• Statement of the obvious to say gas and diesel prices are way too high and it’s a disastrous outcome of Trump’s war with Iran. A more competent president would have anticipated this.

• Nobody needs to tell Americans how much extra it costs to fill up their tank. Before the war, a 15-gallon fill-up cost $45. Now it costs $68. So far, pricier gasoline has cost the typical household more than $500, according to the Watson Institute at Brown University.

[Believe it or not, the economy is strong]

• Most people don’t buy diesel, which makes it harder to gauge the cost crunch for a typical family. But record high diesel prices raise the cost of planting, harvesting, and transporting food, and shipping most consumer products. Higher diesel prices have cost the typical household another $412, according to the Watson Institute. Total cost of the Iran war: $915 per household, and counting.

• Interest rates are rising for a variety of reasons, with the average mortgage rate now above 7%. How painful is that? Let’s look at the history of mortgage rates.

• A 7% mortgage rate isn’t unusual. In fact, it’s close to the historical average, if you go back decades. What has been unusual is the last 18 years, with rates much lower than usual, largely thanks to Federal Reserve monetary stimulus measures that began with the Great Recession in 2008.

• So we’re now reverting to more normal interest rate levels. But this is happening with home prices that are unusually high.

• When mortgage rates fall, home prices tend to rise, since cheaper mortgages boost demand and that sends prices higher. There was a dramatic jump in prices during the Covid pandemic that started in 2020, mainly because the Fed slashed interest rates to record lows. You can see the dynamic in both charts, starting in 2020: Rates plunge, prices soar.

[The Weekly WTF: America’s worst TV channel]

• As mortgage rates have been rising, home prices have begun to drop—a little. But the market is still way out of whack and is likely to stay that way for a while. The biggest problem is there’s not enough lower-priced housing. Local zoning rules and other regulations make it hard to build. Developers would rather build mansions with high profit margins than entry-level homes or multifamily units.

• Trump’s policies have made the housing problem worse. His tariffs have raised the cost of lumber and other building materials at a time when homes are already pricey. His deportation policies have thinned out the construction workforce and pushed labor costs higher. Congress passed a law over the summer meant to create incentives for more affordable housing, which might help. But it will take years.

[5 things to expect if Democrats win in December]

• The Pinpoint Press has been arguing that it’s time to rethink the American Dream. Home ownership has been the main way ordinary families built wealth for decades. But there are other ways to get ahead. Shrewd investing is easier than ever, with low transaction costs. You can start an investment account with a couple hundred dollars. Financial investments carry risk, but that declines the longer your time horizon. And you can invest in ways that limit your risk to whatever you’re comfortable with.

• The amount of financial wealth in the United States now exceeds the amount of real-estate wealth. The richest Americans own most of those financial assets—but there’s no rule that says only the wealthy can own stocks and other assets. If you think owning a home is the simplest or fastest way to build wealth, you might be missing out.

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Trump isn’t likely to get the lower rates he demands, or he thinks the United States deserves. CNN recently invited me on air to discuss why. Here’s the clip. Takeaways follow.

• Trump doesn’t even seem to know how interest rates work. The Fed, for the most part, only sets short-term rates that affect banks. Under normal conditions, market forces set long-term rates such as those on mortgages and most other types of loans. Long-term rates are the ones that matter to most consumers and businesses. So why is Trump blathering on about the Fed?

• One reason long-term rates are rising is because investors are worried about inflation. When bond buyers think future inflation will be higher, they demand higher rates to compensate for the eroding value of money.

• Trump has personally made inflation worse, not better. His tariffs on imports are taxes that push the cost of many prices higher. That’s inflation. The Iran war he launched in February has obviously sent energy prices soaring, another source of inflation. Trump’s own actions are helping push rates higher.

[The ugly math roiling the bond market]

• Another factor behind rising rates is the massive amount of borrowing by the US government, which now borrows around $2 trillion per year to fund deficit spending. That’s $2 trillion in Treasury debt hitting the market every year, competing with debt from many other governments and thousands of corporations. If there’s more debt on the market than investors want, the market pushes rates up until higher returns finally persuade buyers to commit their money.

