Blain’s Morning Comment 9/11 2026 – The King is Mad – step forward the New King!

“The sleeper must awaken…”

Keep your eyes on JD Vance. He is headed for a coronation. What will that mean for America and global markets? He’s not stupid, but many suspect hes is not his own man – he owes his successes to billionaire Mega-mind Peter Theil. Vance will lead the attack on the Progressive, Weirdo, Democratic Socialists, but even if he wins… what kind of market and economy might he inherit?

Key Takeaways:

• JD Vance is stepping to the fore as Trump’s likely successor. He’s doing a competent job sorting through the mess that is Trump’s war on Iran.
• There are questions around how much he is still influenced by Peter Theil and how a Vance presidency may serve the “Nerd” Billionaire faction.
• We are passed Peak Trump – that will be confirmed in November. Step forward the new man.
• Vance will campaign around the stability of conservative Republican political competency vs the danger of radical progressive Democrat socialists, who have a branding problem and no clear leader.
• Whatever happens, the scale of US debt and how to refinance it will be the legacy issue for whoever wins in 2028.
• The consequences of years of financial repression, capital markets abundance, cheap liquidity and now de-dollarisation, and a crisis in refinancing debt could trigger higher inflation and economic crisis.

LINK TO PODCAST

Short comment this morning as I have “stuff” to go to…

There is an extraordinary piece in the New York Times this morning: Maggie Haberman, the excellent NYT journalist who eviscerated Trump and his confederacy of dunces in the book Regime Change earlier this year, has published an article positive about JD Vance. It is well worth a read: Behind the Scenes, Vance Gathered Unvarnished Views of the Iran War. It strongly suggests Vance is now the grown-up-in-the-room of the White House kindergarten.

Last night, at Trump’s gab-fest Midterm Convention in Texas, Vance was hailed as 48 – a reference to the possibility he might become the 48^th President of the USA if he succeeds Trump and wins in November 2028. His rival for the job is Marco Rubio who was kept out the way, plodding around South America glad-handing autocratic leaders. Vance gave a speech with warned Americans against voting for weirdo, socialist, baby-eating socialists who will impose Sharia law on ‘Merica… or something like that. But he is clearly the front runner as Trump’s successor… (Despite Steve Bannon saying there is a plan for Trump’s third presidency – heaven help us all.)

If I were a conspiracy theorist… Vance’s sudden ascendency into pole position rather suggests the man pulling the strings, Peter Theil, has made his call on Trump. Everyone knows Theil likes to paint his world in terms of JRR Tolkien, naming his funds and companies from artefacts from The Lord of the Rings fantasy. However, I suspect he bases his politics on Frank Herbert’s Dune (the books, not the films). He is Baron Harkonnen.  Now that America is close to crisis, he’s figuring the time is ripe to replace Trump with his protégé – Vance. If you know the book it’s when the Baron replaces Beast Rabban (who he instructed to make war on Dune’s population) with his nephew Feyd-Rautha (famously played by Sting in the David Lynch 1984 film) as their saviour.

You don’t need to be a rocket scientist to see the Trump Presidency is in trouble – the president has made multiple miscalculations, mistakes and missteps. He retains the worship of his core MAGA supporters – but otherwise the swing voters of the USA are pretty much appalled by Trump’s Second Presidency. It has hit their wallets, looks to be in thrall of the billionaire class, has proved itself capable of great cruelty in terms of ICE, and has diminished America on the international stage. Trump is increasingly perceived to be a chaotic liar and fantasist who has delivered little of substance. Whatever he claims about being the greatest president – he is now a vote loser. Peak Trump has passed.

If this was Dune… step forward JD Vance with the new message… and it’s all about competency (as detailed in the Haberman article) and the danger of the Weird, Progressive, Democratic Socialists / communists!

I suspect it will find a willing listener base. As yet, there is no clear new Democrat leader. There is nobody around whom American voters can coalesce around as the leader of the new Democrats, who can moderate the best and worst of the new more progressive policies. America has to avoid the mistake Labour made in the UK when it elected popular but absolutely hat-stand socialist Jeremy Corbyn from 2015 – as a result it failed to mount an effective opposition to the Tories, enabling the manic stupidity of the Tories post Brexit!

