Room For Only One Traumatized Child at aTime

I think that when you get two traumatized (by their respective fathers) little boys in the same sandbox, one of them ends up with a mouth full of sand and a face streaked with tears. I think “Elmo’s” days are numbered.

On top of the fact that Trump harbours jealousy for Elmo because, unlike Trump, Elmo is an actual billionaire, Trump is transactional and as soon as anyone stops being advantageous to Trump, he kicks them to the curb. Trump got Elmo’s $200mil bribe, but that was never going to buy him Trump’s Presidential spot light. Musk is making Trump look weak. Trump can’t take that. Elmo is going to get the boot.

Further out, there some possibilities:

1) Trump slaps tariffs on trading partners,

2) Trump enacts tax-cuts,

3) Elon cuts spending in a significant way,

4) Trump tries to deport millions of brown people.

…and there some possible outcomes:

1) Tariffs are taxes on the consumer and will pressure prices higher,

2) Tax-cuts are equivalent to spending increases, but the effect on the economy will depend on WHO gets the cuts. If, like last time, the top earners get most of the benefit, then financial assets will inflate with little effect on core inflation or PCE. If the tax cuts include more of the consumer sector, then the effect of the tariffs will be mitigated.

3) If there are significant spending-cuts — equal to the tax-cuts or greater — the danger is not inflation, but recession (A note here, there is very little room for cuts becasue most of the spending is non-discretionary — as evidenced by cutting money earmarked for childhood cancer research) .

4) Depending on how much effort (and expense) goes into fulfilling this dystopian fever-dream, the result will be recessionary as well…recessionary for agribusiness and home-builders, but a boon for the prison industry.

Powell seemed to fear inflation more than the possibility of recession. I’m leaning more toward neutral on inflation overall.

Last night, I showed that the last three Government shutdowns had no lasting impact on the stock market. have hypothesized that the 1990’s is the most similar period to the present: money creation, new technology, fear in the herd. Now we might even get a shutdown to add to the list.

The pattern profiles (black boxes below) are very similar.

We will hold are long positions for now.

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