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Advisor

the stock market

shot back up yesterday on Trump's announcement of a tariff retreat. Futures back down this morning.

A small but essential portion of Trump support is relatively affluent people who are giddy about their investment an retirement accounts. I personally know a few who scooped some of the booty out of their 401ks and took their bucket list trip.

The global economy is slowing. This could be the first time in modern history where an expansion dies from old age rather than being murdered by central banks. Or, you could say that trade tension are bringing it on.

Anyway, the stock market and the narrative about the economy need to be present in order for Trump to win re-election.

I'll guiltily admit to being a mild Prechter/Elliott Wave disciple but his template has served me well in the last few years. Best current count is an expanding triangle 4th which would call for a drop below the Dec lows, followed by a final Grand Supercycle 300 year top. The final rally sounds pretty unlikely from here- seems it would require some extreme stimulus/intervention to accomplish. We'll see. Trump claims unlimited Unitary Executive powers.

My view of that isn't so much that I want to play it as it is that if that forecast actually verifies I'd suggest moving to defcon 5 prepper bunker alert.

Given the extent to which we've been professionally separated into warring camps, the implications of that would be extreme. Half would blame Trump, half would blame the "socialists" coming to power.

My view of the current social convulsion remains approximately the same as 3 years ago- like the Italian guy said about Berlusconi- "the man who screwed over an entire nation."

 

 

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Honored Advisor

Re: the stock market

A few months ago when the Left could no longer claim "Trump wrecked the economy" they moved to the narrative that "this is leftover dividends from the Obama economy".   But now Jerome Powell`s 4 rate hikes are being felt and we`re feeling a little turbulence over Salt Lake City, now it`s back to "C`mon Recession!  Come to Papa!" .  

This is something to bookmark:  If Trump loses and the economy goes to recession for president Kamala Harris, the media and history books will blame Trump just like they erroneously blame Smoot-Hawley for the Great Depression.  If Trump`s deregulation and tax cuts and trade reform reap benefits in the future, president Kamala Harris will get the credit.  Trump about has to win and finish what he started.

The trade deficit has a bigger ripple on the economy than the simple "2% of GDP".  If a factory in a town of 2,000 moves to Mexico and 500 people are out of a job, homes are lost, the car dealer in town doesn`t sell new cars, the ShopKo has to close, the Pizza Hut has to close.  The school with 200 fewer students has to encourage early retirement for teachers that won`t be replaced.  There are ripples above and beyond the 2% of GDP.

Image result for one dollar circulates in local economy

Advisor

Re: the stock market

Yes. What you say. All of that has been coming down for a long time. Before Trump. Before Obama.

But in this stratosphere, your complaints are seen as nothing more than impersonal anecdotes. Even though they have huge macro implications. 

Probably best to look for a candidate who understands that. Or at least comes close or seems to. 

It’s not a promising landscape. The Current Occupant (haven’t heard that since 2007 or so??) fwiw, as is far from understanding that as can be imagined 

Honored Advisor

Re: the stock market

Trump is the only candidate, president that has understood my concerns and then carries through with his promises. I know the 2 dozen Democrats all raising hands to decriminalize crossing the border, giving them food stamps, free college , free healthcare they have a plan to "not borrow from the Chinese" but rather "tax the rich".  That is all another pall on the communities, the poem written on the Statue of Liberty notwithstanding.

As American`s bellybutton and spine become closer, they with become less proud to do "jobs Americans won`t do" for $13/hr.  The current generational demographics show less red meat consumption and animal deconstruction facilities won`t be required as much and those that do robots will do more of the icky work.  

So, we`ll be stuck paying the expenses of workers that we thought we couldn`t live without pre-2020, but won`t be needed post 2020.  Trump at least touched the 3rd rail of "that is not who we are"...well we better damned well start looking out for number one, no one else in the world will.  

Advisor

Re: the stock market

Bouncing a bit- might hold for a while if Trump can stick to the message about the 2nd Amendment, mooslim women, communists and the brown invasion. Although I'm not hopeful he can for very long.

"The economy" really isn't that bad, it just isn't that good. Bumpin' along at the old neoliberal stagnation pace which doesn't bother the people at the top of the pyramid who continue to rake it in.

The problem is that "the market" is priced for that perpetual 3%+ growth, which ain't happenin'.

The Market isn't the Economy but it does help with social mood on the upside and harms it on the downside which tends to influence consumer behavior. The consumer is spending but the consumer is always spending at the tail end of a cycle too. 

But here's one optimistic chart that speaks to the low potential for a recession to be severe:

https://fred.stlouisfed.org/series/HDTGPDUSQ163N