably public service.
If Trump gets even one month with negative job growth he could be in trouble. Doing so many things, so soon, so dramatically means he is going to be blamed.
What is most offensive is the gaslighting, you aren't seeing what you are actually seeing. It goes like this, "Trump is just doing what he was elected to do. Quit hyperventilating. Sit down and take a deep breath, you have Trump derangement syndrome. There are no constitutional problems."
ReplyDeleteGood story in the Post summarizing the larger constitutional issues at stake re presidential powers. Trump is a despicable personality who does everything with maximum meanness to rile folks up. But focusing on the larger issues helps me maintain perspective.
ReplyDeletehttps://www.washingtonpost.com/politics/2025/02/08/trump-constitutional-crisis-democrats-republicans/
Broadly speaking:
1.Congress allocates and earmarks funds, but can the president decline to disburse them at his discretion?
2. Does the president alone have control over all federal employees and can hire and fire at will?
3. Can the president create new agencies like DOGE without congressional approval?
These are likely to be hammered out by the courts--and then we'll see if Trump abides by the rulings. At times, the Post story points out, presidents have ignored the Supreme Court. One case was Andrew Jackson's flouting the court and summarily ordering thousands of Native Americans off their land.
You may recall that a portrait of Jackson hangs prominently in Trump's Oval Office.
I think that the limits presidents have to govern via emergency order (aka, rule by edict) also needs to have some limits, and that may also be in the offing.
Yep. Jackson was maybe the first populist non-aristocratic President. He also was an evil, nasty, racist SOB. I’ve seen his photographic portrait and he looked like one. Woodrow Wilson was one, too, but didn’t look as mean as he was when it came to blacks. Rid the Post Office of all its black postmasters. Refused to grant an audience to a little asian guy named Ho Chi Minh. This white supremacy stuff is going to get all of us white guys killed.
ReplyDeleteRe: Trump's and Musk: all presidents have casts of hundreds to serve as aides, assistants, et al. I suppose one could try to classify Musk and his kiddie korps that way - although traditionally the White House employees are government employees and subject to employee ethics rules. I suspect that is what will trip up DOGE in the courts.
ReplyDeleteI certainly hope they are tripped up in the courts. Though to listen to the vice-president, DOGE is free to flip the middle finger to the courts. I don't think Musk counts as an ordinary aide or assistant. He is a Trojan horse, and wants to run the show. He and his minions can't pass a security clearance, and they didn't even try to. They just throw agencies and careers into the "wood chipper". See, once and done. That annoyance is outa the way.
DeleteThe guy is a druggie with mental issues who is smart enough to run circles around Trump. If it sounds like I am a little worked up about the Musk problem, it's because I am.
And by now Musk and the kiddy korps have downloaded everything from the financial workings of Medicare and the federal payroll to sensitive foreign affairs stuff.
DeleteA fed judge issued some kind of order at Treas including an injunction against copying anything and a requirement to destroy any copies they had already made. Which indicates to me that nobody knows what is going on.
DeleteThis morning it was announced spending at Ag Dept is frozen. School lunches and farm operations in my area will be up the proverbial creek.
Off topic: I had five bright red cardinals at my bird feeder this morning, Katherine. Said a random prayer for your mom.
Thanks Jean. Looking forward to seeing cardinals again. So far just Canada geese and a few chilly doves.
DeleteMy wife has not been refilling the bird feeder, she says due to bird flu. I guess the idea is, that's one of the way it jumps from one species to another?
DeleteSong birds at winter feeders are not at much risk. Here's a lot of expert info about feeding birds with flu around. Assuming anybody believes experts any more: https://www.allaboutbirds.org/news/avian-influenza-outbreak-should-you-take-down-your-bird-feeders/
DeleteWe also had five bright red cardinals a couple of days ago. We are still refilling our bird feeder. Watching all the birds is one of the few bright spots in our life these days.
DeleteJean, thanks for that bird feeder article. Just wish to note (and circling us back toward the original topic) that it cites CDC and USDA data - two federal agencies actively under assault by the president and DOGE.
DeleteIf nothing else, Trump-Musk have people asking questions about what government does for them. Ramesh Ponnuru has a story about the Dept of Ed in today's Post and how, even if the Dept goes, many of its functions will be shuffled into other depts and agencies. So some of what Trump-Musk are doing is just smoke and mirrors creating chaos that will have little effect on efficiency.
DeleteLots of effect on efficiency. Negative. I’m hearing of people getting anxiety attacks and going to ER’s. I understand only 60,000 have taken the offer. There really is no appropriated money for this. At bottom, it’s a Trump promise. And paying people for nine months to do nothing is not efficiency, especially if the money comes from the agencies.
DeleteOf course it will all be disruption. Musk wants to have bureaucrats working 16 hour days under the heel of Big Balls and his other teenage minions. Republicans will cheer because bureaucrats are not really humans but dirty elite leftists wasting taxpayer money who never did a real day's work.
DeleteWhat it's coming down to is whether the fed courts trying to impose temp freezes or hear complaints can make rulings stick. So far Trump is ignoring the courts and threatening to remove judges.
If a fed judge decides Trump's in contempt, the US Marshal service is supposed to enforce a judge's order. Will they? They'll certainly meet resistance if they try.
But this is what most Americans want. Trump controls Congress, has a majority on the Supreme Court, and enjoys high approval ratings. Makes me sick, but that's democracy. You can't protect people from themselves.
Lots of people will suffer. But that seems to entertain a lot of the MAGAs. I'm sure they find the thought of people in ERs with panic attacks hilarious. Cry more, libs! Bring on the Squid Games!
There’s a collection of articles at CEPR.org covering Trump 2.0. One I liked was about what should Canada and Mexico do about their unstable partner? The answer is China. Yes, they’re autocratic but how us that different from what we are now? China makes everything they need, has an economy a third larger than ours, makes E-cars for $13,000, all the green tech you can want, and is a dependable trading partner. Maybe there’s more Confucianism than anything else going on there.
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