Presidential Stock Market Returns

Comparative presidential stock market returns are  always interesting and makes for good political fodder but pretty meaningless.  I am not arguing policies don’t matter but the initial conditions or valuation when a president takes office has, in the past, seemed to matter the most on how the market does during that president’s term.   Context, baby.

President Obama,  for example inherited a collapsing stock market, which bottomed about 7 weeks after he took office.  Bush #43  inherited the bubble, which began to collapse about nine months before he took over, and then existed office with a collapsing credit bubble, handing the Great Financial Crisis (GFC) off to President Obama.

Trump took office with record high valuations and commenced to pump the market higher with his tweets, a China trade deal coming soon meme, and beating the Fed into submission to drive interest rates to zero. Add to that the trillions and trillions and trillions of dollars in rescue and COVID stilumus packages, which drove monetary and fiscal policy in his last year in office, and here we sit.

Moreover,  Hoover’s stock market really distorts the average for the Republicans.  But hey, it’s politics not purity, no?   But so does Silent Calvin Coolidge’s bubble.  As does Clinton’s.

Given the intial valuation of a 180 percent stock market capitalization to GDP,  either Joe Biden will be the first Demcorat with an negative stock market or the country is heading toward hyperinflation.  When you figure that out let us know.

Election Day or Inauguration Day? 

By the way, the last time Carol K. posted the following table we had some pushback on when should the clock start ticking to measure presidential returns: a)  Election day, or b) the Inaugural?

We took a look at the data and found it actually makes the Democrats average look better.  Sorry, Republicans.   In fact, it even hurts Trump’s stock market return as we suspect that is what motivated the pushback.

The Dow 7.63 percent runup from Election Day to Trump’s inauguration was eclipsed by the recent 11.07% increase in the Dow from November 4th to the night before the Biden admistration took power.

2oth Amendment   

A problem also arises when trying to nomarlize the lame duck period — from the election to the new president taking office.  Prior to 1933,  a new president wasn’t swown in until March 4 as is stated in the Constitiuion.  It took an amendment to shorten the lame duck period.

The Twentieth Amendment (Amendment XX) to the United States Constitution moved the beginning and ending of the terms of the president and vice president from March4 to January 20, and of members of Congress from March4 to January 3. It also has provisions that determine what is to be done when there is no president-elect. The Twentieth Amendment was adopted on January 23, 1933.[1]

The amendment reduced the presidential transition and the “lame duck” period, by which members of Congress and the president serve the remainder of their terms after an election. The amendment established congressional terms to begin before presidential terms and that the incoming Congress, rather than the outgoing one, would hold a contingent election in the event that the Electoral College deadlocked regarding either the presidential or vice presidential elections.  – Wikipedia


It is interesting to see the Dow’s compounded average annual price return (not including divies) is only 5.54 percent since 1901.   Makes sense as our priors are that is about the average growth rate of nominal GDP during the same period.

That is why we view the times we now live as an anomaly and not sustainable.

Sorry to burst your bubble but perpetual annual 10-15 percent stock market returns are not a Constitutional right nor an entitlement.

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The Best MLK Weekend Of All-Time

We are reposting this for the holiday and in honor of Dr. King, one of our greatest Americans, a patriot, and a true saint.

I exchanged emails with Reverend Senator-elect Raphael Warnock after posting it.

Originally Posted on 

During my Lehman days as a bond strategist, the firm’s research group would do a January roadshow in many of America’s major cities to present our ideas to institutional investors.   One particular year, we were in Atlanta at the end of the week and scheduled for another “greatest show on earth” in Chicago the next Tuesday.

A Weekend In The Peachtree Hyatt

Rather than flying home to New York, I decided to stay over in Atlanta and migrate north on Monday evening.   It was MLK weekend and I wanted to attend services at the Ebenezer Baptist Church, where Martin Luther King, Jr. was baptized as a child and gave his first sermon. If my memory is correct, I believe his father also pastored the church.   His mother was shot and killed while she played the organ in that church in 1974.

Dr. King’s tomb is located just outside the side door of the church in the middle of a reflecting pool.

dr. king

Three Memories Of Ebenezer

I recall three of my main takeaways from that Sunday morning.

