The Summer of ‘24, as we live it, is now over. For me, its death throes begin each year when I see the little ones heading off to school. Which always makes me a bit blue. Not only for them, but also for us, I think, because it removes any pretext for intellectual relaxation — for man, woman, boyo, or girlie. There’s no excuse for not summoning our focus now. And harvesting it — for benefit or ill.
Due to the caprices of the calendar, the holiday marks beginning of the final trimester of this year, and it promises to be an interesting one. The whole global capital/political economy is in play. Moreover, what transpires and what we make of it might very well, like the devil, bear a long tail.
Unfortunately, we must devote disproportionate attention to politics, because, like it or not, there’s a depressingly important election immediately on our horizon.
And we enter it with what is in my judgment perhaps the deepest fallows in our two-party system – at least in my lifetime and maybe since the Civil War. Both parties have failed us in such signal fashion that we can no longer dismiss the shenanigans as merely the diverting pig circus that it is.
Let’s begin with the Dems — the party originated by Thomas Jefferson, which held the Presidency for the entire first generation of the 19th Century. In his often-mean-spirited-but-spirited-nonetheless debate with lifelong frenemy John Adams (both died on the same day – the 50th anniversary of the original 4th of July) the latter often pointed out that while TJ was concerned with the tyranny of the individual, he himself was most worried about what he described as ‘the tyranny of the few” – an elite class that would: a) command absolute power; and b) likely (among other accomplishments) destroy themselves – French Revolution style.
That’s what I see when I look left. But a more modern analogy would be the Five Families, with tuti di capi tuti bearing names such as Pelosi, Schumer, Cortez, etc. Together, they form a Commission: the arbiters of all disputes, the bearers of the final say of all important matters. You wanna hit someone inside? You need a sit-down. Such as the one which so recently dispatched Joe (Moe Green) Biden.
And they nearly always get what they want. And so long as it aligns with their agenda, any pursuit is fair game. They sanction violent, destructive riots one week; lay down flimsy felony charges against political foes the next. Ballot harvesting and ballot removal efforts exist in a similar two-step. Throughout, they claim both the high intellectual and moral ground and deride you if you disagree.
They are a formidable host, and if they weren’t slathered with corruption and ineptness, they would win by Slaughter Rule. Because their opposite numbers insist on bringing knives to a gun fight. And I think I know why. So astounded were they at having pulled off that historic inside straight in 2016 (taking down Hill-dog and capturing both houses of Congress) that they have refused to abandon either the playbook or reign in its author, ever since. Having come from the outer political galaxies to the heights of governmental power, he has (as was the case with, say, Maximilien de Robespierre and John Gotti) too thoroughly relished his victories to be an effective wielder of political authority.
In result, the GOP got trounced in 2018, lost not only a winnable presidential race but also both legislative bodies in 2020, failed miserably to meet obtainable objectives in ’22, but has yet again handed all decision-making authority to the above-described three-time loser. While he smugly glided towards presumed victory over the barely warmed cadaver thought he was up against, the Dems pulled a fast one. Not only did they switch stalking horse ticket leaders, but they rebranded their selection into something (if she is anything at all), she clearly is not. Then they screened her from authentic scrutiny.
Thus far, it’s working beyond any reasonably gleeful expectations. The Republicans got caught entirely flatfooted, and, if they lose in November, it will all be on Trump.
Why should we care?
Because either outcome will be a disaster. Let’s start with Harris, who, as has been widely reported, has recently backed off the articulation of the core elements of her agenda. If elected and (more importantly) empowered, we’re looking at the policy of circular firing squad, featuring higher taxes (including suicidal levies on unrealized capital gains), the gutting of the Energy and Health Care sectors, the funding and enfranchisement of millions of immigrants beholden to them, the regulation of pricing, and other practically dubious but politically potent bennies. Again, in this over-branded sham of a campaign, she has disavowed much of this. But c’mon! Are we so shortsighted that we cannot remember 2020? When basement-bound Biden told us that, aw shucks, all he wants to do is to unite us in a harmonious spirt of compromise? And then proceeded to govern to the left of Castro?
They are recycling this pap, and about the only mitigant that I can envision is that they are no more likely to pull off their most nefarious agenda components than they have been for the last 4 years.
Conversely, if Trump wins, half of the country will go bat shit; the rest labelled as fascists. Cities will burn. He, in his arrogance will ignore it all, and we will pay a terrible price. Throughout, he’ll brag about what a great job he’s doing. And then the party will get crushed in ‘26, ‘28….
I will, however (if he loses), cop to looking forward to packing him off once and for all. For my money, he’s done enough damage.
The markets are either ignoring all this or adopting a laudable, if unwise, Zen. My guess is that this is owing to the collective wisdom of investors, who believe that whoever takes power will reliably bitch it all up. Again. I share this hope but will feel a whole lot better if there’s a split outcome from an election which, again due to the caprices of the calendar, falls one day after I turn 65.
But the election is still two months off, and, in the meanwhile, there’s still September to endure. And October. Both look like a bumpy ride. We will overanalyze the data flows, as well as the actions and rhetoric of the FOMC. If there is a debate, we’ll read too much into it. And I must again remind my readers that September ranks 12th out of 12 in terms of risk asset returns.
Then there’s October. Which I don’t even want to think about.
There are some signs that certain investor groups anticipate aggravation and are taking actions to mitigate it. Take hedge fund for example (please?). Though I don’t see this trend in my reports, the primes are showing significant reductions in nets exposures:
Well, maybe, but on the other hand, it could simply reflect a temporary lightening of the load heading into the just-completed workers’ celebration.
I suspect, though, that generating returns will be a difficult task in the coming weeks. Not like the first two thirds of the year, when everyone made a king’s ransom by simply buying Colgate and selling Intel:
Tried and true though the toothpaste/semiconductor spread trade is, I’m not sure it has legs to carry us through to the end of the year.
Such are the nature of the trials we must endure every year, after we’ve retired our white belts and shoes. The final third of 2024 looks and feels more problematic than most, but it always does.
At this moment, I feel like the need to cleanse myself — by brushing my (remaining) teeth (again) and tossing my Dell desktop (Intel Inside) over the balcony. This, after all, has been the winning strategy in ’24, and who knows? It may continue to pay off. Our political parties adhere tightly to their old tricks, after all, and, whatever else transpires this much is certain:
One side or the other, unfortunately, is gonna win.
TIMSHEL