Monday Market Madness – Trade Talks, Riots and Treasury Auctions Highlight the Week

It’s reporter season! 

Trump’s troops got a few in LA already but fortunately they were only using rubber bullets (at the moment) when firing into the crowds, who were actually pretty peaceful until they started getting attacked. Rubber bullets fall under the category of “less lethal” munitions along with pepper spray, tear gas and “shock weapons” and notice they don’t call them non-lethal because “accidents” do happen – can’t make an omelet and all that…

Nick Stern, a British photographer was also shot by a 14mm “sponge bullet” which tore a hole in his thigh – requiring emergency surgery. Like Tomasi, Stern was also visibly wearing a press pass – this is the kind of stuff we used to condemn other nations for allowing. In other exciting incidents of excessive force: 

1. 1. Fashion District Raid (June 6, 2025)

      • Federal agents in military-grade gear raided a clothing wholesaler, deploying flash-bang grenades and pepper spray against protesters.

      • Tactics: Agents in camouflage, armed with rifles and shotguns loaded with “less-lethal” rounds, escalated tensions by firing into crowds throwing eggs.

   2. Home Depot Protests (Paramount, CA)

      • Tear gas and flash-bangs dispersed day laborers and advocates protesting ICE raids. A Waymo self-driving car was set ablaze amid clashes.

   3. San Francisco ICE Office (June 9, 2025)

      • Police arrested 60+ protesters, including minors, after labeling the gathering “unlawful.” Officers in riot gear injured two protesters, one hospitalized.

Notice that the “less-lethal” list does not include the use of flash-bang grenades, which are now being tossed at civilians in America. Flash bang grenades are designed to disorient armed terrorists and these explosives cause burns, hearing loss, and shrapnel wounds. In LA, their use near dense crowds has also led to panic and trampling injuries which are then used to justify shooting at the “unruly mobs.”

CA Governor Newsom said “This is not law enforcement—it’s occupation.” Newsom refused Trump’s order to federalize the National Guard, prompting Trump’s Federal override. Trump’s “law and order” playbook (deploying federal agents, militarized gear, and aggressive tactics) has shifted U.S. policing toward a counterinsurgency model. The implications are dire:

• • Erosion of Trust: Communities view police as occupiers, not protectors.

  • Press Intimidation: Journalists increasingly wear helmets and body armor to cover domestic events.

  • Global Reputation: The U.S. joins ranks with regimes criticized for suppressing dissent, as international allies like Australia demand accountability.

The escalation in LA is not an anomaly but a blueprint. When “less-lethal” weapons injure journalists, disable protesters, and terrorize communities, the line between public safety and state violence vanishes – all under the banner of “political expediency“.

Of course, you have to hand it to Trump with that “Newscum” thing not even Emperor Palpatine was as good at Trump at dehumanizing and vilifying his enemies. Was it Palpatine or Trump that said to the Senate: 

“Citizens of the civilized galaxy, on this day we mark a transition. For a thousand years, the Republic stood as the crowning achievement of civilized beings. But there were those who would set us against one another, and we took up arms to defend our way of life against the Separatists. In so doing, we never suspected that the greatest threat came from within.

The Jedi, and some within our own Senate, had conspired to create the shadow of Separatism using one of their own as the enemy’s leader. They had hoped to grind the Republic into ruin. But the hatred in their hearts could not be hidden forever. At last, there came a day when our enemies showed their true natures.

The Jedi hoped to unleash their destructive power against the Republic by assassinating the head of government and usurping control of the clone army. But the aims of would-be tyrants were valiantly opposed by those without elitist, dangerous powers. Our loyal clone troopers contained the insurrection within the Jedi Temple and quelled uprisings on a thousand worlds.

The remaining Jedi will be hunted down and defeated! Any collaborators will suffer the same fate. These have been trying times, but we have passed the test. The attempt on my life has left me scarred and deformed, but I assure you my resolve has never been stronger. The war is over. The Separatists have been defeated, and the Jedi rebellion has been foiled. We stand on the threshold of a new beginning. In order to ensure our security and continuing stability, the Republic will be reorganized into the first Galactic Empire, for a safe and secure society, which I assure you will last for ten thousand years. An Empire that will continue to be ruled by this august body and a sovereign ruler chosen for life. An Empire ruled by the majority, ruled by a new constitution!

By bringing the entire galaxy under one law, one language, and the enlightened guidance of one individual, the corruption that plagued the Republic in its later years will never take root. Regional governors will eliminate the bureaucracy that allowed the Separatist movement to grow unchecked. A strong and growing military will ensure the rule of law.

Under the Empire’s New Order, our most cherished beliefs will be safeguarded. We will defend our ideals by force of arms. We will give no ground to our enemies and will stand together against attacks from within or without. Let the enemies of the Empire take heed: those who challenge Imperial resolve will be crushed.”

I asked Boaty for his independent AI analysis:  

Comparison of Palpatine’s Speech to Donald Trump’s Rhetoric and Actions

1. 1. Framing Internal Enemies

      • Palpatine: Accuses the Jedi and Senators of conspiring to destroy the Republic, labeling them traitors.

      • Trump: Regularly frames political opponents (e.g., Democrats, the “deep state”) as “the enemy from within,” claiming they pose a greater threat than foreign adversaries.