First,  I was maybe one of ten whites out of 600-700 people sitting in the pews.  Sadly, as Dr. King said almost 60 years ago.

I think it is one of the tragedies of our nation, one of the shameful tragedies, at 11 o’clock on Sunday morning is one of the most segregated hours, if not the most segregated hour in Christian America.  – MLK, Jr  Meet the Press, April 17, 1960

Nevertheless, I felt incredibly welcome and never — not for one nanosecond —  was conscious about such a silly thing as the difference of the color of my skin.  During the greeting time, the Ebenezers made me feel so welcome and a part of their family.

Second, not to contradict Dr. King, but I believe the service started at 9:30 AM and went to almost 1:00 PM!  Maybe it was a special MLK weekend service.  The pastors in the mostly white churches I have attended have trouble keeping the attention of the congregation for more than 20 minutes.

Third, the sermon was entirely different from those I had experienced in middle-class white churches.  Less doctrine, though similar theology, and more real life.  The struggles of raising children in poverty.  Grandparents raising their grandchildren. Troubles with children with drug addiction. The struggles of being black in white America.   No pretense of being sinless and perfect, no holier than thou vibe, no judgment, no condemnation, no guilt, no shaming.  All love, compassion, kindness, and forgiveness.  Just like the real Jesus.

Also, the sharing of the same joys and blessings.  New babies, college graduates, marriages, medical recoveries, and others.

Daddy King” was referred to several times.

It truly echoed the genius and saintliness of Dr. King.

I walked away convinced the Church for the African-American community was much more — that is a considerable part of their life — than what I had experienced in white evangelical America.

Yes, maybe some of us attend more than just Sunday services, but many, such as yours truly, often do so with the dubious motive of seeking the blessings of personal peace and personal prosperity.  The community of the Church, as it for the African-Americans, though not always, is secondary.

The next day, Martin Luther King Jr Day, I spent across the street at the King Center.

More Empathy, Less “Being A Dick

What great memories from that unforgettable MLK weekend.

I grew up lower-middle class in the white suburbs of Los Angeles, attending an all-white high school.  Fortunately, I had a father, who was politically left of the salad fork (out of a rebellion,  I became a conservative in college),  and also spent my first 25 years playing sports, fighting in the baseball trenches with, pulling for, breaking bread, and downing brewskies with my teammates of color; or as I grew to learn colorless.

I am very thankful for those experiences.  It helped me integrate into and see the real greatness of America.

I feel sad for my many brothers and sisters who have not had the same privilege and are stuck still watching black and white television:  unable or unwilling to embrace and enjoy the tremendous diversity of this great country.

Ditto for the similar ignoramuses from other races and ethnic groups.


I can’t imagine eating steak and potatoes every day and every night.

Ignorance And Racism Know No Boundaries

Let me finish by qualifying all of the above.

Racism is such a prominent feature of so many human societies that some evolutionary psychologists have concluded it is “natural” or “innate.”  We don’t know about that but are certain it is not just a “white thing”, a “black thing, or a “brown thing,” etc.

I have shared the story of my brother who was murdered by an undocumented worker, who stated, after stabbing him, “all anglos need to be exterminated.”   This sociopathic asshole killed my brother not because he was brown, or undocumented, but because he was one sick and crazy mother f$@ker.

Now, more than ever it is time to commit to expanding our menu.  Let’s make it a point to understand and enjoy the perspectives and various cultures of all the different races and ethnic groups.

Allegorically, and literally, let’s eat more balaedas, falafel, babaghanoush, borscht, moussaka, and bouilli, among others.  The steak and potatoes will taste sooo much better.

Sorry to end on a note that violates the spirit of Dr. King but I can’t help myself.

Any white man (probably less so for a white woman) who thinks he knows what it is like to be an African-American growing up and living in America, has his head…well…you know where.


Bring on the hate mail.

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Comfortably Numb: Are We There Yet?

Markets certainly are.

Just a little pinprick
There’ll be no more aaaaaaaah!
But you may feel a little sick – Pink Floyd

Hard to say what the pinprick will be. 

My bet is higher inflation and higher interest rates.   

On the other hand, it could be a form of Structured Criticality.  Just one more grain of sand will be all it takes to trigger the avalanche.