• The Fed does have tools for lowering long-term rates, which it normally only deploys in a crisis. And those only work if inflation is contained, which it is not right now. Lowering rates is a form of stimulus that stokes demand, making inflation worse. If the Fed lowered rates while inflation was high, it could backfire by creating more upward pressure on rates and trashing the Fed’s credibility.

• One thing Trump could do to tamp down rates is develop a plan for reining in all that federal debt. Crickets.

• Rates aren’t unusually high right now. They’re only around historical averages. But in the past, when rates were at similar levels, the US debt burden was far lower and net interest payments were a far smaller share of federal outlays. Interest payments now total more than $1 trillion per year and block other types of spending. That’s a problem.

• The bottom line: It’s time to start dealing with the federal government’s massive debt load, which will only go higher if nobody does anything. It isn’t a crisis yet, but the market is saying now’s the time to do something.

[Three lessons from Trump’s six bankruptcies]

• Don’t expect Trump to do anything. His attitude toward debt is that it’s somebody else’s problem. He declared business bankruptcy six times, mainly because his companies took on too much debt and couldn’t pay it back. He has said many times that declaring bankruptcy is a standard business procedure. Only problem: For the federal government, it’s not an option.

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Which one will get the most attention?

That’s an easy call. Bad news generally gets more attention than good, but more importantly, rising costs and high inflation directly affect millions of Americans every day. Most people don’t fuel their vehicles with diesel, but record-high prices of $5.85 per gallon mean higher prices for food harvested by combines, consumer products delivered by truck, and construction requiring diesel-powered machinery. And gasoline prices, at $4.15 per gallon, remain higher than anybody would like (except oil companies).

CNN invited me on air to talk about the jobs report, which was surprisingly strong: Employers added 162,000 new jobs in August, the most in five months. But that is likely to do President Trump little good, since affordability remains most voters’ top concern.

Here’s the CNN clip. Our monthly charts on the job market follow, with takeaways.

Here’s the overall trend in employment. While job gains were strong in August, there’s been a notable slowdown in job creation during Trump’s second term.

Read more

• Status of the Canada trade war: In August, Trump smacked new 50% tariffs on about $20 billion of Canadian imports. Canada has said it will impose similar tariffs on a like amount of US imports starting September 8. Trump, in turn, said he’ll slap more tariffs on Canadian products starting January 1, including autos and auto parts.

[Trump’s sketchy Venezuelan oil deal]

• Why is this happening? Because Trump loves tariffs, even though there’s overwhelming evidence they harm growth and employment and raise costs for Americans. Trump began targeting Canada last year with new tariffs. Canada retaliated by imposing its own tariffs on American imports. Trump finally counter-retaliated in August with the new 50% tariffs, prompting Canada’s counter-counter-retaliation. So this is Round 3 or 4 or maybe 5 in Trump’s trade spat with Canada, depending on how you count.

• Important reminder: We have a free-trade pact with Canada! That is supposed to eliminate tariffs on most products crossing borders between the two countries. Trump’s new Canada tariffs undermine the trade deal with Mexico and Canada he hammered out himself in 2020.

• Trump probably reasons that a tit-for-tat trade war with Canada will hurt the Canadian economy more than America’s. That’s simply because of size. The US economy is 13 times bigger than Canada’s and more diversified. This is a dumb way of thinking about it, of course: A prudent trade policy would seek ways to benefit everybody, not harm one party more than the other. But we are stuck with Trump’s trade nihilism, for now.

[It’s time to revive the American Dream]

• One thing Trump may not have contemplated: Canada appears to be targeting its own retaliation at certain northern states most dependent on trade with Canada. Those include Michigan, Ohio and Maine. All three feature toss-up Senate races this year that could flip control to Democrats. Economic problems caused by Trump’s tariffs could give Dems an edge.

