A generation ago, the brokerage house where I was an equity portfolio manager hired a political commentator. In one of his first pieces, he said that the Democrats had a social program but no economic one, and that the Republicans didn’t believe in much of anything but were flirting dangerously with a religious movement that aimed to trigger a war in the Middle East (he didn’t specify the location, though) that would trigger the second coming of Jesus and the end of the world.

He didn’t have much else to say, however, and he didn’t generate much revenue for the firm, so he was fired a year or so later.

He did, however, capture the economic ineptness of the Democratic party in general and the power of fundamental Christians in shaping the Republican agenda, both of which continue to this day.

My wife and I have been in France for the past few weeks, and more or less off the grid. Two things relevant to the current US stock market stand out to me from our trip, however.

–We went to a Holocaust museum in Lyon, located in a former Gestapo headquarters. It was kind of surprising to see how closely this WWII stuff resembles the ICE playbook.

–a fellow traveler needed a doctor, who while he was treating our friend mentioned that his reaction to events in the US was a deep sadness that we’re no longer the shining city on the hill of the Reagan days.

The story of the US stock market since Trump’s inauguration, and the administration’s, witting or not (my guess is either not or Trump doesn’t care), deeply anti-economic growth agenda: avoid anything that depends on domestic economic strength and embrace instead firms that have costs in the US and revenues abroad. This is the classic emerging markets strategy.

Especially attractive are companies like software architects, whose charm is in part due to the fact that their infrastructure and intellectual property can be on a plane this morning and in, say, Canada within a few hours.

If we look at the domestic consumer, this has been a bad place to be since the Trump inauguration–and especially so for companies that serve the less affluent consumers who, ironically, form a strong pro-Trump bloc. Many of these companies have brand names and distribution networks that in theory should make them attractive to either foreign or domestic acquirers. For foreign-based companies, however, the home country reaction to such a move is likely to be very severely negative, given the fascist vibe of the adminstration.

If the election on Tuesday turns out to be an endorsement of Trump policies, my guess is that the currency weakens, as do Treasuries–and the market continues to focus on tech companies that have plant and equipment outside the US or specialize in software. Investors will likely also begin to shift more aggressively to non-US stock markets–for the first time in a quarter-century. My guess is that interest would center on Japan and China, but that may only be that I’m more familiar with those markets than I am with the EU.

If the election as a strong statement of disapproval of Trump policies, my guess is that the dollar will strengthen and domestic low-end retail will begin to perk up for the first time since the inauguration.

The chip sector of the Korean and US stock market sold off sharply this morning on the news that a firm in China announced at a conference that it has made a significant step forward in the craft of manufacturing memory chips. Elon Musk apparently observed that China normally has significant scale in manufacturing in just about everything, so a new-and-better chip might make significant inroads in the current chip market. Arguably worse, it might decide to withhold the advance from the rest of the world, compelling potential users to set up shop in China.

Chip stocks were looking a bit toppy before this news, so the resulting selloff in Korea and the US can’t come as a huge shock. Several key characteristics of the current administration make the situation significantly riskier than it otherwise might be, however: the attack on universities, ICE, and the aversion to people with technical expertise. The US has also decided to deny China access to the most advanced chip-making tools from ASML, forcing it to intensify its own development efforts.

So one might also ask whether the shoe isn’t now on the other foot–with China moving ahead of the rest of the world and potentially opting to withhold its advances from the US.

In different times, the market would find this situation a reason to rotate away from IT to, say, Consumer Discretionary names. But Washington’s economics of tariffs and shrinking the workforce, as well as the visions of 1930s Europe its policies conjure up, have stunted profit growth there and diminished the value of the sector’s brand names and distribution networks.

Some consumer names have been showing strength over the past short while, but I don’t see any strong pattern to the sectors ups and downs. But it’s at least worth thinking about how to react to upcoming election results.

Over the past short while, I’ve been reading lots of comments about how apparently lopsided, or AI-tilted, the current US stock market is. The general argument is that if there’s some bad development in the AI space, the S&P and NASDAQ have nothing much else going for them.

I agree that this is the case. But there’s also another side to the coin, one that I think is just as important. It’s that, ex AI, the US economy doesn’t have much going for it at all–due in large part, I think, to the high level of incompetence on both sides of the aisle in Washington. Although almost half a century as a professional investor has taught me that government policy never really matters that much. Not so right now, I think.

Two conclusions:

–it isn’t completely that AI is so dominant, it’s also that the general domestic economy is in poor shape and that current federal government policy has given the US as a place a tremendous black eye. Joining North Korea and the Taliban as one of the few entities to televise executions is probably not a feather in our cap, either.

–for the first time in a very long while, US election results may well play a significant role in the direction of the stock market into next year. The question to be answered is whether it still makes sense, as it has since the inauguration, to avoid the general US economy as much as possible.

I wasn’t quite sure how to headline this. The FT and its parent the Nikkei News are, in my view, the two best sources of usable, professionally written, articles on the world economy in general and on individual publicly-traded companies.

One of the FT’s regular contributors is Mohammed El Erian, whom copilot describes as an accomplished global macro strategist. What I enjoy most about Mr. El Arian is his elegant and sophisticated use of the English language. In today’s newspaper, for example, he makes the point that current Treasury intervention in markets “to counter underlying market fundamentals” is counterproductive. It risks “eroding credibility” and “Using it as a routine policy lever rather than an emergency safety valve risks turning a market stabilizer into a source of moral hazard and deeper volatility.”

To the extent I understand Mr. El Erian’s prose style, he’s saying this is shockingly bad policy.

Memory chips are a boom and bust business that is already very capital intensive, and increasingly so. The dilemma for investors is this–the stocks have already gone up a lot and the industry has already planted the seeds of its own future downturn in the immense capacity expansions now underway. On the other hand, these additions are still several years off.

A side issue, which may end up becoming important at some point, is that China appears to have unused capacity. Sanctions have prevented that country from obtaining cutting edge chip-making equipment from ASML and also deter western product makers from using Chinese output of any type. We’ve already seen gamers begin to make the shift–as well as Chinese chip makeers raise prices.

Let’s put that to the side for now.

The big issue that investors are struggling with is that we know that, with or without China, the current boom will end within a few years and we surmise that the usual trainwreck will then ensue as massive new capacity come online, virtually all at once. On the other hand, Micron (MU) is still only trading at 14x earnings, even after having tripled so far this year. And it would be very unusual for the market to discount today capacity additions that are at least a couple of years in the future.

The newest piece of information that has come out is the Samsung Electronics pre-announcement of very strong earnings growth in its latest quarter. More important, though, is the fact the stock went down on the news.

Personally, I sold the MU I owned a while ago and put most of the proceeds into a dram ETF. This is after having trimmed my overall tech exposure significantly a while ago and put that money into things like the NY Times and the Atlanta Braves. Given the trainwreck the administration has made of the US economy, it’s hard to know whether cash, or foreign stocks, wouldn’t be a better move.

But my main point is that the Samsung Electronics price action suggests that the DRAM trade may well be living on borrowed time.