Contrary to widespread belief...
All-In
"Contrary to a widespread belief, no rule of written law prevents Presidents from firing the Chair of the Federal Reserve (“Fed Chair”), the nation’s independent central bank."
If you missed Jerome Powell's press conference, here are the highlights:
Former New York Fed senior trader Joseph Wang:
And do we really need these polls?
I suppose I should comment a bit on the election.
I was a little surprised by the breadth of Trump’s win, but clearly the message from the legacy media, and the message from the middle-class that I came from, were two very different messages.
Most - but not all - of my friends were Trump supporters, but I understand the concerns of all sides. I knew that most Americans weren’t buying the constant and condescending, “everything is great, what’s your problem?” MSM propaganda, so a Trump win was not a shocker.
I was very skeptical of polling, as usual. Did you see the “prominent pollster” who a couple days before the election said that her new poll had Harris winning Iowa by 4 points? Trump won Iowa by over 13 points.
Since the election, most mainstream pundits - especially the I.Y.I.1 academics who give them intellectual cover - remain shocked - shocked! - that Harris didn’t win, and think that Trump won because of racist Hispanics, misogynist black guys, and white supremacists. Zero introspection, again. Good luck with that strategy.
And most people are really sick of this crap:
Anyway, I love America and want us all to do well. For starters, we need to stop bombing people in countries most Americans could not identify on a map, and we need to stop making Larry Fink’s net worth our #1 priority.
“This disposition to admire—and almost to worship—the rich and the powerful, and to despise or at least neglect persons of poor and mean condition, is (on one hand) necessary to establish and maintain the distinction of ranks and the order of society, and (on the other) the great and most universal cause of the corruption of our moral sentiments. Moralists all down the centuries have complained that wealth and greatness are often given the respect and admiration that only wisdom and virtue should receive, and that poverty and weakness are quite wrongly treated with the contempt that should be reserved for vice and folly.”
As an aside, there remains no general MSM recognition that people hate inflation (Claudia Sahm reminded me of this this week,) though even Jay Powell now understands that (after his outfit intentionally goosed it). Whether he cares or not remains to be seen.
Three non-Republican left-of-center accounts I’d recommend - that I think have done an excellent job of analyzing the election - are Matt Stoller, David Sirota and Mark Ames. Matt and Mark have followed me for a long time, David just started. Not sure how long he’ll stay.
As for Trump, to his credit he started off by saying Mike Pompeo and Nikki Haley will not be in his Administration, which is encouraging. However, we need to watch out for all the little Mike Pompeo neo-con clones out there (e.g., Brian Hook) who will no doubt be angling for a piece of the pie. Many new Trump voters were RFK Jr. and Tulsi Gabbard and Ron Paul voters, so if Trump alienates them, that’s a huge warning sign.
As before, I will praise Trump on the things I like, and criticize him on the things I don’t. Remember - he wanted negative rates and MORE QE last time around (and also said there was “no inflation.”)
Don’t expect monetary policy to suddenly become sane.
Some of the old-timers here may remember a thread I did in October 2017, explaining my take on the 2016 election. If you’ve never read it, it might help you understand why I’m the way I am.
And, as always, this remains true:
Not a huge post today, but I’m sure I’ll get back to that soon enough.
Thanks again to the new subscribers - after a lull, things have been picking up nicely this past month.
"US households held 48% of their financial assets in equities, as of October 15 — a record that equals the previous peak, set around the turn of the century."
Nice podcast with good friend of the show and Bitcoin and gold advocate Lawrence Lepard
Stan Druckenmiller A general investment philosophy discussion. “When you have conviction, you should bet really big.”
Great anecdote here about his experience in 2000:
David Dredge Part 2 of his interview which I quoted from extensively in this post.
Here Dredge talks about the danger of extrapolating based on past results:
Jack Farley: So, adjusting for inflation, this economy in real terms looks pretty good - do you agree?
[Very long pause]
Jeff Snider: No, I don't. Sorry Jack.
“Pretty much the only person currently in a financial speaking role today who’s ever been on a rising rate side of this curve is Warren Buffett. No one else is old enough. By the way, he’s got a third of Berkshire in cash right now. Over $300 billion out of a $900 billion market cap in cash. He doesn’t think that he ought to be anywhere else. That says something. That’s a really strong statement - he’s one of the few people alive who has seen this cycle go the other direction. I think paying attention to him would probably be a good idea.”
