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November 8th brought the ultimate shock and the futility of depending on masses to the surface. Contrary to folklore, democracy and the “wisdom of crowds” appear oddly contradictory. In case that is not clear, yes, electing trump was very odd, if anything. The stock market indices first fell, and then selectively stocks for large banks, private prison firms, defense and other areas have risen.
There is a general sense of belief that the Republicans will come in with sparkling dust and a magic wand to reduce individual and corporate taxes and boost the economy. Yes, in the short term, this is very feasible. Well, this has been tried during the Bush Administration, and in Wisconsin and Kansas. Not once was the result good.
Furthermore, there is some giddiness surrounding expectations of the riddance of Dodd Frank, the CFPB, and oddly enough the ACA as well. Sure, these are all possible, even with all the legal battles that will ensue. But no one seems even a bit bothered that the absence of Dodd Frank is what in most part caused at least some of the problems leading to the crash in 2008.
Then, Realtor.com is worried that Freddie and Fannie Mae are in the gop cross-hairs. This makes it quite odd, if true. I agree with Realtor in that it directly affects the people who supported trump.
There are also some questions as to whether inflation will rise as is being expected as part of this run up, and as to whether if it did, that would be a good thing.
Trigger Point
Well, where does this leave us all? I think this election result is the trigger point. There is true irrational exuberance at play. Stocks are rising when the status quo is about to change, especially in ways that are not good. They are also not taking into account the instability of the president elect. He says and does things which make as little sense as possible. Plus, as someone who also did not believe he was going to win, he never had plans. For example, it has become apparent that besides vague threats to Amazon.com (and Jeff Bezos deserves it for treating his lower level employees like dirt), trump has no plans for the technology industry at all!
All the republicans want is to be rid of the ACA. However, none of them know what to replace it with. Because they wouldn’t. They never knew how to solve the healthcare problem. So, they will do really stupid things. Yes, they will not regulate as the Democrats have, but that is not enough to keep up the healthcare and insurance industry shored up for long.
So, taken in effect, along with trump’s volatility, the stock market is rising now based on nothing. Take this with the technology and real estate bubbles already underway, I think we will finally see rapid growth and the ultimate crash. It is now just a question of time.
Timing the timing
I don’t think we will need to wait long to figure out a way to judge things.
- I believe we will see the stocks rise, then plateau and then rise.
- When the interest rates are finally increased in December, we should see more activity.
- The various crazy laws that the gop plans to implement should start popping up as soon as Congress opens shop in January.
- Then will come the various executive orders in third week of January.
- Add to that the changes to immigration they want. I don’t know when they want to start doing this, but it should be pretty early on and will be very disruptive to the workforce. Several experiments have been attempted to replace immigrants with natives in hard labor jobs and they have never succeeded.
- Finally, given the incredibly crazy territory we are swimming into, there will be other unexpected signs. We just have to wait and watch.
The challenge is simply not in knowing there will be or that we are in a bubble. The challenge is in the timing. This is what I am going to try and track as closely as I can. Keep an eye out.
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