JD Vance: WARNING *THIS* DEATH SPIRAL may Take Down Trump

that is one of the ways they could take

down Donald Trump it would be

devastating to the president if you had

this death spiral well I have to admit I

have incorrectly been a bond market Bull

since right before the Federal Reserve

cut interest rates 50 basis points I

figured with inflationary signals fading

away company earnings calls remarking on

a lack of pricing power and quite

frankly the likelihood that the Federal

Reserve will have to increase the pace

of their rate cutting not decrease it

there was only one way to go for bond

yields that was down which would mean

bond prices would go up but I missed

this a conversation from JD Vance with

Tucker Carlson and the implications of

pricing in a potential Donald Trump

presidency but don't hear it from me let

me play you what JD Vance said on

September 18th the same day the Federal

Reserve cut interest rates 50 basis

points and then let's talk about what

some of the takeaways from this are what

they mean for bond yields from then

until now which let's just say not good

but then let's also talk about what they

potentially mean going forward depending

on what kind of presidency we end up

getting here we go the thing I really

worry about on on bond markets is okay

we have call it$ 1.6 to2 trillion in

debt every single year in this country

getting added to the national debt and

the only thing that really makes that

service ible is that interest rates are

still pretty low right they're about 4

and a half% right now if interest rates

go to 8% and you're actually spending

way more to service the debt than you

are on actual like good services and

infrastructure for your country like

that can become a huge spiral that could

take down the finances of this country

we've never had that in 200 plus years

of being an American Republic we've

never had a true debt spiral in this

country so I really worry about do the

bond markets do the international

investors the people who are getting

rich off of globalization the people who

have gotten Rich from Shipping our

manufacturing base to China the people

who' have gotten Rich from a lot of Wars

do they try to take down the Trump

presidency by spiking Bond rates and and

one of the things that I think a lot

about and I talked to the president

about this a lot is when we think about

who we're choosing as treasury secretary

one of the things the president of

course it's his choice ultimately is

we've got to find the guy who's going to

make sure that we can manage this

country through a real time of crisis

where we get the country's finances back

on track that is one of the ways they

could take down Donald Trump and you

have to ask yourself the tools at their

disposal they're doing everything that

they can to manipulate voters I don't

think it's going to work but if Trump

wins it's not just going to be smooth

sailing for four years they're going to

do everything that they can to take down

the key number is that interest rate I

think that's probably the most the most

important and the most impactful way

they could try to take down as

presidency is by spiking the interest

rates you saw this by the way Tucker Liz

trust in in Britain okay which by the

way like I I like Liz truss I disagree

with her on a lot of issues um but like

so I'm not I'm not trying to stand up or

say Liz truss is my person but look she

came in she had a plan and the bank of

England I think made a lot of mistakes

maybe intentional interest rates shot

through the roof and it took down her

government in a matter of days of course

we don't have the same style of

government but it would be devastating

to the president if you had this bond

market death spiral and that's one of

the things we're going to have to fight

against when we win again I think we're

going to win let's understand that for a

moment they referred to the destruction

of the Trump presidency potentially via

Rising interest rates through the bond

market now Liz truss took office on

September 6th of

2022 take a look at the 10-year guilt

this is the United Kingdom Bond the

10year version of it you'll notice

between August and then the end of

September and then the beginning of

October during the Liz trust

Administration which lasted less Long

than a lettuce head but she did end up

getting replaced and yields promptly

came down although not as much as they

had come you know as much as they had

moved up there was some relief after she

was replaced but this increase of uh

actually if you look at this from 2.3%

up to about 4.1 this is a

1.8 percentage Point increase in the

yield on the 10-year going from 2 2.3

all the way up to 4.1 this creates

massive losses for bond market

investors and it was due to the fear of

a trust Administration and JD Vance here

the day of the Federal Reserve 50 basis

point cut is arguing what if the bond

market prices in that Donald Trump is

going to Skyrocket interest rates and

since this warning as you could see on

this chart the 10-year treasury yield

has skyrocketed from about

3.65 is% all the way up to about

4.27 now that's only about it's actually

slightly less than half as bad as the

skyrocketing that you got because of Liz

truss but JD Vance is basically arguing

here hey this could really hurt us now

why could Rising yields hurt us like in

plain English why could this be Dev

stating to the Trump

Administration it's simple in 2007 the

Federal Reserve cut interest rates on

September 18th 2007 by 50 basis points

they went from 5 and a qu to

4.75 it's the same exact day just quite

literally 17 years later that we just

cut interest rates from the same amount

5 and a quarter to 4.75 by 50 basis

points except then we did it leading

into the Great Recession great financial

crisis everybody argues today that this

time is different but what actually

helped contribute to the financial

crisis of 2007 2008

2009 Rising yields and this is what JD

Vance is worried about I think he's a

smart person and he realizes that oh no

if markets for some reason think that

Donald Trump or a trump Administration

would lead to Rising yields it's going

to make it harder for us to deal with

the massive debts that we have in

addition to that it could actually

create a recession that's the problem

when yields go up when the Federal

Reserve is trying to loosen monetary

policy you actually make it harder for

the Federal Reserve to relax economic

tension you make it harder to expand

business or to hire or to invest in new

business products or capital

infrastructure or whatever because

interest rates are even higher now add