Structured criticality is a property of complex systems in which small events may trigger larger events due to subtle interdependencies between elements. This often gives rise to a form of stratified chaos where the general behavior of the system can be modeled on one scale while smaller- and larger-scale behaviors remain unpredictable.

For example:

Consider a pile of sand. If you drop one grain of sand on top of this pile every second, the pile will continue to grow in the shape of a cone. The general shape, size, and growth of this cone is fairly easy to model as a function of the rate at which new sand grains are added, the size and shape of the grains, and the number of grains in the pile.

The pile retains its shape because occasionally a new grain of sand will trigger an avalanche which causes some number of grains to slide down the side of the cone into new positions.

These avalanches are chaotic. It is nearly impossible to predict if the next grain of sand will cause an avalanche, where that avalanche will occur on the pile, how many grains of sand will be involved in the event, and so on.  – Wikipedia


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Peak Euphoria & Bat Shit Crazy Markets


[t]here is no denying that there’s been a shift in market structure over the past few years. Whether it be in the proliferation of free trading platforms, the rise in market share of passive investment strategies, or the ease with which social media can fuel speculative manias further, it does feel like something is different. – FT Alphaville

Yikes, “it’s different this time.”  

Same words to rationalize another bubble,  different rodeo.



I will also tell you my definition of success for a bear market call. It is simply that sooner or later there will come a time when an investor is pleased to have been out of the market. That is to say, he will have saved money by being out, and also have reduced risk or volatility on the round trip. This definition of success absolutely does not include precise timing. (Predicting when a bubble breaks is not about valuation. All prior bubble markets have been extremely overvalued, as is this one. Overvaluation is a necessary but not sufficient condition for their bursting.) Calling the week, month, or quarter of the top is all but impossible. – Jeremy Grantham

In economics, things take longer to happen than you think they will, and then they happen faster than you thought they could. –  Rudiger Dornbusch


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My Two Most Enduring Memories of Tommy Lasorda

I have to share with you two of my favorite and most enduring  memories of Tommy Lasorda, who passed last week.  In earlier posts, I have written about my Walter Mitty life growing up in L.A. as a kid working for the Los Angeles Dodgers.

Tommy was the Dodger’s third-base coach and later manager when I worked for one of baseball’s most legendary teams.   He was loud, entertaining,  larger than life, and was a master and very good at his craft, which would eventually land him in Cooperstown, home of baseball’s Hall of Fame.

Tommy was always ready, able, and willing to put on a good show in The Show.

1) The Benedict Arnold Show

I had just left the Dodgers during mid-summer of my gap year.  Taking a gap year was not very common back then.  USC wasn’t exactly kicking down my door with a baseball scholarship nor were there any million-dollar bonuses being thrown at me to sign a professional baseball contract.

A big signing bonus for a top draft pick back then was around $100k, about $500k in 2020 dollars.   For some context,  one of my daughter’s classmates was the number three pick in the nation in the 2019 baseball draft and nailed down a $7.2 million signing bonus with the Chicago White Sox.   Inflation or change in relative price for baseball talent?  You decide.

So why not take a year off and hang with the Dodgers, catching Tommy John in the bullpen during his comeback year, throwing batting practice, and performing my other duties in the clubhouse?   It was being in Show without the pressure of playing in the Show.  Just a teenager living the life that most kids could only dream of.

The Demise Of MLB’s Reserve Clause

During the prior off-season, Andy Messersmith, the great Dodger pitcher who was like a big brother to me,  won his arbitration case challenging MLB’s reserve clause, which shattered the monopsony teams had over players.  Now free from what some called a form of slavery,  players were able to auction their services in the open market to the highest bidder.

It was the start of the big, big money multi-year contract for MLB players.

Ted Turner, the young swashbuckling and budding media mogul and new owner of the Atlanta Braves,  jumped on Messersmith and signed him to a multi-million, multi-year contract.  The Dodgers and Braves also made a blockbuster trade during that offseason that sent many of my close friends and adopted big brothers to Atlanta.

When Messersmith and the boys heard I had left the Dodgers they got on the phone and convinced me to come work with Braves for the rest of the season and to meet them in San Diego on their West Coast tour.

When we came up to Dodger Stadium for a three-game series, it felt strange suiting up in a Braves uniform.  My good friend and Dodger batboy — nicknamed Possum, and he still looks and drinks like one — met me as I came out of the visitor’s dugout.