• Trump’s tariffs are deeply unpopular, and politicians who hope to win elections don’t usually oppose voters’ wishes during the weeks before an election. Yet that’s exactly what Trump is doing. Three possibilities: He doesn’t care if Republicans win in the November midterms. It doesn’t matter if they win because Trump plans to steal key elections anyway. Or maybe Trump is losing his grip and doesn’t remember that elections are just two months away.

[What the bond market wants you to know]

• More tariffs are coming after the elections. Trump’s trade team has been preparing a broad slate of import taxes to replace the “emergency” tariffs the Supreme Court shot down in February. We’ll be stuck with these foolish tariffs until Trump leaves office in 2029, unless he leaves earlier.

• It’s also possible Trump may be planning to sharply revise or even pull out of his own 2020 trade deal with Canada and Mexico. That would have major economic consequences and they’d be uniformly bad.

• Trump’s tariffs haven’t wrecked the US economy, as some critics predicted early in his second term. But they’ve probably slowed growth and done the same to the global economy. Real GDP growth was 2.4% during President Biden’s last year in office. The annualized growth rate now is 2.1%. That’s a meaningful slowdown that means fewer jobs and weaker income growth.

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• Expect elevated gasoline prices of $4 per gallon or higher through the midterm elections on November 3. Iran clearly wants to punish Trump for starting the war back in February by continuing to disrupt Persian Gulf oil flows, keeping prices high, and forcing Trump to face a reckoning with American voters.

• What happens after the midterms? The Trump sanctions, the blockade of Iranian ports, and occasional military strikes continue to harm Iran, and its economy is tattered. If Iran is going to seek a way out, it’s likely to happen after the midterms.

[It’s time to revise the American Dream]

• Iran could also keep the conflict going indefinitely. Iran’s leadership has figured out how to string Trump along, but they’ve also shot themselves in the foot by failing to accept a pretty good ceasefire deal from Trump a couple months ago. Strategic geniuses they are not.

• Trump’s so-called deal to acquire new oil from Venezuela seems like a smokescreen. If it actually goes through, it would take 5 to 15 years to bring oil to market in a nation with a wrecked energy infrastructure moldering beneath a kleptocracy.

• Somebody else will be president by then. A Republican might continue with the unusual deal, which involves the Pentagon taking an ownership stake in a joint venture with a Venezuelan energy firm. But a Democratic president could kill the deal—and investigate the whole scheme if there’s any evidence of fraud or bribery.

[Trump is missing his own economic targets]

• In a separate development, oil giant Chevron said it plans to increase oil production in Venezuela. This is credible. Chevron is the only big US energy firm doing business in Venezuela, and it’s not couching this as some extension of a Trump policy. It’s the result of competent business decision-making. Still, the increased oil production will be incremental and unlikely to affect prices much, if at all.

• Trump, meanwhile, is still trying to jawbone US energy companies into lowering retail prices. It won’t work. The market sets prices in the United States, where energy producers are private sector companies with a duty to maximize profits. We have no national oil company as some other countries do. Thank goodness for that, because it would be a cauldron of graft under Trump.

[What the bond market wants you to know]

• Gas and diesel prices are also high because we have limited refining capacity in the United States. Refineries are expensive and hard to build.

• Energy companies also love high prices! They’re generally not interested in financing more refining capacity so they can sell their product at lower prices.

• As for the bond market, Pinpoint readers should have a pretty good idea what’s going on, because we’ve been covering this in depth. We’ll continue to do so.

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• President Trump’s latest barrage of tariffs puts a 50% tax on about $20 billion worth of imports from Canada, including dairy products, alcohol, lumber, other building materials, and some consumer goods. The news taxes went into effect August 22, after the two nations failed to reach a deal to avert them.

[The bond market is telling us something important. See what it is]

• Canada sends nearly $400 billion worth of goods to the United States each year, so the $20 billion targeted for new tariffs is a small portion of overall imports from Canada.

• The problem, however, is that this dispute could escalate and eventually lead to higher tariffs on a much larger set of goods. Canada, for instance, said it will retaliate with 50% tariffs on $20 billion worth of goods from the United States, starting September 8. Trump, in response, said he’d slap 50% tariffs on all auto imports from Canada, starting January 1. That would hit up to $50 billion worth of products, and raise prices for many Americans.

