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Hail Mary
First, the sell-side and buy-side insisted "Trump 2.0" would be bullish for US equities, as evidence
I sold into the post election rally, and then sold most of what I had left in mid-February. There’s such a wide dispersal of outcomes possible, and I just want to take the worst ones financially off the table. What I have left are a few positions I have large gains in in taxable accounts.
I understand I could miss out on a lot of gains, and in no way feel that I know I’m making the right decision from the standpoint of returns down the road, but just feel I’m acting out of the same sensibility H expressed in Killing the Golden Goose earlier today: I don’t want to be richer, I just want to keep up with inflation, or at keep up close to inflation, and 4% +(as I formerly said) “risk free” is enough to do that right now.
Sadly, the wide dispersal of outcomes now includes seriously undermining the dollar’s reserve currency par excellence status, and I’m at my wits end what to do about that. I can’t believe I’m saying this, but I’m beginning to regret not buying gold post election.
I can certainly understand that. I mean, does it actually feel like a bottom has been reached or stability restored? Do we even have a read on how tariffs and government job cuts are going to hit spending and corporate bottom-lines yet? (We don’t even know precisely what tariffs will begin on April 2nd, or exactly how many government jobs have been permanently cut or lost.) Every day brings more threats, more judge’s rulings, and more reversals. As of closing today, the market is essentially where it was a month prior to the election. You could have done a lot worse than 4% cash during that span.
A brief look at the Marketwatch and other splash pages show a parade of calls for an oversold rally from here.
Perhaps on a seasonal basis and, as our Dear Leader hinted at recently, there may be mechanical model-driven flows from bonds into equities during the last week of the quarter.
My question to Michael Hartnett would be, “Given these huge flows you are pointing at, why isn’t the market higher? Who are the sellers??”
Right? All this dip buying and SP500 can’t break through overhead 200D. We start buyback blackout soon.
If you wanted to attack the US, or at least go at it hit and run, what information would you like to have? For starters how about US military strategy, information on all defense contracts, satellite communication systems, higher education research contracts, US treasury payments, details of the electrical grid and every piece of information possible about every US citizen for starters. I hope the stable geniuses running the show have around the clock security on one Elon Musk. He would be quite the catch or blackmail target. Is anyone surveilling all his communications or does that conflict with getting in 18 holes.
Or how about Musk’s blackhat minions. Anyone keeping an eye on them.
Ah yes, creeping closer to the almighty Smoot-Hawley tariff line. The pinnacle of American exceptionalism and global prosperity. Isn’t it great?
You’ve (H) reiterated this point many times, but this tariff uncertainty is like a funhouse mirror without the fun. Much like this nation’s budget deficit and debt financing being likened to our household budgets, trade deficits have long been distorted as signs of weakness (and now rank exploitation of our “very stupid” largesse). And now we’ve just started another round of trade deficit distortion with the cornerstone that IMPORT tariffs are NOT paid by IMPORTERS, but by EXPORTERS.
If we are to believe what we’re told, and I’m not sure why anyone is doing that anymore, import tariffs will solve our budget and debt woes AND re-industrialize this nation back to the oil refiners and copper miners from whence it came. What is it about free money and great riches and good jobs that everyone’s so worried about?
But if we can’t or are unwilling to agree on who pays import tariffs (or what they do to trade flows and sentiment), then it’s pretty much guaranteed that no one’s going to wade into the details of our trade with our North American neighbors, so I will keep it simple. Canada and Mexico are, by far, our two biggest export markets (~ 1/3rd of total) — China is a distant third. The three are roughly equal in terms of their imports into the US, and all three “enjoy” a trade surplus with the US, although Canada’s is comparatively minor.
But if you look at US-CN-MX trade flows on a per capita basis, the prevailing narrative gets even more wobbly. Both Canada and Mexico buy much more from us on a per capita basis than we buy from them, even though they are both poorer than we are on a per capita basis (Mexico considerably so). Does a fewer number of poorer people buying more from a greater number of richer people sound like rank exploitation of the latter to you? I know that’s an overly-simplified construction, but I don’t think people are aware how “good” we have it, nor how when it comes to co-manufacturing, Canada and Mexico are by far the best partners we have or will ever have.
I don’t have a reference/link handy, but if anyone is interested in just how a little trade uncertainty goes a long way, trace the life of the manufacture of an ordinary pair of jeans that, from the get-go, start off with US-advantaged cotton which seems wrong-footed from the jump, and just gets nuttier from there.
You have been too kind to A.I. It is something you rent, you don’t own. My vision sees it as ‘moat-less’ which implies to me that there will be thousands of regenetive A.I. systems – at like, a dime a dozen. One for every smart team from every podunk group. Hell., my small hedge fund developed several. A.I. structures and made tons from them – sold one, lost two – but our A.I. did not have the precision of Blockchain – no need. For many things a few seconds mean nothing and saves 99% of the capital needed. Seriously there is nothing really fancy there. This business is the future for sure, but no one is going to dominate this IP – and the equity market will be severely disappointed – probably beginning about now – April Fools Day.
Way, way back in November, Will Lockett wrote a piece which supports what you are saying. He then asked:
“So, why does this matter? Well, big tech has poured billions of dollars into AI on the promise that it will get exponentially better and be wildly profitable in the future. Sadly though, we now know that simply won’t happen.”
Each new iteration uses more and more power for diminishing improvement. Coders will quarrel with this as will Wall Street since AI has been about the only bullish theme with any staying power over the past two years or so.
When I read Lockett’s article there was an interesting back-and-forth among some coders. A number of them brought up the idea that coders are relying more and more on AI tools to help them write code rather than seeking answers on forums such as stack overflow. Their concern was that it meant that there was less and less useful data upon which LLMs “educate” themselves. (A form of killing the golden goose?) Some retorted that the models would, instead, learn from themselves.
I cannot add much color since when I learned Basic, Pascal and then Fortran, I had to rely on books and exasperated colleagues. Along with hours of frustrating trial and error.