Remember, Remember The 5th Of November...
Remember, Remember The 5th Of November...
Three Months To The Election: What I'm Watching For The Rest of 2024
I wouldn’t be surprised to see an assassination attempt on Trump next year.
I said that in my 2023 year end post, and sure enough Trump literally dodged a bullet about a month ago. I also talked about Biden not being the candidate for the Democrats, and I still think Kamala is unelectable, no matter what the polls have been saying lately. If you want to read what else I was talking about, here are the links to all three of those posts.
I had a decent draft of this piece last week and had to scrap almost all of it. It was too focused on the short term and I wanted to zero in on some of the things that could be on the horizon longer term. I’m not immune to paying attention to short term events, whether it’s in markets or geopolitics. Would it have been nice to wait to write the post I wrote last week about offshore until after the selloff driven by some of the yen carry trade unwind? Yes. Is there any fundamental change in where those businesses are going over the next couple years? No. It’s easy to get caught up in short term noise in politics and financial markets, and some of my recent travels helped me take a step back and look at the bigger picture.
I still think 2024 is going to be the year that sets the table for geopolitics and markets. The US as a country sits at a crossroads. I see shades of the Spanish Civil War, Weimar Germany, and late Roman empire in our country, and I think we are definitely in the “weak men create hard times” part of the cycle. I have a rough idea of how it might play out, but if we zoom out and look at where we are on a scale of decades and centuries, I think the US is going to radically different twenty years from now. The average person has no understanding of history, and plenty of people that think they understand history believe a completely fabricated version of events, especially when it comes to the 20th century.
So here we are, set to repeat a similar cycle of events that has happened throughout history. We have an oligarchy that wears a democratic republic as a skin suit, and I wouldn’t be surprised if we have a monarchy or something similar in my lifetime. We have financial markets distorted by passive investment and a decade of ZIRP (and apparently Yen carry trades) where the fair value of assets takes a backseat to things like momentum and trend following. We have a degenerate culture that shows signs of rot everywhere, from Hollywood, to the media, to our politics. You even see it at the Olympics with the opening ceremony. I could rant about everything that’s wrong with modern society for a long time, but the point is that we have signs of decay everywhere you look.
Gaining Perspective: Invert, Always Invert
One of the best ways to understand the upside down world we live in Charlie Munger’s saying: invert, always invert. It helps with markets, it helps with current events, and it helps to figure out the interesting times we live in. Another way that some people try to figure out our interesting times is Hanlon’s Razor.
Never attribute to malice that which is adequately explained by stupidity.
It drives me nuts when people talk about Hanlon’s Razor. It sounds intelligent, but I’m not sure how anyone paying attention since 2020 thinks this still works. In my opinion, it underestimates people’s intelligence and overestimates their benevolence. If this made sense, laws of probability would dictate that our leaders would occasionally do something in the best interests of the country. If we invert, it looks like this:
Never attribute to stupidity that which is adequately explained by malice.
Looking at certain events through this lens, like the Trump assassination for example, might give you a different perspective on things. Your mileage may vary on this one depending on your worldview, but it’s an interesting thought exercise when you look at what is going on around the world, and some of the powerful factions that influence markets and geopolitics.
Trump: The Obvious Frontrunner
Now that I’m done pontificating on the state of the world, let’s get into the election. I wasn’t all that surprised to see Trump targeted, and I wouldn’t be surprised if we see another assassination attempt on Trump. I’m not here to take you down the rabbit hole on what happened, but there are a lot of coincidences surrounding the events on July 13th. Just like what happened with JFK, I don’t know if we will ever get an accurate version of the full story.
I thought Trump would be back on Twitter by now, but I still think he’s going to win come November if they don’t cook the books on the election. I didn’t talk about JD Vance as a VP pick in my year end post, but I have been talking about him more recently in some of the podcasts I have been putting out. I don’t know if Trump’s VP pick changed after the assassination attempt, but I think Vance is the best pick he could have made. He has some very interesting connections to Silicon Valley and the so-called PayPal Mafia, but I will be having a guest on the podcast soon to discuss the implications of picking Vance as the Vice President.
Kamala Harris & Tim Walz
Like the assassination attempt on Trump, I wasn’t surprised to see Biden get thrown under the bus and announce that he is dropping out of the Presidential race to endorse Kamala Harris (on National Ice Cream Day no less). I didn’t think she would be the replacement, but she is still just as unelectable now as she was in 2020. You can go into some of her time as attorney general, her policies, or Willie Brown, or her intelligence, but that hasn’t stopped the media apparatchiks from firing up the spin machine for her. I’m curious to see what happens at the Democratic Convention and any debates that might or might not happen. Recently we got her VP pick, Minnesota Governor Tim Walz.
The VP pick was a bit of surprise but needless to say, I’m not a huge fan of him either. Just look up the mostly peaceful protests in 2020 in Minnesota, or his thoughts on the First Amendment, free speech, and misinformation. For the military guys that might be reading, you can look into the allegations of stolen valor. I’m admittedly biased on the topic, but I don’t think the Democratic ticket for 2024 is a strong one.
