What I Learned This Week

"Here we are doing something that almost seems like a suicide mission…increasing the size of the deficit while we’re raising interest rates."

So said DoubleLine Capital founder Jeffrey Gundlach last week. We have repeatedly pointed-out that raising deficit spending near the end of an economic cycle, with the Fed tightening policy, is unprecedented. Moreover, raising the cost of borrowing when the U.S. is going to account for over 75% of developed-country government borrowing over the next five years, with personal saving rates near historic lows (having fallen from over 6% in October 2015 to 2.8% in April 2018), and with the U.S. being the world’s largest debtor nation to the tune of $7.8 trillion, strikes us as unwise. And, entering into a trade war with all your major trading partners at the same time you are so dependent on for…

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