On the remote chance you didn’t find things to give thanks for last Thursday, take four minutes to watch this man’s life and be thankful you weren’t born in Sierra Leone — and inspired by his mission.
Things will surely be a thousand times better here in America than they are in Sierra Leone; but maybe not as “great again” as we’d like. In case you missed Paul Krugman in the indispensable New York Times (subscribe!):
A lot of people in politics and the media are scrambling to normalize what just happened to us, saying that it will all be OK and we can work with Trump. No, it won’t, and no, we can’t. The next occupant of the White House will be a pathological liar with a loose grip on reality; he is already surrounding himself with racists, anti-Semites, and conspiracy theorists; his administration will be the most corrupt in America history.
How did this happen? There were multiple causes, but you just can’t ignore the reality that key institutions and their leaders utterly failed. Every news organization that decided, for the sake of ratings, to ignore policy and barely cover Trump scandals while obsessing over Clinton emails, every reporter who, for whatever reason — often sheer pettiness — played up Wikileaks nonsense and talked about how various Clinton stuff “raised questions” and “cast shadows” is complicit in this disaster. And then there’s the FBI: it’s quite reasonable to argue that James Comey, whether it was careerism, cowardice, or something worse, tipped the scales and may have doomed the world.
No, I’m not giving up hope. Maybe, just maybe, the sheer awfulness of what’s happening will sink in. Maybe the backlash will be big enough to constrain Trump from destroying democracy in the next few months, and/or sweep his gang from power in the next few years. But if that’s going to happen, enough people will have to be true patriots, which means taking a stand.
And anyone who doesn’t — who plays along and plays it safe — is betraying America, and mankind.
Arguably, it wasn’t Comey or Putin or the press that sealed the deal — it was a single statement, quickly walked back but immediately distorted and amplified — inadvisedly uttered when the candidate had pneumonia, as we would learn later — that, more than anything else, changed the course of history. As argued in this lovely, thoughtful — albeit heartbreaking — piece.
And here is why my smart friend John Hook is bearish. (Written in a shorthand aimed at institutional investors, but you’ll get the gist.)
The Reagan-election rally in November, 1980, [quickly turned into] a huge sell for 22 months. Stocks crashed 26%. New party presidents usually do the tough stuff first so that stocks correct and then rally into the next election. Trump has called stocks a “huge bubble.”
Twelve Bearish Probabilities:
1) Emerging-market currencies are devaluing very rapidly — and have correlated or coincided with stock corrections;
2) Start of Fed rate increases;
3) Low productivity and monthly inflation equal to or exceeding income growth;
4) Record high combined stock and bond valuations and near record high leverage;
5) 7.5 years into an expansion, what can go wrong usually (always) has gone wrong;
6) Inflation spike is likely during winter, probably over the inflection level of 3.0%, led by medical, shelter, oil, and average hourly earnings by spring;
7) Oil probably up 50-80%+ Y/Y ($60-65 WTI) by February because of OPEC & non-OPEC 1-1.5 mb/d production cuts;
8) Core CPI trending higher for more than a year, as now, and the fed has not increased rates, but then does—probably fed behind the curve;
9) Two years of weak capital investment and Fed Labor Market Indicator trending weaker for more than a year;
10) Flat (+/-.2% points) unemployment rate for 11 months or more —often late or end of cycle;
11) Risk of CPI inflation exceeding increase in real disposable personal income starting in 2-4 months and lasting a year as costs increase more than structurally low productivity; and . . .
12) Very rapid increases in 10 YR TR yield, like now, have preceded corrections and large crashes.
That said, bear markets, if we have one, are more or less routine — and have always been followed by bull markets.
Have a great day.
Quote of the Day
John Wanamaker found an employee in a dispute with a customer. She wanted a blouse that was being sold only with a skirt. The clerk was insisting they only came together. Wanamaker walked over to the clerk and whispered in his ear the secret of marketing: "Give the lady what she wants."~.
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