Economy Flagging

[Kishkumen]

Looks like big job losses in September after a couple months of anemic job growth. What was Trump good for again?

[Gadianton]

To steel-man the administration's economy to this point, I'd argue like this. The economy was hot. The traditional view is to raise interest rates to slow growth. Growth is slowed to limit inflation. Both sides want some inflation because it makes the rich richer, but do it slow, otherwise it's like boiling a frog too fast, where the frog represents voters. This administration wants interest rates very low for two reasons: 1) lowering rates generally correlate with stock and crypto booms BEFORE the economy goes off the cliff and the massive correction comes. The idea is for our president and his fellow grifters to sell the top and leave the little guy holding the bag. 2) a bunch of tricky ploys to refinance government debt to lower the deficit. gg. If it doesn't work and Trump takes full power they will revalue gold, which will make holding physical gold illegal. (gg Ajax)

From the 20,000 foot view, what's happening now resembles an experiment in Modern Monetary Theory. The tariffs are chaotic unlike adjusting interest rates, they help some and wipe out others, but to this point, I think you can say in aggregate, the tariffs have acted like a tax increase, which according to MMT, is the way you're supposed to bleed off a hot economy. A tariff is a tax. I don't think MMT ever considered using tariffs and labor imprisonment to cool the economy but I have no reason to think that MMT prohibits this route. I think the unibrows that make up the administration led by Scott Bessant whose fund is down 90%, have realized that you can't escape physical reality. As they've f'd the economy with tariffs, it's now apparent to them that lower interest rates naturally follow. To this point, we've merely gotten from point A to point B by a different path. But they do realize now that the more tariffs the levy, the faster we get interest rates to zero. It's very similar to MMT as if they could get rid of Powell they'd thrust rates near zero; MMT would also go to zero.

As I've told Whiskey, don't let your personal politics influence your investments. Going in hard on the TACO trade is the best thing I ever did, hard as it was given how Trump was personally wiping out the market. Definitely factor in the psychology of others, such as TACO.

Well, unless you're really sure, I wouldn't advise pulling everything on fears of economic collapse. Yes, I think tariffs at the levels tweeted would wipe us out, but, what is tweeted vs. what gets paid, and then if things crash, prepare for TACO to reverse course. The unnerving part is that a vehicle this big doesn't turn on a dime. There will be a big lag between tariffs and the crash or alternatively, if they try to reverse to avoid the crash, there's a big lag between the reversal and the stimulus. And company fears as to how to allocate resources during an administration of mayhem and stupidity is the biggest factor. But 2026 could go to Democrats, or a TACO with extra sour cream could be in our future. I think people exiting the market and waiting are taking as much risk as those riding it out.

[Kishkumen]

And all the lost agricultural exports? The lost tourism? I respect your steel man contribution, but there is a lot you are not accounting for.

[Gadianton]

And all the lost agricultural exports? The lost tourism? I respect your steel man contribution, but there is a lot you are not accounting for.

Did I not say certain sectors could be wiped out?

The tariffs are chaotic unlike adjusting interest rates, they help some and wipe out others

[Kishkumen]

And all the lost agricultural exports? The lost tourism? I respect your steel man contribution, but there is a lot you are not accounting for.

Did I not say certain sectors could be wiped out?

The tariffs are chaotic unlike adjusting interest rates, they help some and wipe out others

But overall economy fine? Not buying it.

[Gadianton]

Where did I say overall economy is fine?

[canpakes]

And all the lost agricultural exports? The lost tourism? I respect your steel man contribution, but there is a lot you are not accounting for.

That’s what MAGA Socialism is for, right?

Also, if large numbers of smaller farmers are forced into bankruptcy, the large agricultural entities - who are in on the grift with Trump - will be able to scoop up those assets, and with more favorable interest rates on their borrowed funds. Recessions are good for Trump’s people.

If you’re in Trump’s club, you’ll be making bank if his Administration’s antics succeed. Everyone else will just need to figure out how to navigate their ever-increasingly tenuous financial reality. What MAGA doesn’t seem to get, though, is that 98% of those Trump voters are not in the club, never will be, and are going to end up worse off down the road, even as they continue to try to convince themselves that those dramatic increases in food, fuel and healthcare costs are all ‘Biden’s fault’.

Both my children and Ceeboo’s grandkids are in for challenging times, brought about by an Administration completely run by and infested with grifters who don’t give a second thought about the plight of regular Americans, and who will run roughshod over everyone and everything in quest for their cut.

It’s the evil trans progressive homeless immigrant Marxists who are causing MAGA’s woes. And Joe Biden, and Obama, somehow. Right?

[Gunnar]

And all the lost agricultural exports? The lost tourism? I respect your steel man contribution, but there is a lot you are not accounting for.

That’s what MAGA Socialism is for, right?

Also, if large numbers of smaller farmers are forced into bankruptcy, the large agricultural entities - who are in on the grift with Trump - will be able to scoop up those assets, and with more favorable interest rates on their borrowed funds. Recessions are good for Trump’s people.

If you’re in Trump’s club, you’ll be making bank if his Administration’s antics succeed. Everyone else will just need to figure out how to navigate their ever-increasingly tenuous financial reality. What MAGA doesn’t seem to get, though, is that 98% of those Trump voters are not in the club, never will be, and are going to end up worse off down the road, even as they continue to try to convince themselves that those dramatic increases in food, fuel and healthcare costs are all ‘Biden’s fault’.

Both my children and Ceeboo’s grandkids are in for challenging times, brought about by an Administration completely run by and infested with grifters who don’t give a second thought about the plight of regular Americans, and who will run roughshod over everyone and everything in quest for their cut.

It’s the evil trans progressive homeless immigrant Marxists who are causing MAGA’s woes. And Joe Biden, and Obama, somehow. Right?

This reminds me of an interesting quote I recently saw:

A billionaire, a U.S. citizen and an immigrant walk into a room where there is a table with 100 cakes on it. The billionaire takes 99 cakes for himself and then tells the U.S. citizen, "that immigrant is trying to take your cake!"

[Kishkumen]

Where did I say overall economy is fine?

That was a question, not an attribution. Let me rephrase:

But would you say that the overall economy is fine? Because I'm not buying it.

[Gadianton]

No, I'm saying it's vastly uncertain what the extent of the damage will be and how easily it will be to recover in aggregate. Small caps are in a bizarre position. Since the post stimulus selloff, small caps have been wrecked. Take a stock that in my mind should have settled at around 15$ if not 20$ that ultimately plummeted to .80 cents even as the stock market has been soaring. Now say that stock has ramped up to 1.80$ in recent months. With liquidity injections, some of these could absolutely soar, as larger caps are already stretched, and these companies could start going on the mend even as the Trump-cession hits.

As rates go to near zero, that stock could climb back up to 15$, but as the liquidity dries up and serious recession numbers come in, the market will "crash". However, that 15$ guy that had been outrageously undervalued for reasons hard to understand might bottom out at 3.50$. Part of that story could be the AI bubble bursting and money flows in to other ventures. But that's an example of how some sectors may wind up doing better.

If democrats win the house and senate perhaps they can do something about the tariffs, I don't know. If so, a big recovery could be on the way, but markets could be hellish for a while. The biggest risk is long term investment uncertainty in the US because companies don't know how to play it. If there's indication that the Republican Party is going to behave the way they have been under their Lord and Savior, tariff uncertainty could be a sticky persistent problem. That will be a slow stranglehold on the economy.