to this what companies like Robo bank or

individuals like Nick T over at the Wall

Street Journal say about the Trump

Administration now this is not a dig on

the Trump Administration is just simply

arguing what is being said about the two

administrations first Robo bank has

suggested that Donald Trump would mean

tax cuts for corporations and households

deregulation and a termination of

electric vehicle tax credits in addition

to that we might see the stopping of the

flow of illegal immigrants and we might

end up seeing a single-handed imposition

of tariffs of up to 10 to 20% they go

ahead and outline this here let's go

ahead and jump over to the PDF so you

could see it yourself so you know it's

not just me making this stuff up

although I would hope that you never

think that anyway let's hop

over okay here it is so uh this is what

I just read out to you this section here

and it suggests that Donald Trump can

singlehandedly impose these tariffs on

other countries comma Harris they argue

would instead be Biden with a Twist

reduce health care costs tax hikes for

the rich and corporations tax cuts for

the middle class with a goal to stop

price scouching and provide $25,000 of

down payment assistance for first-time

home buyers the impact out of all of

this well when it comes to inflation

they believe that Donald Trump will lead

to higher inflation in every single year

between 25 6 and 7 now they do argue

that in both cases you will have a

divided Congress and they actually go

pretty generous here on Trump they only

assume when you read the document they

only assume that he's going to get

through a 5% tariff on foreign countries

they actually argue that the inflation

under Trump would be substantially

higher if you had even more tariffs but

take a look look at this 25% Harris in

2025 3.1 Trump 2.7 Harris 26 4.0 Trump

2.3 Harris in 2027 2.5 Trump this is a

remarkable difference here uh and if we

zoom up for a moment I just want you to

see sort of the summary they have here

and then we'll go to GDP look at this

with only one week to go before the

elections the Harris bounce in the poll

is fading a trump presidency would

likely lead to a universal tariff in

even higher tariffs on China with

support from Congress he would cut taxes

deregulate the economy and reduce

immigration a Harris presidency would be

an extension of the Biden

administration's policies with targeted

tariffs on China reducing health care

costs and trying to cut taxes for the

middle class however two new Harris

specific policy plans focus on stopping

price gouging and dealing with the

housing market shortages you know would

lead to uncertainties right in their

simulations Trump's Universal tariff

would lead to a rebound in inflation

that could be one of the reasons why

we're seeing a spike in yields is this

pricing in of Donald Trump that we're

seeing and it's not just uh an inflation

concern but it's also partly a

stagflationary concern which is

concerning take a look at this real GDP

forecast here under Trump negative 2%

compared to Harris in 2025 NE .7

compared to Harris in 26 and .2 compared

to Harris in 2027 this does not even

include a recession scenario and it only

incorporates a 5% Universal uh tariff uh

from Donald Trump so this is kind of

scary because you have Robo bank here

basically reiterating what JD Vance is

warning which is that yeah Bond markets

might be fearful not only of these

uncontrollable fiscal deficits but also

that if public markets think that Donald

Trump is going to be associated with

higher inflation potentially in part

because of deportations or tariffs then

yields are going to go up and you could

actually induce a

recession as a result of yields going up

which is exactly what happened in

2007 now Nick T of the Wall Street

Journal also chimes in on this Nick T of

the Wall Street Journal cites the

Peterson Institute which is considered a

uh pretty unbiased Source I always like

to Google any kind of source uh and then

I type in media bias after that and

there are some good media bias fact

Checkers although you wonder what kind

of bias they have but you know they seem

to be relatively on point and they find

that the Peterson Institute is highly

factual and and almost smack dab in the

middle and so they have uh an analysis

on this uh and again this is from Nick t

i really respect Nick t uh I think he's

he's a great journalist he's pretty

smart uh he's over at the Wall Street

Journal we respect him when uh he covers

uh Drome Powell in the Federal Reserve

and uh you know he doesn't have any kind

of bias or tilt that at least I can

identify he just tries to give it to you

straight uh and uh he argues that both

candidates are going to support policies

that would support growth uh however

both of them might end up leading to the

creation of policies that keep inflation

elevated for longer so higher inflation

for longer and according to the Peterson

Institute Nick argues that deporting

immigrants would quote significantly

reduced economic impact or reduce

economic output rather while boosting

inflation on top of that he argues that

fewer workers would be available and as

a result of fewer workers being

available prices would either go up or

earnings per share at companies would go

down as margins get squeezed now some

people counter this and say that

Americans will just fill that void left

by immigrants who are deported but other

studies come back countering this and

argue that for every 1 million

unauthorized immigrants that are

deported 800 sorry 88,000 Americans lose

their job so in other words kick out 1

million illegal immigrants 88,000

Americans lose their jobs now some

people say hey maybe that's a fair

tradeoff but it is something that's

worth noting tariffs are also considered

to be a stickler with Donald Trump Trump

they expect that there will be an

inflationary impact from Donald Trump's

tariffs now Trump counters this and

argues that we didn't have inflation in

2016 and we just won't again but then

again you saw the very warning from J

Vance himself so if you're wondering

what's going on with a bond trade there

you go and this is a crazy comparison

basically coming straight from JD Vance

a crazy warning about the potential

recessionary impact that markets could

impose upon Donald Trump without even

Trump doing anything just on expectation

in the event that Donald Trump wins the

election so something to buckle up for

and brace for impact on if you're long

bonds and well Donald Trump wins keep an

eye on this now do keep in mind if you

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your take