World Out Of Whack: 7 Investment Implications In A Post-Trump World

Market dislocations occur when financial markets, operating under stressful conditions, experience large widespread asset mispricing.

Welcome to this week’s edition of “World Out Of Whack” where every Wednesday we take time out of our day to laugh, poke fun at and present to you absurdity in global financial markets in all its glorious insanity.

While we enjoy a good laugh, the truth is that the first step to protecting ourselves from losses is to protect ourselves from ignorance. Think of the “World Out Of Whack” as your double thick armour plated side impact protection system in a financial world littered with drunk drivers.

Selfishly we also know that the biggest (and often the fastest) returns come from asymmetric market moves. But, in order to identify these moves we must first identify where they live.

Occasionally we find opportunities where we can buy (or sell) assets for mere cents on the dollar – because, after all, we are capitalists.

In this week’s edition of the WOW we’re post-mortem Trump 

So Americans elected the devil. We know this since the Mainstream Media tells us it’s so.

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The Past

Those who grew up in a time when radios were the size of your washing machine and TVs were square, black and white, had round little knobs, and were the size of Michael Jordan’s shoe box will remember also a time when newspaper journalists reported the news, rather than sucked their chubby little thumbs and made it up over lattes.

There was a little column in the newspapers dedicated to opinions. It was small, at the back, and largely inconsequential to the meat of the publication. It was also plainly evident for all to to see that the opinion piece was… well, just that – an opinion. Clearly stated so as not to be confused with fact, and usually provided by someone who feared enough of a blowback in the event of producing poor quality, ill thought garbage to present something reasonably intelligent. Oh, how we’ve progressed!

The Present

And this is really one of the reasons why during the election campaign with every day that passed Trump increased his odds of winning. He didn’t have to do much more than prod and poke the media who were to be found clambering over each other to ignore and then justify the unjustifiable. I’m not even an American and I find watching US news channels causes me to throw up a little in my mouth each time. But it’s not just the US media of course.

Now, post-Trump election and Brexit you’d think perhaps the media would be taking some time to reflect on their falling ratings and assess their ignorance of the demands from their own client base. You’d think so, wouldn’t you?

Perhaps they’d look at the political hookers they’ve been pushing on their readership like overzealous crack dealers and question whether this helps or hinders their credibility.

Seriously, during the Brexit campaign the establishment, which includes the mainstream media, threw everything and the kitchen sink at the citizens, screaming from the propaganda news channels that a vote to exiting the sclerotic fustercluck that is the EU would immediately sink Britain into the North Sea before the few remaining rescued citizens would be dragged from the now rising oceans (caused by the vote of course) only to find they’d caused world war III and an epidemic of the Zika virus.

Brits poured themselves a warm pint, took a swig, called their bluff and said, “by George, let’s have it then. Bring it on old boy”.

Fast forward a few months and across the Atlantic the MSM were at it again pushing the chosen demigods. Who? Serial rapists (Billy boy), goofy pedophiles (Weiner), and to top it all off their chosen candidate for emperor, portrayed as the love child between the virgin Mary and Mother Teresa. Given that this “Mary Teresa” is funded by war criminals and oligarchs (Saudis, Soros, etc.) you’d think they may have looked at this and said to themselves, “gee Johnny, don’t you think we’ve bitten off a bit more than usual on this one? It looks like it may be a hard sell.” You’d think so, wouldn’t you.

But this is what happens when you think the game’s already in the bag. You get sloppy and lazy, you miss important clues, you dismiss obvious red flags, and you do it because, “Jeezuz, it’s worked for years. Just follow the script, damnit. It can’t fail, it just can’t.”

You’d think that pushing a candidate who is “Democrat” (American for what in many countries of the world is referred to as “labour” and represents the “working man”) would mean finding a candidate that can actually looked remotely as if they give a hoot about the working man. You’d think so, wouldn’t you?

As a result you’d think that your candidate probably shouldn’t be caught dry humping Wall Street. Or the Saudis. Or you the media. You’d think so, wouldn’t you?

