The Real Decider This Week

 

“If the federal government is an addict, then the Federal Reserve System is its enabler.”

— Thomas E. Woods Jr.

November 4, 2024— We’re back on the grid this morning. It took the better part of the day to leave the Maine woods and see what’s been going on in the markets.

We were in no hurry, mostly because that’s the way the trip was planned. Slowly and at its own pace.

There were 13 men staying at the cabin from Wednesday through Saturday nights. They made up three generations from 8 different states. East, South and West.

The only time the election popped into anyone’s consciousness was a moment when “1 no trump,’ was declared as an opening bid in a game of Bridge. The bid brought a snicker from one of the other players. But it’s also considered a weak opening bid, so that might really have been why. No discussion followed.

Frankly, there was more debate over the strategy for keeping the wood firebox kicking out heat through the 27-degree night or how swordfish steaks are best grilled over an open-flame fire pit than any politics. Debating these kinds of deep woods traditions is a family-honored thing, as sons have learned it from their fathers and then passed it on to their own sons.

Another mild acknowledgment of tomorrow’s vote came as we were packing up the cars to leave. One of the elders in our group, an uncle on my mother’s side, whose wife had died in September, has been touring the country for several weeks. He initially set out from his home in Telluride, Colorado, driving a truck with a hitch and car transport for another car that needed to be delivered to his daughter living outside of Nashville, Tennessee.

After a few days in the South, he embarked on what amounts to a tour of New England before ending up five hours north of Portland, Maine. After leaving the cabin, he planned to drive down the coast through Massachusetts, through New Jersey to the Mid-Atlantic.

He has friends who live in Chestertown, Maryland, on the Eastern Shore. Then, he plans to stay at our house in Baltimore for a few days while we tour the Civil War battlefields in Gettysburg and Antietam. “Provided I can stay away from urban areas on Tuesday and don’t need to head for Canada.”

Another snicker. No discussion. I think everyone in that group, at least, is just ready for this election to be over.

I made it out of the woods to the airport in Portland. Our flight was delayed, and I set up shop at a local pub to watch football while some storm in the Midwest cleared enough for our plane to land.

At the table next to me, a man was animatedly describing to his wife how Kamala Harris had skipped out on an event in Michigan to spend three hours rehearsing for a 90-second sketch on Saturday Night Live in violation of FCC regulations.

At that point, whether it was true or not, I had no idea. But the gentleman seemed fairly angry about it.

The betting site Polymarket showed the spread between Trump and Harris had narrowed by nearly 15 points, with Harris closing the gap rapidly in the three days I was not able to connect to the Internet. I’m fairly confident her skit on Saturday Night Live didn’t have that much impact.

Otherwise, markets haven’t been paying much attention to the vote. There was a brief opportunity to add to your gold position if you’d been paying attention on Thursday. The yellow metal got 50 bucks cheaper in the opening 30 minutes of trading that day.

With the spread closing as it is, our own forecast of the declared winner being delayed while Georgia and Arizona figure out their electoral winners seems more likely to happen than prior to heading off into the woods.

Otherwise, any real market action this week is more likely to come from the Federal Reserve. The central bank is a “lock” to cut interest rates another quarter point this week, following September’s half-point kickoff.

Friday’s labor data help cinch that prospect down. Only 12,000 jobs were created in October, against expectations for 100,000. That’s a big miss and a sign that the Fed’s shift to the labor market, which seemed overly strong in September, might have been the right play after all.

In real terms, the labor market is worse.

Without the addition of government jobs, overall job growth would have been negative. The weakening labor market is real. It’s here. And it may finally be the push that will get interest rates lower.

If, for some reason, the Federal Reserve cuts interest rates by a half point again, take it as a sign that the economy is weakening faster than expected and that some of the Grey Swan events our research indicates may occur in 2025 are more likely and possibly more immediate.

Analysis from Wolf Street this morning revealed that commercial real estate metrics are as bad now as they were in the worst months following the 2008 financial crisis.

The market waits for some direction from the Fed. Other than some extreme violence emerging from the election, it’s already priced into nosebleed levels on the major indexes, with gold and bitcoin still hovering near historic highs.

So we wait.

In the meantime, for entertainment purposes, we take a closer look at America’s increasingly bizarre electoral system, which could, in fact, be the source of delayed celebration and/or anguish for anyone who’s a fan of one or other of the political parties vying to spend and borrow on your behalf.

Eli Lake, writing for The Free Press, takes a whimsical look at Donald Trump’s success in politics and how it fits into a broader American tradition and was, ironically, a far better way for me to pass the time waiting for my plane than watching the Packers get thumped by the Lions. Hope you enjoy the read, too. –Addison

 

The Art of the Bullshitter

Eli Lake, The Free Press

They’re eating the cats. I’ll build a great wall, and Mexico will pay for it. It was the biggest inauguration crowd ever.

