Market Morning: Debt Tops $22T, Chevron Stays Put, J&J Gets Esketamine Nod, Trump Upset Again

National Debt Tops $22 Trillion, Rises $1 Trillion In Less Than a Year

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All is well with America’s finances, say all the politicians who want to spend a lot of money on programs, especially the Green New Deal, which seeks to outlaw air travel, replace it with high speed rails all across the country, subsidize people unwilling to work, and rebuild every single building in the United States to make it green. That should go well. The increase in the debt is more than the official budget deficit due to “off budget” expenses, and there is red ink as far as the eye can see. Meanwhile, the Fed continues to shrink its balance sheet, which in practice means that all this debt is not being soaked up by the Fed, and this could cause an interest rate shock at any time. The US debt to GDP ratio is currently around 110%, GDP being close to $20 trillion. Interest rates on the 10Y (^TNX) are holding at around 2.68%.

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Speaking of Debt, Bank of Japan Trims JGB Buying

As the US tops $22 trillion in debt, it’s Japan that’s really the king of debt in terms of debt to GDP ratio, currently over 240% and climbing. The only way the Japanese can sustain this even in the short term is negative interest rates, which still exist in Japan even though rates just rose yesterday as the Bank of Japan has trimmed its bond buying just slightly, to  ¥180 billion a month from  ¥200 billion. Rates are still -0.004, up 0.0067 points, which means that if you invest in Japanese government bonds, you are guaranteed to get less money than you paid in principle, which makes sense in a financial mirror evil universe, which is where we all must be right now. Meanwhile Japanese stocks (NYSEARCA:EWJ) are starting the day off strong, up 1.34% in Asian hours.

Chevron Staying in Venezuela Amid Sanctions

Chevron (NYSE:CVX) is sticking with Venezuela despite US sanctions against the starving country with the highest oil reserves in the world, because socialism works so well. Chevron has official permission to continue operations in the country from the US government until July 27th, at which point they have to turn tail and run. CEO Mike Wirth was mum on the question of whether he thought this was an actual hard deadline, or more like a headline deadline. “We work closely with the U.S. government to understand how their policy objectives are being manifest through the sanctions they have issued and to ensure we remain in full compliance with U.S. law,” Wirth said. He also said the company has no position on who should be president in Venezuela. Prudent of him, considering he’s in Venezuela and would probably not rather be targeted by any of the political class.

Johnson & Johnson Gets FDA Panel Nod for Esketamine

Johnson & Johnson (NYSE:JNJ) just got a vote in the affirmative for recommended approval of esketamine, a drug based on ketamine that blocks the NMDA receptor in the brain that is supposed to be a new mechanism of action for treating depression. The vote was 14-2 in favor of approval. The treatment is intranasal and is fast-acting, as opposed to Prozac, approved in 1987, which is a serotonin reuptake inhibitor that slowly builds up serotonin in the brain and this is supposed to slowly make you feel better, but in practice makes you jumpy and comes with a suicide blackbox warning on it. Some patients who took esketamine during clinical trials had out-of-body experiences. Sounds like the opioid crisis could conceivably be replaced by the ketamine crisis pretty soon.

Trump Doesn’t Like Funding Compromise, But Likely Won’t Do Anything To Stop It

President Trump said he is unhappy with the compromise reached between Democrat and Republican negotiating parties to fund the government past Friday because it doesn’t explicitly include $5.7 billion for a border wall. He however said that another shutdown is unlikely, meaning he’ll probably sign the bill anyway, which should help push the national debt past $22 trillion it just reached today. Trump will reportedly try to find another way to build the wall, and has even tweeted that it’s being built anyway, which may be enough for his supporters who may not need an actual wall to believe that one is being built.

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