US TRUMP PUNCH BOWL ECONOMY DYING BORROW SPEND KEEP UP APPEARANCES
The US Economy is authentic as the gold plating on Trump’s plastic bathroom fixtures. Some large notable investors are moving to cash. Hedge Fund Operative Ray Dalio hedge fund operative, on the other hand, says you will not feel good about yourself if you have cash on the sidelines because markets will soar. Why is the stock market up 31% when the GDP is at 3% up roughly 0.3%? It is a title wave of Bullcrap!
Fake it till you make it!
This is an old salesman slogan in America. There is a great old Movie called “No Downpayment” featuring an all-star cast Joanne Woodward, Sheree North, Jeffrey Hunter, Cameron Mitchell, and Pat Hingle.and introducing newcomer Tony Randall, in a tour de force dramatic role as Jerry Flagg, used car salesman. Randall was superb in fact I will post a link to the youtube movie.
Randall is so great in this role that he stands out in this enormously talented cast. He never went on to do another dramatic film. That is why this is such a cinematic jewel.
Jerry Flagg was living over his head. He was a fake it till you make it guy. This is Americana. The Trump persona is that of a flimflam salesman or grifter in a medicine show. He’s just talk but he is sure spending money.
Trump has borrowed more and spent more Taxpayer dollars than any president in history including Obama.
Today without any budget, Trump has plunked down 4.6 Trillion in spending if you include the Omnibus bill. As a result of the massive flood of borrowed government money, Wall Street is adrift with speculation.
The famous call by David Tepper Billionaire hedge fund operative to buy the market out of recession was spot on. How did he come up with this? Very simply Government Spending!
The USA is a Punch Bowl Economy:
Only 16% of the US Economy is manufacturing, and 84% is service and consumerism. The retired guy on Social Security hires a guy to mow his grass. Follow the money. It is all borrowed. The retired guy gets his government check and pays the guy mowing his grass who pays into Social Security and taxes if he’s honest.
All the loose float of cash is borrowed money. Politically it really doesn’t matter who is in the White House. If the floodgates of spending opened under Obama or Bush, the punch bowl got filled and everyone celebrated. Then one day the borrowed money becomes due.
With Government, they merely borrow more and let the debt rise. But who really gets all that borrowed money. We know who gets the debt… you do.
The 1.5 Trillion borrowed to fund the RINOTAX cuts for corporations is different.
The Fake it till you make it Trump stuff is to claim International Companies are streaming into the USA to set up manufacturing. This is pure fiction. Not a single company has moved to the USA to set up manufacturing. Most of the tax windfall will go overseas.
GE, for example, won’t be building any Nuclear Power plants in the USA. But they may find business in India or Asia. That windfall reduced tax money will be leaving the USA. In the future foreign income will not be taxed. Those who cheered this RINOTAX didn’t understand any of it.
A Scary thought:
The three richest people in the US: Bill Gates, Jeff Bezos, and Warren Buffett own as much wealth as the bottom half of the US population or 160 million people. The RINOTAX enriched these three billionaires at the expense of the 160 million. This isn’t some kind of liberal bellyaching. We are conservative. This is not capitalism either. This is crony consolidation of political power. Interestingly enough these guys are liberals.
Now watch this!
When Buffett dies his estate will go to Gates Foundation. When Gates dies his estate will go to Gates Foundation. All that money will leave and go to Africa. None will be spent in the USA from where it was taken.
Do you really think that Bezos, Gates, and Buffett are that much smarter than the 160,000,000 people in the USA that counterbalance their wealth?
This is not Capitalism, this is Cronyism:
It all works in concert with government. Example: the rich speculate and cause the subprime to burst. You own a house and are suddenly underwater by 50%. The economy goes into recession you lose your job. Government employees don’t lose their jobs.
The state comes after you for delinquent property taxes. The Mortgage company forecloses. You lose your home and your downpayment. IRS then charges you with discharge of indebtedness and treats your loss as if it was income to you. Government and its courts and the federal banking system are screwing you from every direction.
Then the Federal Government bails out the banks that just took your property. They borrow the money for that against you the taxpayer. You are a taxpayer based on your citizenship! You now carry all the debt after being fleeced by the Government. Who is rewarded? Billionaires and Banker who buy your property for ten cents on the dollar from the banks.
The Rich get richer with every economic collapse.
It won’t matter in the next recession if you hold onto dollars. By then the billionaires will own 90% of the emerging markets. They will desert the USA. The dollar will collapse and assets values in homes and everything else will collapse.
But don’t worry, Billionaires from all over the globe will be back to buy your wealth for 1 penny on the dollar just so you can eat a meal and survive another day.
So what is my strategy now?
I am looking to China and Asia. I like oil because it is a true necessity. In spite of the price of it, it must still be transported by large ships. The third world Asia is going to grow and grow fast.
China being Communist can adjust their economy on a dime. They don’t have any real debt because they are self-funded. After watching politics in America fleece citizens every few years, the Communist look rather honest by comparison and much more stable.
Last year I recommended buying the Yuan against the dollar. It is up nearly 30%. The big event is coming. The US Dollar Reserve will be toppled by the Chinese Yuan. That is the day the American Fake it till you make it economy begins the long great fizzle into depression.
Look at the signals.
The talk is cheap especially Trump Talk. To me it is repulsive. Only idiots rattle on endlessly. Trump is so annoying, he is akin to static or tinnitus. Shut off his noise and that of the Hedge fund crowd.
The market is at a record high. It may stay there but it is unlikely to keep going. History tells us this. Rarely do markets stay high for 30 days. When they do that is the market is known as parabolic and the ride down will be sharp and fast.
When the market starts to fumble at the top, it is time to worry.
What we have now is continued leftover mutual fund selling. The markets pop up in the morning then roughly at 10 AM the seller comes in with big sell orders. So the stocks never recover. They show a sawtooth pattern indicative of machine buying and selling over and over again. Volumes rise but they rise artificially. So volume these days is a flawed parameter.
Once this seller is gone, there is nothing holding the stock down. This is Euphoria and it will last awhile while the mom and pops start taking on more risk. I have even read articles that the Millennial who think they are good with money will come in. That should be amusing.
The market top will end sometime in March. The last one ended March 11, 2000. That was the Dot Com Crash.
The Nasdaq lost 78% of its value by the time it was over. That is the kind of correction you can expect. Trump is a perfect fall guy because he stupidly claims his policies have caused the market runup. What policies are those? The RINOTAX? I don’t think so. Or is Trump the super cheerleader that has everyone waiving cash in the air? No… Trump is merely another Bush Obama style big spender.
Look at Corporate Earning:
Corporate earnings were up in 2017 but are expected to level down in 2018. But most interesting of the earnings reports is that in spite of earning being up, revenues are slipping. This means the companies are cost cutting not growing the business. This also suggests that stock buyback strategies may be moving the stock with pretty mundane earnings.
IBM has had 21 quarters of slipping revenues. GE is a basket case.