This daily note, which I've been writing for almost five years, is about connecting dots.
I talk a lot about markets, geopolitics, economics and even psychology. I do so, because without the understanding of how all of these things work together, it's impossible to have an accurate view on markets or the world.
I don't wait for the nightly news on a big network to tell me what's happening on these fronts. I don't rely on CNBC or the Wall Street Journal. I like to hear or see it directly from primary sources (press conferences, speeches, data, actions). That, in combination with the information in the prices of markets, I get the real news.
With that, I've talked a lot about China over the past five years, the rise and the related threat. I've talked a lot about Trump, and his role as a necessary disrupter in an economy that was teetering on the edge of depression, following eight years of economic malaise and Fed intervention. I've talked a lot about the Fed, and its role in keeping the economic patient alive, following the Global Financial Crisis. I've talked a lot about big tech, and the threat the "disruption" represents to the economy and society. I've talked a lot about the massive globally coordinated investment to fight climate change — the climate actioners. I've talked a lot about the virus, and the propaganda surrounding it (from the selective reporting metrics to the imagery of Chinese officials welding Wuhan residents into their apartments). And I've talked a lot about the battles on Capitol Hill, and the election.
These are all dots that have created a pretty clear "big picture" along the way.
It was all about structural reform — the important change needed so that the global economy could sustainably emerge from the damage of the global financial crisis. Trump took the lead (globally) when he came into office, making a lot of tough and unpopular moves in that direction. And with that, it quickly became all about Trump.
Why did the big picture become all about Trump?
As we've discussed, Trump has represented an existential threat 1) to the Chinese Communist Party, 2) to the global climate action plan, and 3) to the careers of entrenched politicians.
Solving that problem became priority, above all else. It dominated the Davos meetings in January this year. They didn’t hide it. It was about Trump (anti-Trump). Not the global economy. Not even climate change.
To what extent would they go to, to get rid of him? Whatever it takes.
Again, if you connect the dots, we see a pretty clear picture. We have a virus that has derailed a strong economy — an economy that was positioned to produce the best growth we've seen since the late 90s boom — heading into an election year.
And we get a virus, from China, a little more than a month after Trump forces the Chinese Communist Party into a "fair-trade" agreement that would be economically game-changing (negatively) for China. The WHO (Foreign Policy Journal calls it “China’s Coronavirus Accomplice”) was "boots on the ground" in China, evaluating a virus for more than two months, and watching it spread across the world before they finally relented and called it a pandemic (which sets into motion domestic government responses).
And then we have U.S. government and agency infighting and contradictory messaging over basic facts about the virus — all along the way. And despite finding clear and effective treatment protocols in New York in early April (as data showed in the declining intubation data in New York hospitals), the virus timeline was drawn-out, and became an effective political tool to leverage, which ultimately translated into massively altered election protocols (via mail-in voting). So, not only did the virus influence the election indirectly (via the economy), it influenced the election directly.
Now, with all of this in mind, we continue to connect the dots.
So, coming into the election, I said "in the case of a Biden win, and split Congress, I suspect he may hold the economy hostage, through tighter virus mitigation, so that the Republican-led Senate will relent and do a second stimulus package (which will fund the clean energy plan).
Here we are. Biden's coronavirus advisor talked yesterday about the strategy of a 4-6 week lockdown "to crush the virus." Since the election, Massachusetts and New York have already ramped up restrictions. And today, Chicago issued stay-at-home orders. We should expect this to build, and very likely from Democrat-led cities and states. The pressure will become intense, helped by the media, for the Republican-led Senate to fold to the demands of the Pelosi/Biden clean energy fund which is packaged as a "relief fund." This isn’t a political view (save your emails). This is a paying attention view.
