Why discounting another Lehman-like moment could trigger ‘the next epic economic crisis’

The Wall Street Journal once described him as “perhaps the most powerful journalist in America.” President Donald Trump, however, isn’t nearly as impressed, having called him a “political moron.” Oh, and “a total dope” and “a loser.”

With mixed reviews like that, it’s no wonder George Will’s colorful prediction of a looming fiscal crisis stirred up plenty of buzz over the weekend.

The Pulitzer Prize-winning columnist, in a Washington Post piece that earned our call of the day, warns that, with the 10th anniversary of the Lehman Brothers meltdown just around the corner, “another epic economic collapse is coming.”

There’s also plenty of head-scratching material in there, as is often the case within Will’s body of work. Bloomberg’s Joe Weisenthal says his latest missive “is… not convincing.” Financial columnist Felix Salmon pointed in bewilderment to this one quote, in particular: “God, a wit has warned, is going to come down and pull civilization over for speeding.”

While perhaps obfuscated by Will’s flowery words, there’s really no mistaking his point: There’s a nasty stretch ahead for the stock market.

“The durable market rise that began March 6, 2009, is as intoxicating as the Lehman anniversary should be sobering: Nothing lasts,” Will wrote. “Those who see no Lehman-like episode on the horizon did not see the last one.”

He says that if we’re looking for some sort of event to mark the end of economic expansion, it’ll likely be when the annual budget deficit exceeds $1 trillion, and that’s expected to happen in fiscal 2019.

“Despite today’s shrill discord between the parties, the political class is more united by class interest than it is divided by ideology,” Will explained. “From left to right, this class has a permanent incentive to run enormous deficits — to charge, through taxation, current voters significantly less than the cost of the government goods and services they consume, and saddle future voters with the cost of servicing the resulting debt after the current crop of politicians has left the scene.”

So, how much stock does Trump put in Will’s forecasting skills?

No crisis so far this morning, with the market headed higher early.

The market

Stocks ended last week with a bang, and they look to resume the uptrend when the opening bell sounds. Futures on the Dow












YMU8, +0.23%










S&P 500












ESU8, +0.18%










 and Nasdaq












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 are modestly higher, while gold












GCU8, +0.72%










 and silver












SIU8, +0.61%










are showing larger gains. Crude












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 is titling hgher. Bitcoin












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 is falling.

The same pretty much holds true overseas, as Europe












SXXP, +0.51%










 is rising in the early part of its session, while Asia markets












ADOW, +0.63%










 closed mostly higher.

The buzz

PepsiCo












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  added some fizz to the day by announcing a $3.2 billion deal — $144 per share — for Israeli-based home-carbonation device maker SodaStream












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Shares of SodaStream are jumping, while those of PepsiCo are tilting lower.

A Tesla












TSLA, -8.93%










 competitor just filed for an IPO, hoping to raise money for an expansion that includes launching a smaller electric SUV to broaden its customer base. Shanghai-based Nio filed to offer up to $1.8 billion worth of American depositary shares, and if it succeeds, it would mark the fourth-largest U.S. IPO this year, behind Axa Equitable Holdings’












EQH, +0.95%










 at $3.16 billion.

Meanwhile, the Saudi sovereign wealth fund may invest more than $1 billion in Lucid Motors, another Tesla rival, according to Reuters. After an initial $500 million investment, the fund could eventually invest more than $1 billion and gain majority ownership of the Newark, Calif.-based company, which was founded in 2007 by former executives from Tesla and Oracle












ORCL, +0.54%

Tesla shares are lower.

In entertainment news, “Crazy Rich Asians” hit it off with moviegoers, becoming the first romantic comedy to top the weekend box office in more than three years. The movie — Hollywood’s first to feature nearly an entire cast of Asian descent in more than 25 years — took in an estimated $25.3 million this weekend, and $34 million over its first five days, the best debut for any comedy this year.

Twitter












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 CEO Jack Dorsey responded to President Trump’s claims that social media is discriminating against conservative voices. “Are we doing something according to political ideology or viewpoints? We are not. Period,” he told CNN in an interview, while admitting a left-leaning bias. “We do not look at content with regards to political viewpoint or ideology. We look at behavior.” Watch the clip:

The chart

Back then it was about “the new economy,” and now it appears to be tax euphoria driving the optimism, according to the Topdown Charts blog’s Callum Thomas, who posted this chart to show how the S&P 500’s












SPX, +0.33%










 longer-term earnings growth outlook hasn’t been this high since the later stage of the dot-com bubble.

“Indeed, it’s interesting to reflect on the history of this chart, it seems to speak more about sentiment than fundamentals (or maybe some mix of the two),” Thomas wrote. “With the U.S. economy still going strong, one may be tempted to channel Irving Fisher’s ‘permanently high plateau’ quote…”

The quote

“A modern Republican politicians are, with few exceptions, apparatchiks: they are creatures of a monolithic movement that doesn’t allow dissent but protects the loyal from risk. Even if they should happen to lose a race in their gerrymandered districts, as long as they toed the line they can count on ‘wing nut welfare’ — commentator slots on Fox News, appointments at think tanks, and so on” — Paul Krugman, doing what he does in his latest editorial in the New York Times












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 .

The stat

Numbers 1 and 2 — While Krugman is making noise by slamming Republicans on another page of the Times, two pro-Trump books top the paper’s list of nonfiction best-sellers. Here’s the rest:

The economy

Nothing of note slated for today or Tuesday, but we’ll get a look at July new and existing home sales on Wednesday and Thursday. Also on Wednesday, the latest FOMC minutes will be released. On Friday, Fed Chair Jerome Powell will give a speech on monetary policy in Jackson Hole, Wyoming.

Read: Sky is clear for U.S. economy, but clouds are forming

Random reads

Who knew chocolate avocado toast was a thing? (It’s not).

No thanks, pickle-frying your chicken sounds way better.

Alone, floating in the sea for 10 hours, she’s finally rescued.

Listening to Aretha in the Soviet Union back in 1983. Over and over again.

Barack Obama shares some of his summertime reads.

Steve Bannon… remember him? He’s got a warning for the GOP.

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