There are no thin summer markets – just an overload of improbable factors to process. How can you value the price of a stock market when the basis behind it – the economy, its financial system and its society - is under intolerable stress?

Chancellor Rachel Reeves should be angry, not tearful. The multiple crises facing the UK’s funding have been long-term in creation. Reeves has the opportunity to fix them. The recipe is simple; common sense, political discipline, a dash for growth and a spicing of Gilts Liability Management. C’mon Rachel… you can do it.

Yesterday the Gilts market suffered a judder moment – but it was political theatre. The gilts market is fundamentally in good shape, well run, and a 3.5 times oversubscribed Gilts auction highlights it’s not under Bond Vigilante pressure. The UK is not about to default, beg an IMF bailout – no matter what Liz Truss apologists would like to believe.

When markets are hitting record highs is the time to be cautious, and ask why? US Stocks and Bonds are at record levels, despite the current uncertainties and policy instability. What’s driving it is a mix of themes, including market evolution. But also a market potentially complacent about approaching threats.

Trump described Fed Head Jay Powell as "stupid" for not easing rates – Powell is playing safe, waiting for the Trump impulse to play through the economy. The standoff in Iran looks likely to prove Trump’s pivotal moment: is he a risk taker, or just noise? The stakes are massive - the upside is consolidation of US power, the downside includes acute embarrassment and MAGA disillusionment in the Presidency.

The market is full of noise, but the facts are more important. The data suggests slowdown is coming. The noise is getting louder as doubts around spending, bonds, inflation and economic slowdown mount. And to cap it all, a fight between Elon Musk and Donald Trump could massively destabilise US Politics.

This morning’s Porridge is given over to what my chum Rob Hillman’s modelling of the Pandemic economy teaches us about the unpredictable consequences of Trump’s Tariffs. Chaotic, but we are more resilient than we might expect. And very likely to backfire on Trump!

The fact the US is almost certain to be plunged into a unresolvable recession by the summer, doesn’t mean Trump will be pressured into recanting his economic heresies. Maga voters look likely to double down on him! Meaning an even deeper problems for US firms trying to retain the illusion of their current inflated valuations.

This week will be about Jay Powell – how will Trump deal with the resolute Fed chairman? Experience suggests badly. As the effects of tariffs on the US economy begin to bite, and the weakness of Trump’s negotiating positions become increasing clear.. fewer and fewer folk will be talking about buying-the-dip.

Global Trade is enormously complex. Trump has put 104% tariffs on China – which will directly impact US consumers. Shutting the door on global trade will inevitably trigger consequences. The biggest risk is to the bond market – and a stressed Treasury market when the US has $15 trillion to refinance in next 20 months is a really, really bad idea.