• Canada has various ways of escalating measure-for-measure. Canada imports about $330 billion worth of goods from the United States, leaving plenty of room to match Trump’s tariffs. Canada could also restrict oil shipments to the United States and direct that energy toward global markets instead. That could disrupt US energy markets and hike gasoline prices.

[Check out The Weekly WTF: $40 trillion in the hole]

• Another problem is that Trump is raising tariffs on products that are as supposed to face no, or low, tariffs, under the USMCA trade deal that Trump himself signed in 2020. This may be what Canadian Prime Minister Mark Carney was referring to when he said sometimes the US signature is “written in pencil.”

• Why did Trump threaten new 50% taxes on Canadian imports in the first place? Because Canada retaliated against some other tariffs Trump imposed on Canadian imports last year. Some of those tariffs are still in effect.

• There could still be a deal that alleviates Trump’s new 50% tariffs and preempts the Canadian response before those tariffs go into effect on September 8. But Canada is likely preparing for a new round of Trump tariffs after the midterms take place in November, and those could entail even more import taxes than Trump is threatening now.

[A Subaru capitalist takes on the “Subaru Socialists”]

• That’s right, once the midterms are over and Trump doesn’t have to worry about voters any more, he’s likely to put in place a whole new set of tariffs to replace the ones the Supreme Court struck down in February. Wouldn’t that be screwing American consumers and businesses? Yes, it would raise costs for millions. Does Trump care? Apparently not.

• Standing up to Trump’s bullying is good politics for Canadian Prime Minister Carney. His approval rating is around 60% and many Canadians are sick of Trump’s antics. They want Carney to go toe-to-toe with Trump.

• Trump’s popularity, meanwhile, is collapsing, with his approval rating in the mid 30% range or lower. Nearly two-thirds of Americans oppose his tariffs.

• Trump’s tariff policy seems dumb. Nevertheless, he persists.

• Trump’s plan is to sell early access to posts on his Truth Social network for a fee of $100,000 per month. Trump’s company, Trump Media & Technology Group, owns Truth Social.

• Other social networks charge a fee for early access, which can amount to just seconds or even a fraction of a second before a post goes public. Investing firms use high-speed computers to track all sorts of data, including the social media posts of prominent people who might be able to move markets. If computers spot a trading opportunity, they can place the trade before others without early access get the info.

• The difference with Truth Social is that the president of the United States owns it! And he regularly makes social media statements that move markets. The Wall Street Journal, for instance, recently analyzed several instances of Trump post affecting the stock price of companies such as US Steel, Intel, and Raytheon. Oil prices often rise or fall based on Trump posts about the status of peace negotiations in the war with Iran.

[See why markets are manic right now]

• Is selling early access to presidential statements legal? Unclear, as with many of Trump’s profit-making schemes. There are laws that prohibit the use of insider information to make a profit. But Trump might argue that his social media company has the same right to offer an upgraded pricing tier as any other platform. Courts will probably decide.

• Will any investing firms give this a shot? A few probably will. Hedge funds and other types of trading shops spend a lot of time and effort seeking any edge that might help them make money. Some probably won’t be bothered by the potential illegality. But most will probably take a pass. One problem is the question of what might happen if courts ban Trump from selling early access to his posts. Would that make any firm that profited from early access guilty of insider trading? And if Democrats win control of either house of Congress in the midterm elections, they could hold hearings exposing firms making money off Trump’s posts.

• One fun aspect of the whole controversy is that Trump Media & Technology Group is a public company—which means it has to disclose important sources of revenue in its quarterly reports. The names of any companies paying for info might remain confidential, but if Trump’s company makes meaningful money by selling early access, we’ll know—unless the company illegally suppresses the information.

• Bottom line: Nobody ever imagined a politician who would monetize the presidency as Trump has.

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• The Fed meeting that concluded on July 29 was really odd because the Fed left short-term interest rates steady, as the market expected. Yet stocks fell and long-term rates rose on the news. WUT?