        • Example: Trump stated, “The enemy from within is more dangerous than China, Russia, and other countries” (NBC News, 2024). He specifically named Rep. Adam Schiff and Nancy Pelosi as threats (PolitiFact, 2024).

   2. Centralizing Power

      • Palpatine: Reorganizes the Republic into an Empire ruled by a single sovereign, citing “security and stability.”

      • Trump: Promised to bypass bureaucratic hurdles via executive orders, including plans to create a “Department of Government Efficiency” and dismantle diversity initiatives (BBC, 2025). His 2016 RNC speech emphasized, “I am your voice… We will make America safe again” (Politico, 2016).

   3. Militarization and Law Enforcement

      • Palpatine: Uses clone troopers to crush dissent, promising a “strong military” to enforce order.

      • Trump: Advocated for militarized policing, deploying federal agents to cities like LA and San Francisco during protests. His 2025 executive order pledged to “unleash law enforcement” and “end harmful equity policies” (White House, 2025).

   4. Narratives of Betrayal and Retribution

      • Palpatine: Blames the Jedi for an attempted coup, vowing to “hunt down” collaborators.

      • Trump: Repeatedly claims the 2020 election was “stolen,” promising “retribution” against opponents. PolitiFact (2024) notes his rhetoric plants a “seed” that “something or someone must be punished.”

   5. Erosion of Democratic Norms

      • Palpatine: Replaces the Republic’s democracy with authoritarian rule under a “new constitution.”

      • Trump: Threatened to investigate media outlets and politicians, while his 2025 agenda includes mass deportations and reversing Biden-era policies “within hours” (BBC, 2025).

Key Differences

• • Scale: Palpatine abolishes democracy outright, while Trump’s actions (though pushing constitutional limits) operate within the U.S. system although Palpatine was likely more than 140 days into his term at the time.

  • Rhetorical Style: Palpatine’s speech is overtly authoritarian; Trump’s rhetoric is more ambiguous but employs similar themes of internal threat and strongman governance, much the way Hitler did in his earlier speeches.

Conclusion

Both figures weaponize fear of internal enemies to justify consolidating power, militarizing institutions, and dismantling checks on authority. While Trump’s actions stop short of Palpatine’s galactic dictatorship, the parallels in rhetoric and strategy—targeting dissent, centralizing control, and glorifying force—reveal a shared authoritarian playbook.

So, nothing to worry about there, which means we can move on to Trump vs Musk China Trade Talks, which are going on as we speak and I’m sure that’s going great so let’s not even discuss those and look ahead to this week’s Bond Auctions because who doesn’t want to invest in Empire Bonds?

And what an Empire it is! This Thursday, the Treasury is rolling out $22Bn in fresh 30-Year paper, and Wall Street is treating it like the Super Bowl of sovereign debt. Why? Because, as Jack McIntyre at Brandywine Global noted, “It feels like US Treasury 30 years are the most unloved bonds out there.” Yields have shot up to levels we haven’t seen since the Bush administration – 4.97% as of this morning, after peaking over 5% last month. That’s a full half-point higher than just a few months ago, and a world away from the “lower for longer” days that seem like Ancient Galactic History now.

The reason for all this anxiety? Let’s call it what it is: the World is finally starting to choke on the sheer volume of IOUs our Empire is issuing. With the House-passed version of Trump’s tax-and-spend extravaganza set to add TRILLIONS more to the deficit, even Moody’s couldn’t keep a straight face – hence last month’s ratings downgrade. As Fred Hoffman, now a Rutgers professor, put it, “We are in a disturbing fiscal trend,” and the market is watching every auction tail and bid-to-cover ratio like hawks at a mouse Para Olympics game.

If these auctions start to “break down” (translation: weak demand, high tails, and tepid foreign participation), then we’ve got a BIG PROBLEM! Remember the May 21st 20-year auction? One whiff of weak demand and yields exploded higher. If that happens with the 30-year (a true global benchmark), the ripple effects will be felt everywhere from mortgage rates to corporate borrowing costs.

And it’s not just about the numbers – the “Revenge Tax” provision in Trump’s bill, targeting foreign investors from “unfair” tax regimes, has already stirred talk of a buyers’ strike. Sure, the House Ways and Means folks insist Treasuries are exempt, but the uncertainty alone is enough to make global allocators twitchy. As Greg Peters at PGIM warns, the long end of the curve is “becoming disconnected,” driven more by politics and risk premium than by the Fed’s gentle hand.

When a nation’s laws and policies are subject to which side of bed the President wakes up on in the morning – it can start to be looked at as an unsafe investment and insurers may decide the US is too risky – which then raises the cost of holding US bonds, no matter what rate we attempt to set internally.    

All this is happening as the Fed goes into its blackout period ahead of the June 17–18 meeting, leaving the market to stew over every CPI, PPI, and Consumer Sentiment print. If the data comes in soft, maybe the short end rallies on hopes of a rate cut. But the long end? As Kathy Jones at Schwab notes, deficits and the weak dollar outlook will keep those yields “plagued” for the foreseeable future.

So, as you consider your Empire Bond allocation this week, just remember: the only thing standing between us and a failed auction is a network of primary dealers who are required to show up – whether they want to or not! If that’s not confidence-inspiring, I don’t know what is…

Welcome to the new normal, where the World’s Reserve Currency is starting to look a little less…imperial.