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Consensus Gone Wrong?
Does the nascent "buy Europe" theme have any staying power?
It depends. On whether the place is inv
My money is on the US economy, which underwrites the stock market. More specifically, I am betting on the top 10% of US earners (households earning over $250k/yr.), that are responsible for 49.7% of all spending – a record since 1989.
Basically, keeping the “rich” rich enough to keep spending should keep US equities propped up. (See WSJ article published yesterday in the online edition).
US high earner consumption has a high corelation to risk assets, that means, stocks, bonds, real estate and small business. It can evaporate quickly if confidence pulls back and credit tightens. It’s a bet. Maybe it works maybe it does not. It’s a gamble I would not want to take for the country as a whole if I were making policy.
I’d be curious to see the spending splits based on partisanship. We see individual perspectives, especially on the economy, colored more and more by politics. My guess (based on education levels and geography e.g. blue cities) is more of the spending in that top 10% is weighted toward people who voted for Harris with the exception of business owners who may separately be feeling the pinch of policy uncertainty. Not that I’m placing any particular bets myself, but to me, the case for international equities might be more about protecting against downside risk.
One thing we know about Trump is he brings chaos that increases risk. Businesses don’t like uncertainty and my gut says the US consumer doesn’t like it either which means spending will slow on most fronts. Add into the mix a global leader who has bankrupted most everything he touches. His first term in office his whims were dampened in most cases, but with Project 2025, the richest man and a cadre of extremists he’s free to impose his insanity on the world. Where will we be when the global order is completely flipped, all attempts to slow climate change have stopped, millions are unemployed, millions more deported, and millions want to emigrate while the person driving the big beautiful bus is focused on retribution and selling everything that’s not nailed down. If the US comes out of this storm with a roof over our heads, we will need a system that keeps us from making 180’s every 2 to 4 years. The global system will implode if we don’t.