1. It’s Early in the Game, but Models Are Already Predicting a Trump Victory

    I’m not surprised that Trump supporters believe he’s going to win reelection in 2020. What’s amazing is the number of Democrats and Trump opponents who think the same thing.

    This article is a survey of recent model outputs that show Trump is a clear favorite in the 2020 presidential election. Models are not polls. Instead, they take various data points such as economic growth, unemployment, real wages and whether the nation is at war. These inputs are then put into models built on past elections and correlations are determined based on whether past presidents won or lost.

    The models discussed here were produced by Steven Rattner, an Obama adviser, and Mark Zandi, another Obama supporter. No one can accuse them of pro-Trump bias. They are also seasoned Wall Street hands who focus on the most reliable results regardless of whether it fits their political preference or not.

    My own model currently has Trump at a 65% probability of winning, although that probability has room to grow as we move closer to Election Day without a recession. Election Day is still far away, but the early signs definitely favor Trump.

    That result also favors investors looking for continued economic expansion and continuation of one of the longest bull markets in history.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

  2. How Do Globalists View the Trade War?

    The U.S. and Chinese governments have made their views on the ongoing trade wars clear. The U.S. insists that China is breaking all the rules and China insists that they will not allow the U.S. to dictate the operation of their economy.

    What about the global elites? They are watching from the sidelines since the nationalists are in charge in both countries. But what is their view?

    This article is written by two of the leading global elites. Their analysis is entirely conventional and mostly wrong. They argue that U.S. consumers will suffer from higher tariffs since tariffs act like taxes on consumers of imported goods. They also argue that slower growth from reciprocal tariffs may result in a U.S. recession.

    This simple analysis ignores how dynamic global markets are today. Many U.S. importers lack the ability to pass cost increases along to consumers, so the costs of tariffs are actually borne by importers in the form of reduced margins or have to be absorbed by the Chinese exporters.

    Supply chains are flexible. Goods not produced in China can be produced in Vietnam or Indonesia, resulting in lower tariffs and permanent loss of exports for China. By moving supply chain origins and not passing tariff costs to consumers, the actual impact of the trade war on the U.S. economy could be quite small and not nearly enough to induce a recession.

    At the same time, gains from new U.S. manufacturing needed to replace some Chinese exports could actually boost the U.S. economy. The complaints in this article are the same misguided economic nostrums the elites have been peddling for decades.

    Trump is the one who is following in the footsteps of Alexander Hamilton and Henry Clay when it comes to protecting U.S. jobs and U.S. industry from overbearing foreign competition.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

  3. If There Is Impeachment, the Senate Trial Will Be Fast and Trump Will Win

    The odds of an impeachment of President Trump by the House of Representatives fluctuate daily. There is a large group of House Democrats who firmly want impeachment and are ready to begin the hearings tomorrow. There is another large group of moderate Democrats, many newly elected, who want to keep away from impeachment and instead focus on legislation involving matters voters care about such as health care, immigration and infrastructure.

    House Speaker Nancy Pelosi is trying to balance these competing factions by favoring investigations but discouraging actual impeachment proceedings. She knows that’s a political loser for the Democrats. But by playing with fire, Pelosi may get burned with an actual impeachment process whether she likes it or not.

    One thing that’s not in doubt is the ultimate outcome of a trial in the Senate. Impeachment is just an accusation; it does not remove the president from office. Removal requires a conviction in the Senate.

    As this article explains, the Senate is firmly under Republican control. If impeachment occurs, you can expect the trial in the Senate to be relatively brief and lead to Trump’s acquittal.

    This is exactly what happened to Bill Clinton in 1998–1999. After his Senate trial was over, Clinton was more popular than ever. The same thing will happen with Trump.

    A House impeachment followed by a Senate acquittal will more or less solidify Trump’s chances of winning reelection in 2020. It should be an interesting next six months in Congress.

    This will definitely add to volatility and uncertainty in markets. Investors should stay focused on the conclusion of this article: Trump will prevail.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

  4. The China-U.S. Trade War Is Not Over. In Fact, It Has Only Just Begun

    We’ve heard a lot about the China-U.S. trade war from the U.S. side. President Trump and Vice President Pence have strongly criticized the Chinese for subsidized Chinese exports, theft of intellectual property, requiring U.S. companies in China to hand over trade secrets, currency manipulation and other unfair trade practices.

    In his landmark speech on Oct. 4, 2018, Vice President Pence laid out these and many other violations of international agreements by China. Pence’s speech is generally understood as not being limited to the trade war, but being a declaration of a new cold war if China does not improve its behavior.

    After these well-publicized critiques, what is China saying in its own defense? The news here is not encouraging.

    As described in this article, China is showing no signs of a change in posture. In fact, China is digging in for a long struggle in which it rejects U.S. claims as an infringement of China’s “core interests.”

    China has pivoted from talk about trade to discussion of territorial issues such as Taiwan and the South China Sea. China also rejects U.S. efforts to alter the behavior of China’s state-owned enterprises, SOEs, that compete in the private sector but are government owned, controlled and subsidized.

    Both the U.S. and China are escalating their countervailing claims and rhetoric. The end of the trade war is not in sight. In fact, it is rapidly turning into a deeper competition that will slow global growth for years to come.

    Investors are turning to cash, Treasury notes and gold as safe havens while these two global giants fight it out. That fight will continue and get worse.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

  5. Who’s for Real (and Who’s Not) in the Democratic 2020 Horse Race?

    It’s far too early to make hard-and-fast predictions on who will be the Democratic nominee for president in 2020. My estimate today is that Biden will fade, Sanders will hang in there (even though he’s not liked by the Democratic establishment) and Warren may gain in the homestretch.

    And as I mentioned in last week’s Five Links, let’s not count out Hillary Clinton. She has been staging campaign-style events and may just be waiting for a deadlocked convention or a frontrunner stumble before being turned to by the party as a white knight candidate.

    For a consensus view, this article lists the top 10 Democratic candidates as of now. (The candidates ranked between 11–23 are barely showing 1% in the polls today; some are at 0%, so it’s safe to ignore them for now).

    As expected, Joe Biden is ranked No. 1 with a strong lead in the polls. But that’s mostly based on name recognition. He’s likely to fade once voters get a closer look at him in the debates and once the multimillion-dollar crony deals with China and Ukraine involving his son are fully vetted.

    Sanders and Warren are Nos. 2 and 3 respectively. They may do well in the New Hampshire primary since both are from neighboring states, Sanders from Vermont and Warren from Massachusetts. Kamala Harris and Pete Buttigieg round out the top five although both are in single digits in national polls.

    The rest of the top 10 are in the low single digits as some such as Beto O’Rourke are fading fast. All of these candidates will have a difficult time beating Trump, but for now they’re off and running for the chance to go up against him.

    Keep an eye on Warren; she’s a dark horse who’s showing real progress. She may also be the worst choice for investors because of her high-tax, pro-regulation policies.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

     

  6. The Perfect Storm

    What are the three elements of the perfect political and market storm I see coming together this fall?

    The first is an effort by the Democratic House of Representatives to impeach President Trump. The second is the socialist-progressive tilt in the 2020 presidential election field. The third is the fallout from the Mueller report and the Russia collusion hoax — what I and others called “Spygate.”

    These components are independent of each other but are at high risk of convergence in the coming months.  Let’s look more closely at the individual elements of impeachment, electoral chaos and Spygate that comprise this new storm with no name.

    Click here to read the rest of this article.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

  7. Rickards: “Perfect Storm” Is Coming

    People often refer to the “perfect storm.” A perfect storm is generally understood as two or more events that are independent but converge to produce an outcome much worse than either event alone.

    The term is an overused cliché, and as a writer I avoid clichés whenever possible. But though rare, perfect storms do exist. The most common example is the devastating 1991 storm popularized by the book and movie of the same name, although it was initially known as the “Halloween storm.”

