Cohn’s tariff tantrum was totally disrespectful

Director of the National Economic Council Gary Cohn’s dead man walking resignation on Tuesday reignited Tariff Terror.

The ex-Goldman exec defied President Trump in an Oval Office meeting refusing to answer the President on whether he supported the administration’s stance on steel and aluminum tariffs. Continue reading


2018: $40K bitcoin, more C-Suite resignations

I would like to welcome 2018 and write what I believe we will see in the business and economic headlines this year.

The first caveat is with President Trump on Twitter there is no way you can be too outlandish in predicting what may happen in 2018. The president can open up a number of cans of worms with less than 100 characters. Continue reading

Cohn at Fed would give Goldman excessive power

A report came out Tuesday from a banking analyst suggesting the Gary Cohn, the president’s chief economic adviser would more than likely replace Fed chief Janet Yellen.

Should this move happens it would give Goldman Sachs the top two economic and monetary positions in the Trump administration. Cohn heading the Fed would join Treasury’s head Steve Mnuchin.

So much for draining the swamp. If you add senior counselor Steve Bannon you have a hat trick for the white shoe firm.

In October  2010, Yellen  began a 14-year term as a member of the Federal Reserve Board that will expire in January 2024. However the position serves at the president’s pleasure, so Trump can replace her at anytime.



Market pros playing chicken with corporate valuations

It’s one thing to have the financial-focused YouTube channels screaming about the pending stock market crash in between hawking gold and silver as the way to survive the coming carnage.

However, over the last two weeks or so, some of Wall Street money pros who are running billions in assets have began to speak of the equity bubble as prices get too lofty and there needs to be a 10% correction.

Market technicians always look for corrections, so that markets can build a bottom to then move higher. What these billionaires are saying is a bit more emotional than technical.

Guggenheim Partner’s Scott Minerd, who has $240 billion in assets under management, sees perhaps a mid-teen percentage move lower as the Trump trade loses its steam mired in the swamp of Congress.

Paul Tudor Jones, who runs the $10 billion Tudor Investment hedge fund, is looking at the near-decade long  years of low-interest rates have pushed stock valuations to a level not seen since the Internet bubble in 2000, when the Nasdaq tumbled 75 percent over the next two years.

This week BlackRock’s Larry Fink came out this week and look at the fundamentals and said he could see a correction over the summer if corporate earnings don’t measure up for Q2.

Baupost Group’s Seth Klarman, with $30 billion AUM , said in an investor letter that insider trading is ramping up as corporate executives have been ramping up their selling of company sales saying  that’s “a sign that those who know their companies the best, believe valuations have become full or excessive.”

As I stated, while the White House was out in force Thursday with both Gary Cohn and Treasury chief Steve Mnuchin said a tax plan will be in place soon. I predict soon will be the beginning of 2018. And the $1 trillion infrastructure rebuilding plan is going nowhere in this Congress as well.

The White House can jawbone stocks up over 100 Dow points now, but some of Trump’s campaign rhetoric need to come to fruition soon or the market  will turn tail and have a significant move lower.

Heads up for the Goldman guys grudge match

With Steve Mnuchin’s Senate confirmation Monday night, a White House battle is staged.

Mnuchin will be in the Treasury building on the Great Mall and National Economic Council director, Gary Cohn will be at the head of the mall at the White House.

While both men come from Goldman Sachs, Mnuchin is second generation banker as his father was with the white shoe investment shop for many years. Cohn was the second in charge of the bank but was never able to take the reins as chief Lloyd Blankfein hung tough during the Great Recession.

The position of National Economic Council director is the back up Treasury spot since it was developed in the Clinton administration for ex-Goldman honcho Bob Rubin.

Who will play what role is speculation right now, but if I had a guess, look for Cohn to have a greater purpose to provide Wall Street banks with greater flexibility in capital formation by gutting Dodd/Frank. Bringing back proprietary trading is probably his main objective, since it provided Goldman and others with a healthy revenue stream for the banks allowing for greater bonuses.

Mnuchin’s positions probably includes freeing up the housing market to unlock billions in value in the mortgage market. So look for him to be a backer of Fannie Mae and Freddie Mac in backing the home loan market. Since Mnuchin came out of the mortgage mess, he may have a strong belief that mortgages, like student loan obligations should be an unforgivable debt.

Needless to say neither have a greater purpose to directly benefit Main Street or the general economy in my view.

I spoke with a Washington DC legislative analyst Monday and what he told me was quite an eye opener. The proposed Trump tax cut will probably not come through this year due to constraints in the legislative calendar.   Yes the White House will speak in generalities on the new policy, but cannot get the Senate of House to act on it this year due to budgetary constraints in Congress’ scheduling.