Geopolitics: Escalating Proxy Wars
The election is only going to get more eyeballs moving forward as we are less than three months from election day, but the geopolitical situations in Ukraine and the Middle East don’t look like they will calm down any time soon. Ukraine has recently made a push into the Kursk region of Russia, and the Western powers seem content to continue the proxy war and fight to the last Ukrainian. The Russians don’t seem like they are in any hurry, and the West has continued to draw down munitions stockpiles while Ukraine is running low on men to send to the front. I thought that we would see things wind down in Ukraine because there is clearly no path to victory, but now I think we could see it grind on for months and potentially longer.
I’m more worried about the situation in the Middle East, as it seems like factions in the US and Israel are itching to get into a war with Iran. The most recent provocation was the assassination of Hamas negotiator Ismail Haniyeh in Tehran. Iran’s retaliation a couple months ago seemed like theater, and we are still waiting to see what their reaction will be this time around. You also have the Houthis in Yemen, Hezbollah in Lebanon, and Hamas in Gaza that make the whole situation complicated to say the least. I’m hoping the US can avoid getting dragged into another war in the Middle East, but needless to say things aren’t trending in the right direction on that front. I have no idea what the rest of 2024 looks like in the Middle East, but I have a hard time seeing a path for deescalation, especially with some of the recent actions from Israel and rhetoric from the US. At least for now, I think the best we can hope for in the Middle East is some sort of uneasy stalemate.
Illegal Immigration Or An Invasion?
In my year end post, I talked about illegal immigration being one of the most important issues of the election this year. I think it’s an issue that falls under the geopolitical umbrella that often flies under the radar. It’s not just an issue in the US. England and Ireland have seen protests in recent weeks, and the rest of Europe is in a similar position (except Hungary thanks to Viktor Orban). I thought that Europe was five or ten years ahead of the US on this front, but we seem to be doing everything possible to catch up.
I have seen headlines saying that a majority of US voters are in favor of mass deportations (ranging from 51% to 62%). I have heard that as many as 1 out of every 6 people in the US are here illegally, which sounded to me like it might be on the high end. I wouldn’t be surprised if it’s as high as 10% though after the last four years. It’s just an educated guess, and good luck trying to find any accurate stats. The point is that the US will have to make a decision on the border and what to do about removing people from the country that shouldn’t be here.
If you want a preview of what might happen if nothing is done, feel free to go read The Camp of the Saints. I haven’t even mentioned the fentanyl coming across the border. More Americans have died from fentanyl overdoses since 2020 than Americans that died in all of World War I or Vietnam. If you want to go even further, you can look into the child trafficking and sex trafficking that is happening in connection with the stream of people crossing the Darien Gap. No matter what politicians in DC say about Ukraine or our greatest ally in the Middle East in Israel, the biggest threat to America is what is going on at the southern border right now.
Will Trump actually follow through on closing the border and mass deportations if he’s elected? I honestly have no idea. I don’t think he is going to repeat some of the mistakes he made with personnel in 2016, but I have a “show me” attitude towards a Trump second term. The issue should be near the top of the agenda if he is elected come November, along with deescalating the situations in Ukraine and the Middle East.
Questions On The Election
There is a lot of uncertainty about what happens depending on the outcome of the election. I think one similarity of the two candidates is that we will probably continue to see large deficits, albeit with different policy focuses. If Trump wins and follows through on some of the campaign promises, there are a lot of changes on the horizon. I’m curious to see if the talk about tariffs is bluster, but that could have an interesting impact on markets. If Harris wins, it probably looks a lot like the last four years of Biden.
One of the other wild cards for the rest of the year is around the integrity of the election. The US is very divided today, and some people have talked about the idea that neither side will accept the other side’s candidate winning. Others have floated the idea of a civil war, which I still think is unlikely. The calculus on that changes depending on the circumstances around the election, especially if we get a rerun of 2020 for some of the swing states. I said in my year end post that a Trump presidency would actually decrease the probability of a civil war, and I think that’s probably still the case. I hope America isn’t past the point of no return and that we can start to fix the divide and some of the problems in the country, but we will find out over the next couple years.
Conclusion
We will see how the rest of the year plays out but I figured it was high time to write an update on my year end post. There are a lot of moving pieces in the world today, whether it’s in markets, the Presidential election or geopolitics. Believe it or not, I’m optimistic about the future of America, but I think the next couple years could get bumpy. If we are going through the Fourth Turning, the next couple decades look a lot brighter to me after we make it through the next several years. I think that the rest of 2024 will chart the path for the rest of the decade in a lot of ways. It will set the table for the political picture here in the US, the geopolitical picture for the rest of the world, along with financial markets. Whatever happens, the next three months leading up to election day on November 5th will certainly be interesting to watch.
Remember, remember the 5th of November…