Speaking of bankruptcy, the casino-bankrupter-in-chief, when he's not renegotiating Globalization on Twitter, has now decided to manage the Federal Reserve in his spare time.
Rule #1 of incompetent management, always have someone else to blame:
"Whoever keeps making all these bad hiring decisions - you're fired. I specifically requested a Fed that would only ever increase asset bubbles"
"They're making a mistake because I have a gut and my gut tells me more sometimes than anybody else's brain can ever tell me."
Indeed.
Unfortunately, what Donny and his acolytes don't seem to understand is that there is no such thing as "free money". It was Donny's massively irresponsible end-of-cycle BORROWED tax cut that raised long-term interest rates.
And apart from the lowest short-term rates in U.S. history ruining the most excellent 'Conomy ever, where Donny is really getting shafted is on the long end, but his Kentucky Fried gut doesn't know anything about Quantitative Uneasing, which is now on auto-pilot to the tune of $50 billion per month indefinitely:
Recall that on the way up, correlation between stocks and the Fed balance sheet was almost 100%, which is what it appears to be on the way down as well:
Fed balance sheet (red)
Dow Industrials (blue)
"In the last decade, the amount of corporate bonds outstanding nearly doubled to $9 trillion, from $5.5 trillion."
There is now nearly $2.5 trillion of United States corporate debt rated in the BBB category, close to triple the amount of 2008,
Exhibit A of brewing trouble is G.E.
"Then there is AT&T. With about $183 billion of debt outstanding, it is now one of the most indebted companies on the planet"
“We’re going to stress test our whole corporate credit market for the first time...From a markets perspective, it’s going to be interesting. There probably will be some really scary moments in corporate credit.”
In summary, between the Federal Government and Federal Reserve, almost $2 trillion in Treasury bonds will get sold this year. Which is raising borrowing costs for the entire planet.
Which is why risks today are far beyond 2016:
