My friend Jeff wrote a post on inflation. Our president told us yesterday that his plan is working because the CPI index came out lower than expected. Read Jeff’s post and think critically about what the president said.
If you don’t understand it yet, I will give you the reason for inflation.
Increased government spending means increased inflation.
I like to be simple and direct in my analysis and communication. Blunt you might say.
No one has decreased spending. We saw a drop yesterday that might be short-lived or not. It depends on how deep the recession we are in goes, and how long it persists. The Fed’s aggressive increase in interest rates will cool some demand. But, the Fed can’t do it alone. It takes the legislature to quit spending money. Meanwhile, you hurt at home.
I do know this. Meat prices dropped in yesterday’s number. Livestock farmers have culled their herds or are culling their herds because they can’t afford to feed ‘em. Look for meat prices to go significantly higher by this time next year.
We might have had a nice one-day rally but the market is still down over 20% on the year. The bear hibernates, but it’s not gone.
Turning to last Tuesday.
I have blogged previously that I was wrong about the Red Wave. Trump candidates were beaten in many headline races across the board. Part of it is because they didn’t get money. Cocaine Mitch put money into Lisa Murkowski’s race but didn’t into others. Will he back Herschel or stay in the minority assuming that Laxalt pulls it out in Nevada? (By the way, statistically, if he loses at this point it’s close to a 3 standard deviation event……still under the bell curve but at the outskirts of it)
Slow vote counting invites fraud and makes people think there is fraud in elections. Get it done on election day.
Trump’s attacks on DeSantis don’t detract from what DeSantis has done. They make Trump look small. Because Trump is not self-aware, and like a lot of politicians thinks the more he says stuff the more it will be true, every time he goes after DeSantis with venom he demeans his own legacy.
My guess is the big donors to the Republican Party will tell President Trump there is no money for him. Trump spent very little money on electing people. He offered support in person. But, Trump is used to using other people’s money to make things happen.
Gerrymandering also played a big part in the elections Tuesday. Look at Nevada. Republicans did pretty well statewide. But, because of the gerrymander Democrats put on the state for this election, Democrats did better locally.
Trump did a favor for Republicans by being the bull in the China shop and exposing all the rot in government along with GOPe. He did a favor by showing that you can be firm and fight. You don’t have to be “Republican nice” and lead with a Mitt Romney glass jaw. It’s okay to call out the media when they are biased, which is all the time. He deserves credit for all that but his time has passed.
I would love to see a competitive Republican Presidential primary of Ron DeSantis, Glenn Youngkin, Mike Pompeo, and Nikki Haley. The rest of the hopefuls should just stand down. They are the adults in the room and the best voices right now. They all seem capable.
Feeble Joe Biden will run for President again and might not be contested. That is a good result out of the red puddle.
Turning to finance and especially crypto.
The FTX situation is worse than initially thought. It’s criminal and Mr. SBF ought to wear an orange jumpsuit. He is Jon Corzine redux. He took customer money to cover trading losses. Corzine was saved by Eric Holder. Corzine was one of them. An elite Wall Streeter who was a Democratic Senator and Governor. Bankman-Fried isn’t one of them and only donated about $50MM to candidates with no chance to donate anymore.
For what it’s worth, an exchange that sets up a market-making facility inside itself to facilitate liquidity in markets isn’t a terrible thing. We established one at CME and they continue to use it as far as I know. It’s for FOREX.
The difference between FTX and CME is Alameda tried to trade and make money instead of simply providing liquidity. There is a huge difference. If you look at CME’s 10-k filings, their market-making facility makes or loses peanuts because they are in and out of trades trying to scratch. They don’t take positions or have a view of the market. Savvy venture capitalists didn’t understand that and I use that description tongue in cheek.
Have a great Veteran’s Day weekend. I am spending it in the Socialist State of California up in wine country.
Regarding Trump. Saw this analogy at Jesse Kelly's Twitter feed:
This almost feels like you have an old dog you love but now he’s shitting all over the floor and biting people so you know you have to put him down 😥
BTW totally agree on vote counting. All these states should copy the Florida system implemented by Jeb! after the hanging chad incident.