I used to think the proper response to Donald Trump’s bullshit was through the sober, fact-based lens of journalism. But, over the past decade, I’ve changed my mind. I now think that asking journalists to pour the best years of their lives into fact-checking him is as daunting and pointless as asking Siskel & Ebert to review the entire Pornhub back catalog.

Most Trump supporters know it’s fake, and they don’t care. In fact, Trump’s propensity for bullshit is not a political liability, it’s a superpower.

Let me explain. It’s not true that Haitians in Ohio were eating the cats and dogs. It is true that a lot of migrants have been arriving into the country illegally. And that’s an awkward fact for the Democrats in an election year. They’d rather the electorate look elsewhere, but Trump’s bullshit about eating cats forced voters to face a truth his opponents wished to conceal.

And here’s the magic trick: When Trump does assert something outrageous like the migrants are coming for our pets, he’s basically buying his own convenient bullshit. That’s not quite the same thing as lying.

The Flimflam Man

Of course, Trump does lie—all politicians do, and he probably lies more than most, but his genius exists outside the binary of truth and lies. It’s the netherworld of flimflam, hyperbole, sales pitches, and ad copy delivered with the quiet dignity of a wet T-shirt competition. Trump is a very modern artist: weaving, as he likes to say, a barrage of anecdotes, fake and real statistics, gossip, and memes into a nebulous and suggestive species of patter. To put it the way the maestro might: A lot of people are saying Donald is the Greatest Bullshitter of All Time.

And that’s why the Democrats get Trump so wrong. They have tried to paint him as an American Hitler, a Russian agent, a man consumed with evil and hatred.

But what they fail to understand is that Trump’s casual relationship to the truth is an echo of great politicians in the past. He is hardly the first bullshitter to ascend to the White House; he’s just the best to ever do it. In this respect, Trump is the crack-cocaine variant of many of his predecessors. Ronald Reagan was a folksy, sentimental bullshitter, as if a president was a Hallmark greeting card. Bill Clinton was a slick bullshitter, a genius at spinning stories at the dawn of the cable news era. And let’s not forget that when then-Vice President Richard Nixon wriggled out of a scandal in his famous Checkers speech, he was able to survive because he deflected a serious allegation about industrialists buying his influence by serving up a bunch of bullshit about his dog, Checkers.

Lying and bullshitting are related, but the differences are important. The late philosopher Harry Frankfurt examined the distinction in his seminal tract: On Bullshit:

“The liar is limited by his commitment to saying something that conflicts with the truth. So there’s a constraint upon him that he has to respect. Whereas the bullshitter, who doesn’t care about truth, you know, can go anywhere he likes. And there’s a kind of a panoramic view that he can take that the liar can’t take, because the liar is limited to inserting in a specific place in the system of beliefs a false belief or a true one. Whereas the bullshitter can go anywhere he likes and draw any kind of picture or any kind of panorama of beliefs that serves his purpose.”

Doesn’t Frankfurt sum up the artistry of Trump? He makes vague provocative statements that are not really true or false: “Many people are saying. . . ,”  “It’s the biggest and most beautiful wall you’ve ever seen,” “You’re gonna get tired of winning.” Trump is painting a picture with his words of a reality he would like to see. He’s not conveying the world as it really is.

According to Penn Jillette, the magician and debunker of flimflam, Trump “does in a very pure way demonstrate the difference between a lie and bullshit.

“A lie is very respectful of the truth, in that it is denying it. And bullshit is saying anything that pops into your head.”

If you want to understand why Donald Trump may be on the verge of winning the White House again, you have to reckon with our own country’s relationship to bullshit. It pervades everything from our politics to our economy to our culture.

To understand how Trump became the greatest bullshitter in American history, put politics aside for a moment. Think of advertising instead.

Advertising is central to American life: It defines everything from the messages our politicians serve us to the videos your Instagram algorithm delivers. In this country, the persuasion industry is always booming.

As the late, great comic George Carlin put it: “Whenever you’re exposed to advertising in this country, you realize all over again that America’s leading industry. . . is still the manufacture, distribution, packaging, and marketing of bullshit.” For the rest of the essay, click here.  ~~ Eli Lake, The Free Press

So it goes,

Addison Wiggin,
Grey Swan

P.S. “I just did my year-end tax-loss harvesting this morning,” notes our Portfolio Director, Andrew Packer. “I’m ready for any post-election selloff to buy more bitcoin, gold mining stocks, or even short-term bounces in any tech stocks that take a big hit.”

We usually suggest this in December, but if you have any stock market losses, you can use them to offset your gains. Even with the overall stock market up nearly 40% over the past 12 months, you probably have a few losing positions.

Andrew makes a good point.

Taking some losses off the table today will prepare you to seize opportunities regardless of how the market responds to tomorrow’s vote outcome.