We walked across the field together when out from the Dodger dugout shot Tommy Lasorda, running at full speed toward us.  I will never forget the sight of him waving his arms and shouting at the top of his lungs for all to hear,

Benedict Arnold, Benedict Arnold, you are a f__kig Benedict Arnold.  Get the ____  out of our house.”

It was hilarious.  All the players on both teams had a good laugh, including yours truly, as Tommy put on another Oscar-worthy performance.

I knew that was his schtick.  Tommy putting on his show in The Show.

2) Watching Tommy Dress Down An Arrogant Rookie 

A couple years earlier, the Dodgers had called up a young and promising left-hand hitting rookie during mid-season, who had some early success and became an instant favorite with Dodger fans.  I was working as the batboy one night while he was on deck when then Dodger manager, Walter Alston, called him back into the dugout for a pinch hitter.

Angry with Alston’s decision, the rookie made the mistake of showing up the Dodger skipper by throwing his bat and helmet down in the on-deck circle in front of 50k fans.  Alston rarely showed emotion and didn’t after the incident.

When the inning was over I ran up into the clubhouse to get something out of my locker and the rook was in there changing his clothes.  Just him and I, alone in the clubhouse.

All of a sudden, Tommy Lasorda storms in screaming at the kid,

You mother f__ker, don’t you ever show up your manager like that again.  Never, ever!  You ain’t shit.  You can’t hit yourself out of your underwear, much less major league hitting.  You sock sucker.  If you ever do that again I will rip your head off and crap down your throat.” 

‘Nuff said,  I think the rookie got the message and learned to respect his managers.

I never heard a dressing down like that again until my first job on Wall Street, working for the Human Piranha (HP) of Michael Lewis’ first book, Liar Pokers.

The Human Piranha was the best boss I ever worked for.  Even though I was shelled by some of his tirades it didn’t bother me, however,  I learned from Lasorda, it was just part of his schtick.   He, like Lasorda, practiced his craft well and taught me how to trade.

The Piranha even wrote a novel,  Wall and Mean. based on the bond trading desk I ran for him.

1988 World Series Champions

Tommy knew how to manage and cultivate young players into major league stars.  He managed the longest-running and one of the most famous infields of all-time,  Garvey, Lopes, Russell, and Cey, as young minor leaguers and throughout much of their major league careers.

I saw him that night beating a false arrogance out a young player, which have killed many a good ball player’s careers.  It wasn’t personal, he did it to make the rookie a better player.

Tommy could also instill confidence in players with, at best, mediocre talent, making them believe in themselves.  He would, for example, take a career .250 hitter and convince him he was the second coming of Babe Ruth.

Nowhere was it more evident than during the 1988 season, when Tommy led the Dodgers to the World Championship.

Sure that team had Kirk Gibson and Orel Hershisher but no way in hell they should have won the World Series.  A third-place team at best yet Lasorda convinced them they were better than the 1927 Yankees, and they played like it.

Rest in peace,  Tommy Lasorda.

I am honored to have known you.  Baseball and the world will miss you.

1:31 minutes In To View/Hear The Real Tommy (Warning: Strong Language) 

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QOTD: Algos Exploiting Tribalism

QOTD = Quote of the Day

I’ d like to think that this is the beginning of the end of Big Tech as we know it. I think this is another example that when you have algorithms that are profit-driven, and these algorithms are different, and figure out the tribalism, and dividing us, is very profitable. And it ends up in an overrun or a seizure of the U.S. Capitol. – Prof. Scott Galloway, NYU

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The Moment I Knew America Was In Trouble

We are reposting a piece from June 1st as we were very concerned about the stability of the American Street and where the country was headed.  We were worried about a future full of “peril,” and after the events of last Wednesday, some of which illustrated below,  the times are now pretty damn perilous.

The mob came to hang the Vice President.  

Originally Posted on

The Conversation:  When I Knew America Was In Deep Shit 

In early February,  I drove to San Diego to attend a trade show.  I stayed overnight in the beautiful beach town of San Clemente, the home of President Richard Nixon’s Western White House.

I awoke on Super Bowl Sunday and headed down to the ocean to grab some breakfast before driving down to San Diego to pick up my good friend and colleague at the airport and to prepare to watch my 49ers give an ass-kicking to the Chiefs.  Wrong!