Much of what the broad church of the Democrats propose makes sense, but is easy to argue against:

• They say they will raise corporation taxes and mount a wealth tax aimed at the rich – the other side say this will discourage growth and trickle down (which is boll-chocks anyway.)
• They want organised labour to be a right – the other side say that will kills industry and manufacturing, (but also enables workers to be bullied as they are at Boeing, prosecuting whistleblowers and resulting in dangerous crap products.)
• They want lower health care costs – the other side say it’s too costly, even as Trump promises to give away $1 trillion to voters if he wins.
• They want to expand welfare, social benefits, holidays and maternity leave – nonsense say the other side, pay the peons as little as you can and don’t give them rights to ensure corporate profits remain high and flow to the wealthy.
• They want to clampdown on political corruption – “what corruption” ask the other side… adding the president has given up so much, it’s only fair he gets a nice plane to travel in…

Vance is now painting the Democrats in terms of dangerous socialists’ intent on fermenting class struggle and communist insurrection against capitalism across the USA by persecuting Christians, Businessmen and Technologists and replacing them with a Muslim state under Sharia law – just look at New York, he will scream… (Or something like that.)

When Trump loses the Midterms – the Dems will take the House, and maybe even the Senate, expect Vance to step into the Van of the Republican fightback against the Goddamn Communist Pinkoes of the New Socialist Democrats.

Interesting….

Meanwhile… what might Vance inherit from Trump if he wins?

Today the US economy looks in fine fettle. It’s at pretty much full employment, and the stock market is hanging on its current range. But there are growing worries about the bond market and its sustainability.

Treasury Secretary Scotty Bessent (the former grown-up-in-the-room now exposed as a complete numpty who though he was the financial equivalent of King Canute) has just immolated himself – claiming he was “the house”. Sure he is – but as I commented earlier, the Bond Market is the chap who broke the bank in Monte Carlo.

Interest rates are rising towards where they should be – normalising to reflect the right level for a hot economy and the elevated inflation risks from higher energy prices. But rising interest rates are going to trigger a problem for the real driver of the strength of US financial markets – the depth and capacity of US capital markets.

The yield on US Treasuries is the risk-free rate against which all other financial asset prices are set. When it is kept too low – as Trump has repeatedly demanded – then it distorts prices upwards, drawing liquidity to the financial asset markets. That’s what been driving the extraordinary rise of US stocks since 2008, and now the absurd valuations ascribed to many US firms and is fuelling the build-out of AI infrastructure and the bubble around it.

When rates normalise, that distortion on financial assets pops, and the liquidity that enable US capital markets to finance everything and anything stops. And that’s when the reality of the last 18 years finally exposes who is swimming naked as the tide goes out.

Since 2008 there has been a massive transfer of risk from the banking sector to the rest of the financial sector. Risk is now embedded in pension funds, insurance companies, and other asset owners. If the bubble pops – they lose, but we only find out as their liabilities come due. We know now just how much private credit has been stuffing assets into captive insurance investors. We know how much private equity is effectively pretend and extend.

We also know that operation twist games in US treasuries have reduced the duration of the USA’s liabilities to around 3 years – which is why the USA has to refinance some $11 trillion – sorry make that $12 trillion because of Trump’s $5000 election bribe – every year. $1 trillion a month as a time when there are fewer dollars funding global trade is a big ask. Once every dollar used in global transactions circulated through the Treasury market. Now, the globe is de-dollarizing, and even “friendly” nations like Norway have cut Treasuries because there are better things to invest in…

Whoever wins the 2028 US election is likely to inherit a nation which will still be struggling with high inflation, the consequences of Trumps tariffs, trade wars, and Iran, and is struggling to refinance its debt. The likely solution will be QE – which is effectively money creation which will crash the dollar and further fuel inflation…

Maybe. Maybe not…

I suspect JD Vance stepping into the limelight following the Midterms will be the least of our worries by November..

On that happy note, out of time, have a great weekend… and if AI doesn’t eat us all over the weekend, back on Monday.

Bill Blain

Author of the Morning Porridge
CEO Windshift Capital
Advisor – Spitfire Strategic Capital

Meanwhile, don’t forget about my new book: The Battle for Hamble

You can read a review on the Society of Professional Economist’s website here.