    In that case, three separate weather dynamics all converged in one place on one day to produce a perfect storm. The odds of all three coming together at once were less than one in 100,000. That’s less than once in 270 years. That’s a perfect storm.

    Do metaphorical perfect storms happen in politics and capital markets?

    For the rest of this article, click here.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

  8. If Gold Was Just a Barbarous Relic…

     

    There’s nothing new about the Russian accumulation of gold bullion in their reserve position. It began in a material way in 2009 when Russia had about 600 metric tonnes of gold.

    Today, Russia has 2,183 metric tonnes, a stunning 264% increase in less than 10 years. Russia is the sixth-largest gold power in the world after the U.S., Germany, IMF, Italy and France.

    Russia’s gold hoard is over 25% of the U.S. hoard, but Russia’s economy is only 8% the size of the U.S. economy. This gives Russia a gold-to-GDP ratio over three times that of the U.S.

    While these developments are well-known, the question of why Russia is accumulating so much gold has never been answered.

    To read the rest of this article, click here.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

  9. SAD: MILLENNIALS BLAME CLIMATE CHANGE FOR NO SAVINGS AND NO CHILDREN

    This is one of the saddest articles I’ve ever read. It’s a lament by millennials that climate change is ruining their adult lives.

    Never mind that global warming stopped in 1995, polar bear populations are thriving and sea level increases are only 1.5mm per year. That is about the width of a penny viewed from the side and not enough to raise the sea by one foot in 100 years. Climate change as it is portrayed by the alarmists is a hoax, but that has not stopped tens of millions of millennials from falling for it.

    They have been told that the Earth’s climate will be irrevocably and catastrophically altered if massive economic changes are not implemented in the next 12 years. (Never mind that apocalyptic forecasts of a “new ice age,” “population bomb” and world starvation have been issued for the past 50 years and they have all been wrong.)

    Millennials are not saving enough, not getting married and not having children because they believe (wrongly) that the future is catastrophically bleak for all concerned. This is a tragedy.

    Marriage and children are a joy (despite challenges) and compound earnings on savings are the easiest way to get rich. These young adults are sacrificing their futures for fear of a nonexistent threat. This is the power of propaganda and miseducation combined.

    This attitude also hurts economic growth because savings and population increases are two of the drivers of investment and productivity. Let’s hope a few more years of good weather and no climate catastrophes convince these millennials to put aside their fears and start thinking about a better future.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

  10. CHINA-U.S. RELATIONS. IT’S NOT JUST ABOUT TRADE ANYMORE, IT’S A NEW COLD WAR

    The stock market seems to rise or fall almost daily based on the latest news from the front lines of the trade wars. When Trump threatens new tariffs and China threatens to retaliate in kind, stocks fall. When Trump delays the tariffs and China agrees to resume negotiations, stocks rise. And so it goes.

    It has been this way since January 2018 when the trade war began. From the start, Wall Street has underestimated the impact of the trade war.

    First they said Trump was bluffing. Then the analysts said that Trump and Xi would put their differences aside and make a historic deal. Some analysts said that trade wars were not important because of the relatively small size of the U.S. external account compared with the entire economy.

    All of these analyses were wrong. The trade war was problematic from the start and is growing worse today. Slowly, Wall Street has caught up to the reality and is taking the trade wars seriously. But according to this article, Wall Street is still missing the importance of what is going on.

    The trade war is important, but it’s not the main event. The trade war is part of a much larger struggle between China and the U.S. for hegemony in Asia and the Western Pacific. China and the U.S. are in a new cold war being fought on many fronts including trade, technology, rights of passage in the Taiwan Strait and the South China Sea and alliances in South Asia where China’s Belt and Road Initiative is promising billions of dollars for infrastructure development and the U.S. is responding with arms deals and bilateral trade deals.

    Tensions are rising, as this article describes. Even if a modest trade deal is worked out with China this summer, it will not put an end to the larger struggle now underway. This new cold war could last for decades.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.