Allies, Assets, and Authoritah!

Like a middle-aged guy going up for a layup in basketball, stocks barely got off the ground yesterday — but it was enough for the S&P 500 to notch another record high. The Nasdaq held strong. The Dow, though, remained grumpy in the corner.

The summer lull is enjoyable so far. Smooth sailing. But geopolitics, tariffs, and the occasional meme-stock fever dream are testing the keel. Markets are riding high, but investors with any mileage on them know a headwind when they feel it.

We noticed Financial Times columnist Rana Foroohar is picking up what we’re laying down. “We’re watching the scaffolding of the old global order being quietly dismantled,” she wrote yesterday.

Tariffs with a Side of Sushi

President Trump reached a deal with Japan, slapping a 15% tariff on imports — including cars — but sweetening the pot with a $550 billion joint investment fund to build in America.

Trump had previously threatened a 25% tariff, so this counts as diplomacy by subtraction.

Elsewhere, trade partners are getting mixed results. The Philippines managed a 1% tariff cut. Canada got a pat on the back. Europe is preparing to fight over tariff rates. Goldman Sachs now expects the average U.S. tariff rate to settle at 15%.

First Stellantis, Now GM

GM followed Stellantis with its own grim quarterly results, reporting a 35% drop in Q2 profits. Tariffs on imported parts cost the company $1.1 billion — and executives warned the damage will worsen next quarter.

Tesla reports today after the bell. Watch for more pain or clever accounting.

China’s Quiet Pivot to EU Factories

While the U.S. threatens and haggles, China is adapting. Instead of buying up European ports and power grids, Chinese firms are now building their own factories on EU soil — using generous local subsidies.

As one EU trade official told Politico, “This is no longer a buyout — it’s a build-in.”

It’s a logical extension of the country’s Belt-and-Road initiative, which helped pour billions of dollars of investments around the world – and a way to conquer via economics and complex trade relationships, not by warfare.

Travel Bans and Business Chills in China

The U.S. confirmed that a Patent Office employee is barred from leaving China. A Wells Fargo executive is reportedly also being held over an opaque criminal case.

Wells Fargo has now suspended all business travel to China. BlackRock is telling employees to use burner devices. Japanese firms are backing away. If this is Beijing’s investor welcome mat, it’s laced with thumbtacks.

China is also taking an early lead in the resource development race. More on that in Ripple Effect later today. We’ll also do a deep dive in the rare earth and natural resource markets with Shad Marquitz tomorrow on Grey Swan Live! at 11am EST.

Canada Boycotts American Booze

American spirits took a 66% nosedive in Canada after the government pulled them from shelves in retaliation for U.S. tariffs. It’s not just Jack and Tito’s: total spirit sales dropped 13% in the same period.

Canadian consumers are now actively avoiding American products. More than 60% say they’re spending less on U.S. goods. Soft power just got a little more watered down.

Trump Eyes Real Estate Tax Cuts

Trump is considering ending capital gains taxes on home sales. The move would supercharge the real estate market and likely set off a new round of asset inflation.

Jerome Powell, whom Trump told lawmakers “won’t be around long,” may have thoughts on the impact of such a proposal… if he gets to keep his job long enough to voice them.

SpaceX Investors Warned: Musk May Return to Politics

In tender offer paperwork, SpaceX warned potential investors that Elon Musk could re-enter politics. Given the $400 billion valuation and Musk’s recent Pentagon contract, it’s a relevant concern.

When your CEO is in orbit — literally and politically — risk management gets tricky.

Kohl’s Goes Meme, Wall Street Goes Wild

Shares of department store chain Kohl’s more than doubled in early trading before settling up 38% — the moribund company became the latest darling of meme stock traders on Reddit.

No earnings beat. No turnaround plan. Just nostalgia, volatility, and a lot of shorts to squeeze.

Fourteen stocks in the Russell 3000 have tripled since April — most of them unprofitable. Meme stocks are back.

Like a rash.

