...if we face a Euro bond crisis down the road, some of you would say it is EU's stupidity and not a US problem, but in the absence of any dependable reliance on the US, EU is not going to take a chance that Russia has no broader ambitions and sees an urgent need for a self determination path.
...any such eventual crisis is attributable to Trump's actions, though he won't care one bit. His rhetoric to get closer to Russia and 'abandoning' his allies is so concerning that forced the Europeans to wake up and spend more on defence. So to his supporters, Trump is genius in getting his allies to do what they would not otherwise do so.
...Trump could have easily have a meeting with EU leaders to spell out his NATO and Ukraine funding limit even on a take it or leave it approach, but chose to broadcast his grievances in the public domain to shock and create fears/concerns and belittle/berate his allies and alliance- what a friend!!
"Europe is doing a massive leveraging exercise. The last thing you want is having a spike in sovereign bond yields: this is what is happening today. If bonds yields keep jumping higher, then 3 things can happen:
Scenario 1: some sovereign is facing issues in releveraging, considering it too expensive; the bond selloff becomes brutal, levels become problematic and you face a bond vigilantes type of price action hitting countries with limited fiscal space and poor rating trajectory BEFORE the EU ReArm plan. This scenario is not bullish for EUR: if you buy EUR when Sovereign yield outright are jumping higher, then not sure it is going to work
Scenario 2: Germany decide to use German money to save all Europe, guaranteeing their national liabilities.
Scenario 3: things calm down; markets partially unwind the crazy move we had"
