setting the stage
It is about Trump …and it isn’t.
Trump’s greatest success–by far–is having been elected president of the US, twice. In the non-government world, his highest achievement, as I see it, is having played the role of a successful businessman on The Apprentice, a reality show. His record as an actual businessman is not as stellar. His most visible real estate venture is his casino venture in Atlantic City. The details aren’t pretty, especially for shareholders who lost everything in bankruptcy. As the New York Times put it:
“…even as his companies did poorly, Mr. Trump did well. He put up little of his own money, shifted personal debts to the casinos and collected millions of dollars in salary, bonuses and other payments. The burden of his failures fell on investors and others who had bet on his business acumen.”
During his first term, Trump’s policy of covid denial resulted in something like a half-million unnecessary deaths, according to Forbes. After he lost the subsequent election, he attempted, through a violent attack on the Capitol, to overthrow the legitimate government and reinstall himself as president. He also appears to be heavily economically reliant on Saudi Arabia (the Liv Tour and Jarrod’s management of $2 billion of Saudi money despite his lack investment experience (as noted by Saudi government investment professionals). Critics have pointed out his apparent devotion to Russia’s Putin.
On the other hand, in the face of all this Trump was still reelected as president last November. By its silence, Congress is ignoring his apparent cognitive decline, his plan to impose tariffs higher than those that caused the Great Depression of the 1930s, and the intentional cruelty of the administration’s treatment in deporting migrant workers.
Also, the Democrats were unable to nominate someone able to defeat what I view as a deeply flawed Republican candidate.
where to from here?
Ytd, MSCI EAFE, the standard for non-US, developed world stock markets, is down by about 2%
The S&P 500, in contrast, is down by about 14%. NASDAQ and the small-cap Russell 2000 (mostly US-centric companies, in contrast to the other two) are both down by around 20%.
The spread between EAFE and the R2000 expanded relatively steadily until about three weeks ago. During the swoon caused by Trump’s tariff threats, coupled with the apparent lack of thinking behind them and Trump’s apparent cognitive decline, all the indices have plunged. But the spread between EAFE and the R2000 remains at about 20 percentage points. In other words, the world economy is in a worse place with tariffs, but everyone is going to suffer relatively equally.
more tomorrow