South Park, Streaming Rights, and a White House Lawsuit

Trey Parker and Matt Stone inked a $1.5 billion streaming deal with Paramount after a heated rights battle — one that bizarrely entangled the White House. Paramount recently settled a $16 million lawsuit with Trump over merger approval.

With the 27th season of South Park premiering tonight, the show that skewered everything is now Exhibit A in political-media theater. Respect their authoritah!

Farewell, Ozzy

Ozzy Osbourne, the Prince of Darkness, has died at 76.

He leaves behind a legacy as both a rock legend and a chaotic representation of disfigured pop culture. Perhaps a toast to the Brit with something Canadian.

Tariff inflation has not yet appeared. Nor have we been plunged into a deep recession. Yet.

Feels like we’re a Truth Social post away from something sinister in the real economy – jobs, savings, consumer debt – from rearing its canary head. (See what I did there? Ozzy famously bit off a bird’s head during a concert in Des Moines in 1982.)

The new tariff regime is, however, shaping earnings, redirecting global capital, and triggering diplomatic retaliation. “The system isn’t breaking,” one Bloomberg columnist wrote yesterday. “It’s bending itself into a new shape.”

The gentleman investor knows: the scaffolding of a new economic world order is in its early stages.

~ Addison

P.S.: Speaking of the stuff civilization is made of, join us tomorrow on Grey Swan Live! with Shad Marquitz: Rare Earth, Real Opportunities — a deep dive into rare earths, uranium, and the defense department’s quiet scramble in the U.S.–China tech arms race.

Shad regaled us last time with a litany of tickers he likes in the natural resource space. We covered rare earth minerals, uranium and nuclear energy, precious metals and building materials – many of which have now outperformed the S&P 500, but are still in the early stages of a multi-year rally as the global financial system meets MAGA.

Tomorrow’s call will give us a chance for another full run down with Shad. He’s very articulate on investing in natural resources. If you’re interested in this overlooked space that’s starting to heat up again, you’ll want to join us Live!

Don’t miss it.

Your thoughts? Please send them here: addison@greyswanfraternity.com

Tariffs with a Side of Sushi

President Trump reached a deal with Japan, slapping a 15% tariff on imports — including cars — but sweetening the pot with a $550 billion joint investment fund to build in America.

Trump had previously threatened a 25% tariff, so this counts as diplomacy by subtraction.

First Stellantis, Now GM

Tesla reports today after the bell. Watch for more pain or clever accounting.

China’s Quiet Pivot to EU Factories

As one EU trade official told Politico, “This is no longer a buyout — it’s a build-in.”

Travel Bans and Business Chills in China

The U.S. confirmed that a Patent Office employee is barred from leaving China. A Wells Fargo executive is reportedly also being held over an opaque criminal case.

Canada Boycotts American Booze

Canadian consumers are now actively avoiding American products. More than 60% say they’re spending less on U.S. goods. Soft power just got a little more watered down.

Trump Eyes Real Estate Tax Cuts

Trump is considering ending capital gains taxes on home sales. The move would supercharge the real estate market and likely set off a new round of asset inflation.

Jerome Powell, whom Trump told lawmakers “won’t be around long,” may have thoughts on the impact of such a proposal… if he gets to keep his job long enough to voice them.

SpaceX Investors Warned: Musk May Return to Politics

In tender offer paperwork, SpaceX warned potential investors that Elon Musk could re-enter politics. Given the $400 billion valuation and Musk’s recent Pentagon contract, it’s a relevant concern.

When your CEO is in orbit — literally and politically — risk management gets tricky.

Kohl’s Goes Meme, Wall Street Goes Wild

Shares of department store chain Kohl’s more than doubled in early trading before settling up 38% — the moribund company became the latest darling of meme stock traders on Reddit.

No earnings beat. No turnaround plan. Just nostalgia, volatility, and a lot of shorts to squeeze.

