Trump and the Animal Spirits


#1

This interview with Shiller from last October is pretty good. At first glance Shiller didn’t seem to say all that much. The old usual two-handed economist gig.

But resd more closely Shiller is saying something important. The narratives have changed, and the animal spirits reignited. These 3 weeks is a powerful showcase and it’s not just the US.

There are now 2 powerful narratives for the US and an additional one for Hong Kong/China:

  1. Trump is pro business and will cut corporate taxes and regulations. Soon there will even be an infrastructure stimulus.

  2. AI is taking over the world and take away your job. The least average people can do is buy tech stocks.

And the additional one for Hong Kong and China:

  1. Xi will push through difficult deleveraging reforms and China will rise to challenge America.

These 3 narratives combined are pushing world wide stock markets to unprecedented highs. I suspect the party will last longer than people thought possible.


#2

I struggle to see how China deleverages and keeps their growth rate above 5%. They already started to deleverage once and bailed on it as soon as they realized growth would slow.

I maintain most of the growth of the last 30 years is due to debt expansion. It’s going to be brutal once debt expansion stops. I think we’ll have a multi decade lull in growth until debt is paid down enough to resume growth. That’s if we don’t see massive defaults on debt.

Economists don’t even talk about stopping debt expansion now. They only talk about sustainable growth. As long as debt grows slower than GDP, then the assumption is everything is fine.


#3

Chinese debt growth is slowing down a lot. Economic growth will slow down and that’s a good thing. Whether they succeed is too soon to tell. What I am saying is that there is a narrative out there after the 19th Congress Xi knows the full extent of the problem and has the resolve to tackle it, even if it means short term pain. He better does because he’s the most powerful leader in China since Deng.


#4

China’s debt as a percent of GDP makes the US look fiscally responsible. That’s only the debt in China that’s known too. It doesn’t count shadow banking.


#5

More that your charts only goes to 2016. Here are some more updated ones.


#6

China’s banks and insurance companies rallied hard so far this year. People are betting the bad debt situation has finally come under control. China’s ICBC just overtook JP Morgan as the biggest bank by market cap.


#7

Property tax on the cards for China?


#8

Some measures are improving, but debt-to-GDP is still in the 260 ranges.


#9

Billionaire hedge fund manager Ray Dalio says market surge ahead: ‘If you’re holding cash, you’re going to feel pretty stupid’


#10

“The S&P 500’s 14-month relative strength index (RSI) surpassed the 87 level for the first time in nearly 22 years, Ari Wald, head of technical analysis at Oppenheimer, told CNBC’s “Trading Nation” on Monday. That’s a level it has reached only 1 percent of the time since 1930 – the other periods in which the measure moved that high were in 1996, 1986 and 1955, three of the strongest bull markets in history.”


#11

What if Trump gets impeached?


#12

That’s super unlikely at this point. Focus is shifting to FBI agents who acted inappropriately and were blatantly biased. Saying offensive stuff isn’t an impeachable offense.


#13

Trump won’t get impeached til 2019. There will be plenty of political risks next year, starting with November midterm.


#14

Trump will be interviewed in the next month…It could rattle the markets


#15

True. One can never be too sure.


#16

They are going after his obstruction of justice, his Russian collusion, and his helping Russians money laundering through his properties…A lot of shit thrown at the wall…Something might stick… He never worried about this shit as a private citizen and wasn’t careful in the campaign because he thought he would lose…Now as president the chickens are coming home to roost…There will be hell to pay…


#17

Bill Clinton got impeached for a blow job. I fully expect Trump will get nailed for something. But until then the party goes on.


#18

He was impeached for lying about the blowjob…But as a southerner he can be forgiven
In the south eating ain’t cheating…lol

Trump has lied so often that he is quoted many times saying the exact opposite


#19

The grim reaper speaks


#20

Buy Caterpillar?