• Here’s what’s going on: First, new Fed Chair Kevin Warsh has confused investors and left them very unimpressed. He talks like a “hawk”—somebody determined to wrestle inflation down to 2%—yet the Fed’s actions, doing nothing, are dovish.

• “The Warsh press conference has left investors with a bad taste in their mouths,” David Rosenberg of Rosenberg Research wrote in a July 30 analysis. “The mantra is that he was not tough enough in his inflation rhetoric. The Fed Chairman served up platitudes, but as is the case with this central bank, he offered no explanations or analysis.” Many other analysts were similarly skeptical.

[Check out The Weekly Matterboard: Missing Mitch Edition]

• Inflation is now 3.5%. The Fed wants inflation at 2%. One way to get it there would be raising short-term rates. Markets are now pricing in the likelihood that the Fed will not do that, and will tolerate inflation higher than its target for the foreseeable future.

• The Fed controls short-term rates that mostly affect banks. It does not control long-term interest rates. The market does. Long-term rates rise when expectations of future inflation jump. That’s because investors buying bonds demand higher rates to account for the eroding value of money.

• Long-term rates on bonds determine the rates on mortgages and most other consumer and business loans. So what really affects most people is long-term rates set by the market, not short-term rates set by the Fed. They are related, but not the same.

• This could all unwind. Inflation is high largely because of the Iran war, which has pushed up the cost of energy and many other things. If the war subsides, inflation will come back down and it will be easier for the Fed to do nothing. If anybody knows when the Iran war will end, call me first—then call Warsh.

• Bottom line for Warsh—he needs to prove himself to markets. His predecessor Jerome Powell made mistakes, such as letting inflation get too hot in 2021 and 2022. But later rate hikes proved Powell was willing to tighten monetary policy and deal with the consequences. Markets aren’t yet sure Warsh has the moxie for that.

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• Inequality has been worsening for at least 30 years, as more of the nation’s wealth goes to people who own financial assets and less goes to workers earning most of their income through labor.

• These trends are accelerating under Trump.

• It starts with tax cuts for the wealthy, who don’t need them. Wealthy Americans have earned extraordinary amounts of money during the last 30 years from a booming stock market and the rise in real-estate values. There’s nothing wrong with that, but they didn’t need the 2025 tax cuts Trump signed into law.

[Check out The Weekly Matterboard: Missing Mitch Edition]

• Trump, meanwhile, has cut food-aid benefits for lower-income Americans. And last year Congress let health care subsidies expire for at least 3 million people who buy insurance through the ACA marketplace. Those moves have made several million lower-income people worse off.

• Trump’s Iran war is another burden for working Americans. The higher cost of gas and many other necessities hurts lower-income Americans more than higher-income people.

• Tariffs raise costs even more. The average tax on imports has gone from 2.6% to about 12% under Trump, so far. Importers pay the tariffs up front, but pass on as much of the added tax as they can to their own customers, with no apparent benefit to anybody.

• The housing bill Congress recently passed may help make homes more affordable at some point, but Trump distanced himself from that and called it a “big yawn.” He seems to have no regard at all for the cost struggles of ordinary Americans.

• Wealth inequality is complicated and not readily understood by everybody, but many people know something’s wrong, even if they can’t define it precisely. This is probably one of the reasons consumer confidence levels are dismal, even in an economy that looks pretty good on paper.

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• The new Canada tariffs will be as high as 50% on large product categories including cars and car parts, dairy products, and alcohol.

• Trump said recently that he wanted to use tariffs to punish Canada for the smoke from Canadian wildfires that has fouled America’s air. But that’s not what this is. This is the continuation of a trade spat Trump started last year. Trump announced new tariffs on Canadian imports in 2025, including some that are still in effect. Canada responded with tariffs of its own on American products. Trump is now punishing Canada for retaliating.

[Check out The Weekly Matterboard, where we rank the news that’s worth your time and the news you can safely ignore]

• The new Canada tariffs don’t go into effect until August 19, so there could be a deal that averts the tariffs before then. But Canada is no pushover. It has resisted making coercive deals with Trump as some other countries have.

