I’ve been sitting in front of my computer, trying to think of a way to describe how I see the economic/stock market situation in the US today. Then Crazy Eddie popped into my mind.

Crazy Eddie

In the dim past–1978, to be precise–I was living in NYC and looking for a job. I worked as a cab driver for a while and then as a bank teller, so I needed an answering machine in the unlikely case that someone desperate for a Vietnam veteran with a PhD (two big negatives at that time) might call when I wasn’t at home.

I went to an electronics store called Crazy Eddie. Its advertising tag line was “His prices are insane!!” I knew it was a kind of unsavory place, and that I had to be careful. But it did have by a considerable amount the lowest price for the model I wanted. A salesman sent a runner to the back room to get the machine while he wrote up the sale. The runner returned, but with a different machine. The salesman yelled at him and then turned to me. He said the machine in his hand was a newer, better, more expensive model. He would sell it to me at the same price as the one I wanted, though–or I could wait another 15 minutes, or however long it took, for the inept runner to come back with the correct machine. In either case, no returns. I picked “newer, better.”

When I got home, I found that what I’d bought was an older, clunkier, cheaper model. It did ultimately field the call that led to a stock market job, though.

Crazy Eddie went public in 1984. The firm went into bankruptcy in 1989 when it was unable to sustain a massive accounting fraud it had been engaged in from the very beginning. The eponymous Eddie (Antar) went to prison.

Why this thought? Who knows, but…

–I’ve been reading arguments, made mostly by chartists, that the S&P is back on the right track because it has rallied recently from down 15% since the inauguration to down 5% now. But this ignores the fact that the Russell 2000, which is a better indicator of what’s going on in the domestic economy is still down by 12%–yes, it was off a few weeks ago by about 24%, but still…

Compare that with the EAFE index of established non-US markets, which is up by 10.2% over the same time period, despite being comprised by and large of companies that are pale imitations of their US-based rivals. A loss of 15% in relative value for the US market over just more than three months is a staggering amount. I haven’t looked, but although this might also have happened during Trump’s pandemic denial, my guess is that we’d have to go back to the 1980s to see a relative loss like this.

It seems to me the largest part of this relative decline has little to do with the operating performance of companies in the US equity market, many of whom have extensive foreign operations and are beneficiaries of their increased value in $US terms.. I read this instead as a bet by the world against the USA as a place where people will want to live and where businesses can flourish.

The US dollar has fallen by about 8% since Trump took office, and arguably accounts for the largest part of the subsequent performance difference between the US and EAFE. The only greater loss of value that I can think of in a major currency is what happened to the British pound (-18% vs. USD) after voters committed economic hari-kiri in 2016 by opting to leave the EU. Kind of like the ghost of Christmas future for us.

–what’s also struck me is that in both Canada and Australia, Trump-ish candidates to become their next heads of state, who both had commanding leads in their election battles a short while ago, were ultimately defeated–by significant margins. Hard not to read both votes as strong desires not to have their own version of Trumpish tariff and deportation policies, and to remain instead lands of the gfree and homes of the brave.

PS. I learned today from the internet that our Attorney General proclaimed in a recent cabinet meeting that had it not been for Trump’s war on fentanyl smuggling from Mexico, 83% of the domestic population would now be dead. I wonder where the Democrats were hiding the bodies last year.