As noted in December 2022's "Stock market valuations don’t ‘reflect the damage ahead,’ BlackRock warns":
In the carefree days of yore I probably wouldn't have taken much notice of this beyond thinking "ah, big money manager has thoughts."
But since "Flashback: That Time Just Weeks Before Covid That BlackRock Told The Fed Exactly What It Wanted The Fed To Do (BLK)" which links to ourselves and the 2019 BLK whitepaper where Mr. Fink's peeps gave the Fed its marching orders for the 2020 disaster; well, I'm paying a bit more attention. If interested the Philosophical Salon has more after the jump.....
From Yahoo Finance, November 15:
Now that Donald Trump has been elected to a second term as president, investors have had to reckon with paradigm shifts to their positioning, from tariffs to “DOGE.”
There’s also the bogeyman of the ballooning debt that the US will take on if Trump enacts his campaign promises. According to an analysis by the nonpartisan Committee for a Responsible Federal Budget, Trump’s plans will boost the debt by $7.75 trillion.
While that’s not a "today problem" for investors, they're still grappling with what that increase could mean down the road.
“I think markets tend to react to the shark closest to the boat,” Rick Rieder, chief investment officer for fixed income at BlackRock, told me at the Yahoo Invest conference this week. “The shark on the debt dynamic is not going to be next to the boat in January or February, but it is going to get next to the boat sometime. I don't know if it's the latter part of 2025 or the beginning of 2026, unless they address the size of the spending dynamics, the amount of debt we're issuing, and then obviously inflation relative to that.”
Rieder laid out a scenario where “bond vigilantes” could attack. Essentially, if regular buyers of government Treasurys decide that Trump’s fiscal policies are inflationary, they could stage a strike, or sell en masse, driving up yields. That, in turn, would increase debt servicing costs for the US government and create a ripple effect throughout markets and the economy....
....MORE
If interested see also November 14's "Jim Bianco: "It’s Time to Position the Portfolio for Rising Yields and a Stronger Dollar""
Related:
That Threat Out On The Horizon You Thought Might Be A Black Swan....
Is probably the even-more-dangerous Gray Rhino.
Big, obvious and headed right for you.
What happens if you don't take them seriously?
Here's the State Council of the People's Republic of China highlighting a March 2021 China Daily article:
'Gray rhino' real estate risks need to be tamed