Bear Coast Coffee

I had been pretty bearish on the market at the time and thought how appropriate it was to eat at the Bear Coast Coffee.  I do believe in omens, by the way.  This was about two weeks before the market peaked on February 19th [and experienced the sharpest and quickest drop in history, falling 35.4 percent over the next 24 trading days before a multi-trillion-dollar bailout].

I snapped this picture and even thought about posting it while I was eating breakfast.

San Clemente,  February 2, 2020


Clean & Pristine San Clemente

San Clemente wreaks of wealth (ranked 11th wealthiest city in the country), multi-million dollar ocean view homes, and I was very impressed by the clean and pristine character of the city.  I thought what a great summer vacation spot for my daughter and me.  Sat next to and had a great convo with a nice couple, who said their son commuted on the Amtrak to high school into Santa Ana.  Great morning.

San Clemente,  February 2, 2020



San Diego Convention Center

After nursing the wounds of the 49ers fourth-quarter collapse, we were about two days into the trade show when an elderly gentleman stopped in our booth and began to chat with my colleague.

Let’s call him Joe and my colleague Jim.  After exchanging niceties, the conversation went something like this.

Joe:   Can you believe what is happening to the world?  The homeless are overrunning the country.  Shitting in public.  You can’t even walk in San Francisco now without stepping in human feces!  Those god damn liberals can’t run anything.  The homeless have even overrun my town of San Clemente.  God damn it! 

Jim (from back east)No, haven’t really thought about or noticed it. 

[I found out later Joe’s net worth puts him in the Top 1 percent and couldn’t really confirm if he was a college graduate.  I almost jumped in and told Joe he was full of shit and had been sniffing too much Faux News.  I was primed for such a debate as I’ve had many similar Twitter debates with people making the same argument about San Francisco but have, you guessed it, never set foot in the town.  Their perception was all painted by hard alt-right pundits.

In fact, I was in San Francisco just the prior week and snapped the following picture to use in my Twitter debates.  If anyone can find a human turd in the photo, I will send you $1000.  The same goes for the pictures of San Clemente.  No photoshopping.

San Francisco,  January 2020


Of course, every city has a homeless problem and San Francisco’s is more acute than most.  But the problem is not as ubiquitous as Faux News portrays.

I also wanted to wrap Joe on the knuckles with the fact that the People’s Republic Of SF sports the most billionaires per capita by a factor 8x the second-highest, NYC, and the city has the highest rents in the nation, which might help explain, in part, its homeless problem.  See our post here.   I bit my tongue and kept quiet.]

The Bombshell

Then the convo turned very ugly.

Joe:  My wife told me the other day she wanted to buy a gun.  I said, “honey, why do you need a gun?  I have several and we have a very good and expensive alarm system for the house.  What’s up.”   She told me, “I don’t want a gun for protection,  I want one to shoot the liberals!”



I thought WTF is wrong with this guy?  I am almost certain he was 100 percent serious.  The dude is not a poor uneducated cracker from some “‘Podunk’ Town In The Middle Of Nowhere”  He’s a one-percenter and lives in the 11th wealthiest city in the nation.

How could this be?  Didn’t he realize he could just have been easily born a crack baby in Harlem if not for being born into the Lucky Sperm Club?

Whatever happened to the noblesse oblige practiced by the likes of the Kennedy clan and George H.W. Bush, the unwritten obligation of people of means to act honorably and generously to others of lesser means?

Right then and there, I realized the country was near a very ominous tipping point.

What Next?

If you think the instability in the American Street is going away anytime soon, think again. 

There may be an ebb and flow of calm and violence but unless the underlying issues discussed above are addressed and mitigated the country has crossed the Rubicon into failed state territory.

Trump can continue to talk tough and even send the M1 tanks into the streets but it won’t make a damn bit of difference but to make matters worse.

It’s time to get to work and begin to really address the issues at their very core, America.

All of us united, even if the goal is to save what’s left of our own personal and selfish interests.  The alternative is peril.

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Inflation Cometh And So Is A Big Market Correction

It was hilarious, no, sad actually, to see a piece last week by some market strategist mocking the “inflation truthers.”   Kind of like “election truthers?”

