Nobody told us there’d be days like these……
Nobody told us there’d be days like these……
…….Actually they did.
I think that we all kind of half-expected that the end of Trump would have ugly twists & turns.
It may or may not hasten the end of Trumpism but there’s no indication that it will do anything to mitigate the causes of ‘Trumpism’.
Chuck Hagel is partly right that the overnight events were caused by the last 4 years* but it’s dangerous to lay all this at the door of one emotionally undeveloped narcissistic demagogue.
I’m no Trump apologist – far from it – but Trumpism is just the highly stimulated acceleration, the blow-off top,
if you like, in the failure of America’s political classes that pre-dates Trump, certainly as far back as Trump’s mentor, Reagan and ultimately I’d say to Madison, Jefferson, Franklin et al in the 1770s and 1780s.
Therefore forgive me if I’m unimpressed by Trump staffers talking of resigning or by comments like these:
“Our elected leaders have a responsibility to call for an end to the violence, accept the results and, as our democracy has for hundreds of years, support the peaceful transition of power.” – Jamie Dimon
“The peaceful transfer of power is the foundation of our democracy. We are who we are as a nation because of our democratic institutions and process.” – Larry Fink
Strange days indeed……😩
“We must embark on the peaceful transition of power to President-elect Biden, a hallmark of our republic” – Charles Sharf
“violence at the U.S. Capitol does not reflect who we are as a nation.” – Mary Barra
“The chaos unfolding in the nation’s capital is the result of unlawful efforts to overturn the legitimate results of a democratic election. The country deserves better.” – The Business Roundtable
“The violence and destruction taking place at the US Capitol Must Stop and it Must Stop Now.” – Mike Pence
While it’s hard to take issue with any of these sentiments and in the cauldron last night, they were probably the right things to say they belie a denial about the structural problems facing America that makes me question whether there is sufficient willingness or awareness to tackle the deep-seated solutions can be achieved. We always distrust what sounds to us like virtue-signalling.
In terms of markets, they seem to be simply taking the view that the Democrat wins in Georgia open the way to more stimulus (which to a greater or lesser extent we hold to be, er, self-evident).
Most peculiar, mama……
They also seem to be taking the view that this is
- Good for stocks
- Bad for treasuries
- Bad for the Dollar
The former may be true in the short term but unless this is supported by measures that support the economy then it is boosting asset prices with foundations that are based on sand and will ultimately collapse unless something is done to fix the economy in a way that feeds back to corporate earnings, especially if these are discounted by a higher interest rate.
From the above statement, we can see that the rationale for higher interest rates is extremely dubious and depends on higher levels of economic activity.
The rationale for a weaker Dollar seems to be a mistake that Wall St has repeated over & over again since at least 2008. Stimulus, at least in the US, doesn’t seem to automatically weaken the US Dollar.
Nobody told us there’d be days like these……
In yesterday’s chaos, at least Wall Street behaved predictably.
Stocks rallied, bond yields rose relatively sharply and USD strengthened and then weakened, as the world witnessed the violent scenes in DC and other US cities. To us, this simply highlights many of the views that we held before these scenes:
🔰US tech stocks now face huge challenges from regulatory risk to unrealistic real earnings expectations to excessive valuations – we’re not in the business of calling peaks so we’d be looking for the exit doors right now (Chinese tech stocks on the other hand face strong short term headwinds but potentially a brighter long term future)
🔰US stocks that represent better value, such as dividend paying low volatility stocks, look a better risk-adjusted relative medium term proposition
🔰Treasuries can get weaker. We always expected that they could through the first part of 2021. This looks to be a buying opportunity.
🔰The US Dollar may have some way further to fall but we’d expect to see a bottom form in the coming months and for the medium term, the Greenback looks like the least bad currency.
💢And Bitcoin? 2021 could be the year where bubbles like Bitcoin & Tesla continue to expand further.
But we all know what happens to bubbles when they expand too far.
