Kudos to Goldman Sachs for knowing how to make money on the election

A friend forwarded this chart. Since the market is already pricing in a Clinton victory, shorting NJA (non-Japan Asia, in GS lingo, not "National Jousting Association" as the Acronym Finder says) is recommended. Shorting the Mexican peso is also indicated but with a lower level of potential gain. This trade would apply even if Trump lost the election. This reminds us that, in the world of the trading of financial instruments, there is no good or bad, no right or wrong, only opportunity. Investors should never forget this.

Big Picture: Central Bank balance sheet growth accelerates YTD: Now at $21.4 trillion

A new flood of liquidity is being unleashed. Where will it go? (below is from the Bloomberg article)

Meanwhile, while we were thinking about the election, the trade war had already begun.

From "US Steel Could Rise. . ." in Barron's this weekend. (The Mr. Longhi quoted is president of US Steel.)

"The-Policy-That-Must-Not-Be-Named" is finally unmasked.

It's "Monetization."  Japan has finally abandoned the pretense that central bank's printing of money to fund the government is a temporary measure designed to control the level of interest rates.  Will the markets find this candor "refreshing?"

from A6 in today's Wall Street Journal:

Shakespeare's take on the Fed's failure to raise rates

Thus conscience does make cowards of us all,

And thus the native hue of resolution

Is sicklied o'er with the pale cast of thought,

And enterprise of great pith and moment

With this regard their currents turn awry

And lose the name of action.




(Hamlet, Act III, Scene 1)

Net US international investment position continues down

Our net position is now -$7.3 trillion. Our national business model is broken, with too much consumption and not enough investment. What is worse, foreign flows are being used for even greater consumption. Present flows inward will need to be balanced with future flows outward. It is a formula for national impoverishment. Are we doomed? You be the judge.

The Economist, too, is living in a fantasy land: "The audacity of hope"

President Obama has rightly and repeatedly pointed out that anyone who believes the economy is not doing well is "living in a fantasy land."

The Economist has moved to this fantasy land. The current issue has a report on guaranteed incomes. ("Sighing for paradise to come") In it there is graph with the tongue-in-cheek title of "The audacity of hope." (That is also the title of Obama's 2006 book.) It shows that the median salaries of full-time workers in the US are basically unchanged since 2000 A.D. despite a 15% increase in GDP/capital. (Britain did better than the US in both GDP/capita and earnings.)

On top of that, of course, is the fact that fewer workers have full-time jobs and the numbers of those outside the workforce has grown considerably.



To misquote T.S. Eliot, "I'll show you malaise in a handful of dust." (I guess misquoting Eliot is one of the things people in a fantasy land do.)