Fourteen stocks in the Russell 3000 have tripled since April — most of them unprofitable. Meme stocks are back.

Like a rash.

South Park, Streaming Rights, and a White House Lawsuit

With the 27th season of South Park premiering tonight, the show that skewered everything is now Exhibit A in political-media theater. Respect their authoritah!

Farewell, Ozzy

Ozzy Osbourne, the Prince of Darkness, has died at 76.

He leaves behind a legacy as both a rock legend and a chaotic representation of disfigured pop culture. Perhaps a toast to the Brit with something Canadian.

Tariff inflation has not yet appeared. Nor have we been plunged into a deep recession. Yet.

The gentleman investor knows: the scaffolding of a new economic world order is in its early stages.

~ Addison

Don’t miss it.

Your thoughts? Please send them here: addison@greyswanfraternity.com

Back in April, when we published what we called the Trump Great Reset Strategy, we described the grand realignment we believed President Trump and his acolytes were embarking on in three phases.

At the time, it read like a conceptual map. As the months passed, it began to feel like a set of operating instructions written in advance of turbulence.

As you can expect, any grandiose plan would get all kinds of blowback… but this year exhibited all manner of Trump Derangement Syndrome on top of the difficulty of steering a sclerotic empire clear of the rocky shores.

The “phases” were never about optimism or pessimism. They were about sequencing — how stress surfaces, how systems adapt, and what must hold before confidence can regenerate. And in the end, what do we do with our money?!

Relative to GDP, the net international investment claim on the U.S. economy was 20% in 2003. It had swollen to 65% by 2023. Practically every type of American company, bond, or real estate asset now has some degree of foreign ownership.

But it’s even worse than that. As the federal deficit has pumped up the GDP figures, and made a larger share of the economy dependent on government spending, the quality and sustainability of GDP have deteriorated. So, foreigners, to the extent they are paying attention, are accumulating claims on an economy that has been eroded by inefficient, government-directed spending and “investments.” Why should foreign creditors maintain confidence in the integrity of these paper claims? Only to the extent that their economies are even worse off. And in the case of China, that’s probably true.

As global government interest expense climbed, gold quietly followed it higher. The IIF estimates that interest costs on government debt now run at nearly $4.9 trillion annually. Over the same span, gold prices have tracked that burden almost one-for-one.

Silver has recently gone along for the ride, with even more enthusiasm.

Since early 2023, Japan’s 10-year government bond yield has risen roughly 150 basis points, touching levels not seen since the 1990s.

Over that same period, gold prices have surged about 135%, while silver is up roughly 175%. Zoom out two years, and the divergence becomes starker still: gold up 114%, silver up 178%, while the S&P 500 gained 44%.

According to the American Association of Individual Investors, the average retail investor has about a 70% allocation to stocks. That’s well over the traditional 60/40 split between stocks and bonds. Even a 60/40 allocation ignores real estate, gold, collectibles, and private assets.

A pullback in the 10% range – which is likely in any given year – will prompt investors to scream as if it’s the end of the world.

Our “panic now, avoid the rush” strategy is simple.

Take tech profits off the table, raise some cash, and focus on industry-leading companies that pay dividends. Roll those dividends up and use compounding to your overall portfolio’s advantage.

Back in April, when we published what we called the Trump Great Reset Strategy, we described the grand realignment we believed President Trump and his acolytes were embarking on in three phases.

At the time, it read like a conceptual map. As the months passed, it began to feel like a set of operating instructions written in advance of turbulence.

Silver has recently gone along for the ride, with even more enthusiasm.

Since early 2023, Japan’s 10-year government bond yield has risen roughly 150 basis points, touching levels not seen since the 1990s.

A pullback in the 10% range – which is likely in any given year – will prompt investors to scream as if it’s the end of the world.

Our “panic now, avoid the rush” strategy is simple.

Take tech profits off the table, raise some cash, and focus on industry-leading companies that pay dividends. Roll those dividends up and use compounding to your overall portfolio’s advantage.