Of course, he surely knows the one thing that can knock the markets on their ass and keep them down is accelerating inflation.

Guess what, folks?  It’s here.

I just finished reading through at least 50 country PMIs (purchasing manager index) and almost all report accelerating inflation due to supply shocks and higher demand.  It’s not just a weak dollar thingy.

A positive second derivative of prices will tie the Fed’s hands in rescuing the market for the umpteenth time, and this dude, no doubt realizes, his year-end bonus would suffer.  Just sayin’.

Man, I dig Upton.

Call me a skeptic, because I am, and a contrarian, because I am. It’s my nature.  I guess my mother didn’t love me enough.

Nevertheless, I just try to read and interpret the data and decipher the signs of the time.

Yes, we do know Perma bulls are born with a .725 batting average and they think they are geniuses, as markets naturally go up.  Over the past 70 years, for example, the S&P has been in the red on annual basis for just 19 years.

It’s Why So Few Bears Own Park Avenue Apartments, or in the COVID era, so few islands off the coast of Nova Scotia.

A Clear Sign

The markets have once again become a social movement and everyone is now a genius.

I was lectured the other day by a friend, who said  I knew nothing because I didn’t understand that millennials are taking their stimulus checks and buying Bitcoin.  I tried to explain that was my point,  then asked if he knew what a price-earnings ratio was or what is the stock market captialization to GDP.

He dismissed me and said something to the effect,  “Nope, doesn’t matter, you’re an idiot.”  Credibility is all about timing, baby, but timing is impossible,

I will also tell you my definition of success for a bear market call. It is simply that sooner or later there will come a time when an investor is pleased to have been out of the market. That is to say, he will have saved money by being out, and also have reduced risk or volatility on the round trip. This definition of success absolutely does not include precise timing. (Predicting when a bubble breaks is not about valuation. All prior bubble markets have been extremely overvalued, as is this one. Overvaluation is a necessary but not sufficient condition for their bursting.) Calling the week, month, or quarter of the top is all but impossible. – Jeremy Grantham

I then tried to explain to him that markets don’t reflect a true fundamental reality because the government, via the Fed, has basically nationalized most of them through endless bailouts creating an alternative reality.  I conveyed that my investment philosophy is to buy low and sell high.

We then had a debate over Tesla, the stock that is minting money for him.  So he says.

He couldn’t distinguish between Tesla the car (we agreed the best in the world),  and Tesla the stock.

Carol K. has pounded into me there are always some stocks that will make you money even in a big bad bear so I mentioned to him I do like Taiwan Semiconductor, which trades around 55x earnings, and probably the most important company in the world, rather than Telsa that trades at 1,680x.

He called tonight and wants to buy  TSM.  Not all was lost.

Our sense is he is not the only one out there listening to the financial equivalent of QAnon shamans.

It. Is. Coming. Folks!

How Shall It Come?    

As you can see from the above global purchasing managers’ index, producers have to pay real money for real goods.  No hedonic quality-price adjustments to distort real price deltas. Moreover, it’s kind of difficult for the managers to substitute hamburger for semiconductors when prices rise due to supply shocks and excess demand.

One reason why the Fed prefers the PCE deflator over the CPI, by the way. Allows for mo’ substitution and lower stated official inflation.

The Nightmare Before Christmas Bear Market 

My best guess is that we are about to see a repeat of the 2018 Nightmare Before Christmas bear market, which I watched unfold from my hospital bed, by the way.   The 10-year yield spiked 45 bps after breaking through some strong resistance, which was, as usual, initially ignored by the market.  The market shamans argued higher interest rates are a good thing and a sign of a strong economy.  Until they aren’t.

Stocks began to buckle in early October 2018 and ended up falling almost exactly 20 percent, bottoming intraday on Boxing Day, the day after Christmas.  Then, only after Trump and Jim Cramer beat Jerome Powell over the head with an ugly stick for several weeks to ease up and bail out the market as Santa Claus bailed out of stocks. Gotta love the market socialists.

Rates Are Spiking

If you haven’t noticed, folks, the 10-year Note yield has more than doubled since August, up over 6o bps with valuations not exactly cheap, more than three standard deviations above their mean.

Wait, I thought the Fed was pegging the 10-year yield?  