• The Canada tariffs are based on a 1930 law that some experts think is defunct because other tariff laws passed by Congress superseded it. There will be lawsuits, for sure.

• Trump has a lot more tariffs in mind. After the Supreme Court ruled his emergency tariffs illegal this past February, Trump’s trade team set in motion the prep work necessary to impose other sorts of tariffs that might have a better chance of surviving legal challenges. Those take longer to impose, because the government has to go through a variety of rulemaking procedures. But those are nearing completion and there could soon be new taxes on imports from 60 countries, covering most of the imported products Americans purchase.

• The average tariff rate has jumped around during Trump’s second term, as tariffs went in and out of effect. But overall, the average import tax has risen from 2.5% when Trump took office to about 10%. The Yale Budget Lab estimates it will go to about 13% if the new tariffs Trump has propoposed go into effect.

• Trump’s tariffs cost Americans real money. The Budget Lab estimates the current cost of the tariffs is about $550 per household per year. If Trump imposes all the new tariffs he has threatened, the annual cost per household could hit about $1,100. That’s on top of higher prices for gas, energy, food and other things Americans are paying because of the Iran war Trump launched in February.

• Is Trump crazy to be doing this? You could sure make that case. Economists are nearly unanimous in saying that tariffs reduce growth and employment and produce little economic benefit except higher revenue for the government. Around 60% of Americans disapprove of Trump’s tariffs, with only 37% approving. It’s a maxim of politics that voters will punish you if you raise their taxes, especially if you do it right before an election. Yet that’s exactly what Trump is doing.

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~ ~ ~ ~ ~ ~ ~ ~ ~ ~

MS Now invited me on air recently to talk about Trump Accounts, the government-backed investment vehicles for children born between 2025 and 2028. The accounts went live in early July.

Bullet points below. Here’s the video:

Congress created Trump Accounts as part of the tax bill that went into effect last year. The government will seed each account with $1,000 that the child’s parents or guardians can invest in a limited set of exchange-traded stock funds, or ETFs. The idea is to give every child who qualifies a bit of exposure to the stock market.

There’s no income limit for qualification, and most children with a Social Security number qualify. The SSN requirement is there to ensure no undocumented migrants, Trump’s mortal enemies, take taxpayer money.

[Check out The Matterboard: The news that’s really worth your time]

Individuals and employers can contribute additional money to the accounts, which function like an IRA. It’s free money and everybody who qualifies should take it. If you invested $1,000 in an S&P 500 fund 18 years ago and reinvested the dividends, you’d have about $8,500 today.

There are some problems, though:

They shouldn’t be called Trump Accounts. Many people will think this is some kind of private Trump venture—like Trump’s memecoin, which was basically a scam—and steer clear. Trump’s egomaniacal drive to put his name on everything will obscure the fact that this is a no-cost investment funded by the government.

Why do they only run through 2028? Politics, duh. The law as it exists only includes funding through the last year of Trump’s term. What then? It’s yet another example of arbitrary partisan policymaking that leaves voters confused and cynical.

Cash-outs are coming. Once the child turns 18, there are incentives to keep the money invested or use it for a designated purpose, mainly education or buying a home. But come on, some 18-year-olds are going to pay the 10% penalty, take the cash, and buy a motorcycle or a boat. Trump Accounts will undoubtedly finance some jackassery.

[How Trump is mimicking the socialist Mamdani 😱]

The smart move seems to be, take the $1,000 plus any employer or philanthropic contributions you qualify for. But it may make sense to put your personal money into other investments that are better structured, such as a 529 education plan.

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TL;DW: It’s good for markets. Powell is better than whatever stooge Trump would try to install. Trump will not gain control of the Fed, thank goodness. Meanwhile, the Fed may not cut interest rates at all this year, largely because of Trump himself. His foolish tariffs and his war with Iran have triggered another bout of inflation, raising the odds that the Fed will RAISE interest rates instead of cutting them.

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