“Berkshire Hathaway is now holding over 28% of their Assets in Cash, the highest % since 2004. Historical average cash position: 14%.”
America’s Empty Apartments Are Finally Starting to Fill Up “The vacancy rate, or the share of apartment units that are empty, stopped rising for the first time in three years last quarter, as demand for apartments rose to its highest levels since 2021…The more than 1.2 million new apartment units that were built during the past two years are filling up. If that demand is sustained, if the economy remains strong and if housing prices remain near record highs, landlords likely will have more pricing power starting sometime next year. That could allow building owners to raise rents more than they have recently.”
Four Senators Question KKR About June Multifamily Acquisition “KKR has acquired 18 new multifamily assets from a closed-ended fund sponsored by Quarterra Multifamily for $2.1 billion. Now four Democratic senators are asking difficult questions about company plans for the properties. The recently built, Class A portfolio comprises more than 5,200 units located primarily in coastal and sunbelt markets…According to multiple industry analyses like that of Apartment List in October 2024, median rent has plunged by 0.7% year-over-year, or about $10 for October, hitting $1,394. "This would not be the first time that a private equity firm like KKR has used a housing crisis to rake in profits by driving up rent costs and squeezing American families"“
Typical US Homebuyer More Likely to Be Older, Single and a Woman What a depressing headline. Young families are largely priced out.
“The share of first-time home buyers shrunk to 24%, the lowest in data going back to 1981…In just two years, the median income of a first-time buyer has increased by $26,000 to $97,000.”
Depressing:
“An increasing share of homeowners are either childless or empty nesters, with 73% of all buyers having no child under 18 at home this year, up from 70% last year.”
Here’s real estate investor Ken McElroy - who I posted about back in March - talking about "Wall Street Investors” in single-family housing (TL;DR: it’s not good.)
Is Germany’s business model broken?
“Over the past three years, Europe’s largest economy has slowly but steadily sunk into crisis. The country has seen no meaningful quarterly real GDP growth since late 2021, and annual GDP is poised to shrink for the second year in a row. Industrial production, excluding construction, peaked in 2017 and is down 16 per cent since then. According to the latest available data, corporate investment declined in 12 of the past 20 quarters and is now at a level last seen during the early shock of the pandemic. Foreign direct investment is also down sharply.
Light on the horizon is hard to detect. In its latest forecast, the IMF says that German GDP will expand by just 0.8 per cent next year. Of the world’s largest and richest economies, only Italy is expected to grow as slowly….
“For 15 years, the German economy was like a ship sailing with a strong tailwind,” says Clemens Fuest, president of the Munich-based economic think-tank Ifo, pointing to strong employment growth, budgetary surpluses and fat industry profits enabled by labour market reforms, low interest rates, cheap Russian gas and buoyant world trade. “Now it is facing a very stiff headwind.””
German stock market doesn’t care!
Bernie Sanders on Open Borders, 2015
"Open borders? No, that's a Koch brothers proposal...What right-wing people in this country would love is an open border policy. Bring in all kinds of people, work for $2 or $3 an hour, that would be great for them. I don't believe in that."
Erik Townsend: “I mean, you've actually worked in the White House as an advisor to the US president, is it really possible that there could be powers or forces within the US intelligence community that are capable of assassinating a US President who won't support their war agenda? Is that what happened to JFK? And is it possible in this day and age that that could happen to President Trump, and they could get away with it?”
Pippa Malmgren: “Well, this is the question that's on the table…”
“…there had been no hyperinflation during the war and no threat of coming depression either. The various governmental authorities had paid farmers and civil servants in money whose value was unquestioned and had done so on time. The use of the printing press went unquestioned, as did government expenditures. None of this was true in late 1922.”
A random passage I came across in The Great Disorder
“The CERN Hadron Collider is doing an experiment, and they're trying to open a dimensional gate and send a message through, which I kind of think is a bad idea, because anybody that's been in the military will tell you never draw fire on your own position.”
https://medium.com/incerto/the-intellectual-yet-idiot-13211e2d0577
that Bernie Sanders clip is fantastic. I'm not sure if he was completely gaslighting or his views have done a 180 since then
Interesting that no analysts have blamed the USA for blowing up the Nordstream pipeline and throwing Germany and the UK into a recession by increasing their energy costs 10X?