U.S. Stock Market Valuation 

Another Policy Mistake

It also looks like another stimulus check is in the mail when the Dems take control of the White House and Senate on January 20th.   Any additional stimulus money should be specifically targeted to the leisure and hospitality sector, those people that have been hit hardest by COVID.

My sense is the Fed will begin to sweat razor blades as the economy shakes off this latest COVID surge.   There is way too much stimulus in the economy, which will soon begin to overheat — though some sectors will remain weak —  asset prices are out of control, and inflation is on the march higher.

You can’t print your way out of a supply shock without inflation, especially if there isn’t a credit contraction or problem in the banking sector.

Of course, a big downdraft in asset prices could tighten up financial conditions fairly rapidly, which is why we believe we are now in a binary economy, fluctuating between fears over inflation that sow the seeds of deflationary fears as asset markets sell-off.  The Fed to rescue,  inflation moves higher.

This wash, rinse, repeat cycle may soon be coming to an end, especially if the new administration doubles the capital gains tax on the plus $400k annual income crowd as they campaigned on.

Bid adieu to Goldilocks.

Poor Uncle Joe.  He has inherited one huge mess but thank God it’s Joe.

At least the Orange Man won’t have his Twitter account to pop off from the peanut gallery or… Leavenworth.

As always,  I reserve the right to be wrong.

Future Of GMM

On a personal note, we don’t know exactly the direction GMM is going to take.  I am very busy with my other job and dealing with many personal issues.  The website could look much different in a few months or fade into the sunset.

We are just waiting for Carol K.‘s health to get better.

After beating back a relapse of Ovarian Cancer with some intense chemo, she contracted pneumonia a few weeks ago and recently tested positive for COVID.   She is now fighting a three-front war with a compromised immune system and yet still manages to post on this site on occasion.  She is one tough lady.

Keep her in your thoughts and prayers.

She added so much to the Global Macro Monitor in 2020 with her excellent posts that made many of our readers a lot of money.

Carol and I have grown very close over the past year.  She is not only my best friend but my soulmate.   Godspeed, Carol K.!

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Straight Flush: The Taiwan Straight Beats The Straight Of Hormuz

As the stock market and the FOMO chasers remain unhinged from reality (3 standard deviations above mean valuations) about as much as the crowd we watched in horror invade the Capitol yesterday, it’s time to revert to a fundamental story that is consistent, logical, and will probably make you some money that you will be able to keep and bank over the medium-term. No, not Bitcoin.

It’s also an interesting story full of geopolitical intrigue.  We will keep it short and sweet with some pictures.

Short Straight Of Hormuz

The U.S. didn’t import any Saudi crude last week for the first time in 35 years, a reversal from just months ago when the Kingdom threatened to upend the American energy industry by unleashing a tsunami of exports into a market decimated by the pandemic. – Bloomberg, Supply Lines

Long Taiwan Straight

Taiwan will become geopolitically important in a way that the Middle East never was. Modern semiconductor manufacturing is at least as important to the economy as oil was in the 1970s. But in the case of oil, at least it was available all over the world albeit at higher prices than in the Middle East. Imagine a world where oil only came from one country, and how important that country would have been for the last hundred years. That is what the world would look like if Intel cannot find its footing and continue to manufacture chips at the leading-edge here in America. Taiwan could become by far the most geopolitically important country in the history of the world. –

Taiwan Semiconductor

Taiwan Semi with 54 percent of the semiconductor foundry market share?  Holy moly!

We know one smart person —  well the smartest person in Carol K. –  at GMM that owns a ton.  TSM may be the most important company in the world.

Don’t do it, Chairman Xi.

Would China Invade Taiwan for TSMC? – The Diplomat 

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Top Emerging Tech Trends In 2020

As we look to 2021 and the anticipated global economic recovery, we see continued interest in topics related to emerging business risks, digital transformation and cybersecurity. As a result, integrated risk management (IRM) topped our list in 2020.

We also continue to see increased interest in the wider adoption of digital technologies to support an employee base that is now physically separate due to stay-at-home mandates across the globe. Technologies such as smart spacesdigital risk management (DRM)secure access service edge (SASE) and zero trust network access (ZTNA) are emerging as critical needs in this new working environment. – Gartner


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