Important: The Luongo - Gromen Debate

Behind the scenes lately I’ve had a bit of an exchange with a commenter regarding the views of Luke Gromen—a well known investment guru (I think that’s the title?)—as opposed to the views of Tom Luongo regarding the question, What is Jay Powell up to? I’m not competent to reprise what was said about Gromen’s views on where all the financial turmoil is heading, but my view was that Gromen is injecting personal views into the debate, particularly with regard to the Neocon war on Russia. You can read about Gromen’s background at this DDG link.

Now, I’ve been aware that Luongo does pay attention to Gromen, so it was probably only a matter of time before Luongo weighed in—this afternoon. However, before we turn to that, I want to inject something into the mix regarding the war on Russia. Because it’s directly relevant, and because in addition to the global financial turmoil the geopolitical turmoil is increasingly plain to see. It’s necessary background in that the American war of choice on Russia has brought everything to a head.

So, I was listening to Alexander Mercouris this afternoon. At the end of his long war summary he made a number of important points. Some were speculative. For example, he suggested that, following the example of Slovakia, the Polish elections this month could end up with the ruling coalition (United Right, led by Law and Justice) forced to expand its coalition in order to form a new government and keep Civic Coalition out. That would mean bringing in the Confederation party, which is outspokenly war- skeptical. That could mean a sea change in Polish participation in the war, because the increasing conflicts with the UkroNazi Kiev Regime are not going away. Needless to say, any change in Polish participation would represent a serious blow to the Anglosphere led NATO war effort. For a preview of the Polish election at this point, here’s where things stand:

• Current polls show ZP [United Right] at 37.8%. That's a loss of -5.8 compared to the last election.

• In current polls, KO [Civic Coalition] is getting 30.5% of the vote - an increase of +3.1 since the last election.

• In current polls, Kon [Confederation Liberty and Independence] is getting 9.7% of the vote - an increase of +2.9 since the last election.

However, Mercouris emphasized that the big fight is going on in DC. He doesn’t doubt that an “aid” package will be forthcoming for Ukraine at this point, but he maintains that disagreement over the war’s continuation is increasingly evident. This is reflected in the budget debate, even if few politicians are willing to publicly break ranks with the Russophobic orthodoxy of American Uniparty politics. That time may yet come, with the increasing turmoil within US politics. Public support is waning, so it seems only a matter of time before some smart politician (besides RFKjr) grabs that political Third Rail. Trump has flirted with that momentous step. And here we see the almost incalculable harm that the Neocons and Hillary have done to the American nation.

So now we turn to the Luongo Gromen debate, which worked itself out in a series of tweets—so far without response from Gromen. I’ve reordered the tweets into a logical order and added a few comments:

Craig Shapiro

@ces921

*DIMON: WHEN ASKED IF INTEREST RATES GO TO 7%, THE ANSWER IS YES

[IOW, Dimon believes rates WILL go to 7%. Luongo, in my understanding, isn’t sure; he believe Powell will only go that high if forced—there’s room for discussion on that point, between Dimon and Powell. But it is, in Luongo’s view, a possibility. There are a lot of variables.]

They are saying the quiet parts out loud now

"Common Knowledge" Game

Luke Gromen

@LukeGromen

Yes...the corollary to Dimon's point remains quiet, for now:

"Can the US afford Entitlements & DoD without Fed printing if rates go to 7%?"

The answer is "No."

Will Powell win the war for Russia, or trigger a US political revolution in 2024 by forcing Entitlement cuts...or resume QE?

[Clearly, Gromen believes that Powell will be forced back to QE, because Guns and Butter. America can’t afford both Entitlements and War on Russia at 7%, so Gromen appears to be concluding that Guns and Butter will continue and Powell will just have to like it—despite his clear warnings that he won’t.]

[This is the point at which Luongo weighs in. For clarity, I’ve inserted Gromen’s questions to go with Luongo’s answers.]

Tom Luongo (Head Sneetch)

@TFL1728

"Winning the war for Russia" is an irrelevant frame.

The answer to the other 2 questions are easy:

[Will Powell ... trigger a US political revolution in 2024 by forcing Entitlement cuts?]

"Yes"

[Will Powell ... resume QE?]

"No"

The better question is "Will Congress burn the country down before allowing that revolution?"

A: They will try.

[Luongo objects to Gromen’s phrasing of what’s going on. I’ve heard Gromen say this elsewhere—that Powell’s interest rate increases the risk of “winning the war for Russia.” Behind Luongo’s objection to Gromen’s rhetoric is my own objection: The war on Russia is a war of choice, and a “luxury” America cannot afford. Powell understands that and wants to force feckless DC politicians to do their job and put an end to the madness—as well as the entitlement madness. Powell can’t do that on his own—he’s not in control of DC in that sense—but he can make it clear that he won’t fund the madness.]

[Luongo then adds to what he has already said. Because I find his phrasing awkward, I’ve tried to translate what I believe he’s saying, i.e., what Luongo believes Gromen is saying:]

Tom Luongo (Head Sneetch)

@TFL1728

What Luke is suggesting, rightly, is that can we afford this at elevated rates, i.e. 7%. = [The question that Luke is really asking is, Can we afford this--i.e., entitlements and war--at elevated rates, like 7%?] No, clearly not with the current paradigm.

It means cutting spending as well as changing the nature of our debt markets.

Hello gold?

H2theRs

@H2theRs

a wise man shared the financial crisis of 1857 which I hadn’t studied like I should have —the parallels are uncomfortable at best

-telegraph then is our online banking apps now

-gold & silver caps then, now JPM makes moves as custodian GLD

-Costco selling Gold, Walmart selling SLV

-geographic lean on senate vote Sat. night

Think about it. This is where we are. The dollar may not be about to vanish overnight, but we’re on a trajectory that can’t continue. We need to act soon.

I’ll end with three more Luongo tweets that indicate that the EU is losing big time, but that pressure will build on US politics and finance:

This is an incipient dollar event of the type that perma-bears simply do not want to admit is possible.

Lagarde is trashing the euro to save the German bund.

German debt basically flat over Friday's close. US 10 yr off 8bps. The cost of this is nearly $0.01 on the Euro.

***

What a difference a couple of hours make... now that Europe is closed.

Lagarde lost both the euro and the German 10-Yr.

***

Brent crude threw a Quarterly Bullish Breakout and reversal in Q3. Some short-term profit taking and US dollar panic this week, maybe next... then $100+/bbl.

Hello inflation.