But you’d be wrong.

According to a Gallup poll taken 6 months ago only 20% of American trusted the news anymore.

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Which begs the question: Are fully 20% of Americans brain dead?

Still, let’s ask a question. Given this poll is 6 months old, is that figure higher or lower today after the Trump victory?

To assist in the question, I’ll remind you that the Huffington Post promised readers that Trump had a less than 5% chance of winning and the polls run by other mainstream media outlets all put Clinton ahead. All of them!

The Future

Trump’s campaign cry was “Make America Great Again”. But what people really heard was actually this:

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Americans never voted to “Make America great again” as much as they voted to DRAIN THE SWAMP. They were sick and tired of the goddamned bought-and-paid for media, the nepotism, the lifetime politicians, and the revolving door between congress and Wall Street. Like him or loathe him, Trump came with none of this baggage.

Trump, a billionaire (clearly hardly working class) spoke the language of the working man: infrastructure spending. I’ll come to this in a bit due to the investment implications. Rebuilding railroads, roads, and public services which are outdated and overcrowded speaks to people who actually use this stuff and people who will build and maintain it. And guess who uses public services? It sure ain’t Lady Gaga or the elites. It’s the working man.

After writing multiple articles suggesting Trump should be taken seriously and was indeed going to win, serious people sent me emails explaining that come election day, Americans would shuffle into their private booths and they’d vote for stability, and Hillary represented stability. I heard the same arguments about brexit.

These folk, many of them friends are smart and sharp as heck but were missing the qualitative from the quantitative.

What Now?

There’s 7 things that you should have on your radar if you plan to make some money instead of pontificating on what “should” or “shouldn’t” happen. Most people “should” all over themselves. It’s counterproductive. Don’t do it.

I’m fully aware that the US is due a recession but….

  1. If Trump can pull off the corporate tax cuts (35% down to 15%) this makes the US competitive with places such as Singapore and Hong Kong. Capital will flow back into the US. Dollar goes up and so do equities (not all, though).
  2. Protectionism will drive inflation. Dollar goes up.
  3. Infrastructure spending ($1 trillion) is inflationary, positive for equities, and scary (very scary) for credit markets.
  4. Futures markets are pricing a December Fed hike at over 90%. If so, dollar goes up.
  5. Nothing Trump does is going to alter the massive global forces of debt overhang. And guess what currency this debt is priced in…
  6. The Zeitgeist is changing. Fast. Italy on the 4th December. Lega Nord here we come.
  7. Speaking of the 4th of December: Just like their scooter-driving neighbours to the South, it’s the day Austria vote in “The Freedom party”. You heard it here. All of this is EU negative and since it’s EU negative it’s euro negative, ergo dollar positive. It’s the law of negatives. Two negatives make a positive. In all seriousness, you want to know what’s in store for Europe? Go read this.

And so we get to the big question of the day for this week’s World out of Whack:

If you’d like to have voted #4 and you indeed intend this to be so, then don’t be the one who knew it would happen but failed to profit from it.

 

There is a saying, “If we took all the money in the world and divided it equally, the same people would become rich over the next 100 year cycle.” 

 

The difference between the winners and losers lies in those who actually do something. There are probably more broke intellectuals who know it all but never do anything about it. This is asinine at best. You may as well grab your corn chips, tune in to the latest reality TV show, and just be ignorant and stupid if you’re not going to make your life better with your knowledge. If, like us, you are more concerned with profiting from, rather than simply pontificating about it, then join us here.

Investing and protecting our capital in a world which is enjoying the most severe distortions of any period in mans recorded history means that a different approach is required. And traditional portfolio management fails miserably to accomplish this.

And so our goal here is simple: protecting the majority of our wealth from the inevitable consequences of absurdity, while finding the most asymmetric investment opportunities for our capital. Ironically, such opportunities are a result of the actions which have landed the world in such trouble to begin with.

– Chris

“The American people are tired of liars and people who pretend to be something they’re not.” — Hillary Clinton speaking the truth

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