Stocks and Bonds. We say them together, but mostly we think about stocks. Stocks are more fun. You can get personal with stocks. However, the bond market keeps stuff stable enough for you to play the market.
My AI search created this explanation:
“While bonds traditionally provide diversification and act as economic shock absorbers, their stabilizing role is contingent on investor confidence and monetary policy effectiveness. Recent volatility highlights vulnerabilities, particularly when bond markets reflect skepticism about fiscal health or geopolitical risks. Thus, the bond market’s impact on stability is context-dependent, balancing risk mitigation and systemic fragility.”
I was a pretty good math student. Not so much now, but I do remember the use of variables—you know, those unknowns that change depending on the value of the other variables. So when x goes up, y goes up. Or when x goes up, y goes down. There are different ways this can go. Consider that the stock and bond market has more than two variables. When x goes up, y goes up, and z goes down. Or y goes down and z goes up. There are many different combinations these variables can take. Consider working with five variables, or 15 variables, or 47 unknowns (47 is just a random number here). It starts to get complicated. Some variables you had not considered before may also impact the equation.
This may not be the case, but this president does not know that other variables will change by his actions or inaction. If you have read my writings in the past, you might remember a piece I wrote last year that during this president’s previous term, he messed with the soybean market. Farmers in the United States had been selling soybeans to China for over twenty years. He thought that China should pay whatever tariff he decided. He never considered that China could or would search the world to buy soybeans from somewhere else. The United States farmers lost a valuable market.
In anticipation of this president playing with tariffs, other countries have been buying up United States Treasury notes. If all of these countries dumped their holdings, the result would be a tanking of the United States dollar, thereby destroying our economy. There are many variables here; evidently, this president assumes he can take action and no one else (no other countries) will do anything but pay his tariffs, whatever he wants them to be. The political cartoon I saw yesterday showcased this situation, showing this president playing checkers alone while leaders of several other countries were playing chess. He is out of his league.