Crypto Playing Politics
The Stealthiest Campaign Commercials of 2024
The campaign ad looks like most other campaign ads, of which there’ve been way too many this fall.
It touts Ohio’s GOP candidate for the U.S. Senate — auto dealer Bernie Moreno. It plays up how he’s aligned with Donald Trump on energy policy and immigration.
But the outfit behind the ad is pursuing an agenda that has nothing to do with either of those hot-button issues. Nor does it really have anything to do with its name — “Defend American Jobs.”
Defend American Jobs is a political action committee representing the crypto industry — one of three PACs that have spent $82 million so far on 19 key Senate and House races.
Defend American Jobs backs Republican candidates. A similar PAC called Project Progress supports Democrats.
Both PACs are backed by still another PAC called Fairshake — which is funded by Coinbase, Ripple Labs and the Silicon Valley venture capital firm Andreessen Horowitz.
As you can tell, Fairshake is unlike most PACs. It is indifferent to political party.
Fairshake is backing Republican Moreno in Ohio’s Senate race. But it’s also backing Democrats Elissa Slotkin in Michigan and Ruben Gallego in Arizona. Both are running for open Senate seats. Both built up pro-crypto track records in the House.
“It’s purely transactional and on specific policies,” says Rick Claypool of the watchdog group Public Citizen. As he tells Bloomberg, “It is a very clear attempt to apply pressure on the lawmakers themselves to essentially say: ‘Support us and we’ll stay out of your race.’”
Nearly half of the money spent by Fairshake so far — $40.1 million — has gone into the Ohio Senate race.
That’s because Moreno’s opponent is three-term incumbent Democrat Sherrod Brown.
As chair of the Senate Banking Committee and one of the most vocal crypto critics in Congress, Brown finds himself in the crypto industry’s crosshairs — and in a dead heat with Moreno after he once led the race by six percentage points.
“Brown has warned for years about the risks that crypto poses to consumers and the financial system,” reported Politico in late 2023. “He’s one of the toughest obstacles the crypto industry faces in advancing legislation that would help give it regulatory credibility.”
In contrast, Moreno has openly embraced crypto — even if it’s not a huge part of his platform. He launched a company that aims to put vehicle titles on the blockchain. He spoke at a recent gathering of the Ohio Blockchain Council — where Paradigm crypto analyst Chris Campbell was on hand.
As Chris puts it, “Politicians and industry heads are taking notice and, behind the scenes, becoming way more open to this technology.”
Moreno himself put it this way recently: “The crypto industry is pretty amazing in that 10 years ago, it was the laughingstock of the tech world. And in reality, here you are 10 years later, and they’re going to be decisive in helping Republicans win the United States Senate.”
Maybe, maybe not — given how Fairshake is strategically placing bets on both the elephant and donkey parties.
A Year-End Rally: The Stage Is Set
For as much as the stock market has been struggling to get traction this week, history says it’s in line for a strong run into year-end.
Says trading pro and hedge-fund veteran Enrique Abeyta, the newest addition to the Paradigm team: “We recently completed the 202nd trading day of the year. Through the close of that day, the S&P 500 is +23% for 2024.
“Over the last century (back to 1928) this would rank as the 13th-BEST year-to-date performance for the stock market.
“What is interesting about this is what happens next! Looking at the 12 occurrences that were BETTER — all 12 of them saw the stock market higher by year-end.
“The market also posted an average +6.4% return with four instances of double-digit returns.
“Looking at the top 20 year-to-date returns through 202 days over the entire data set, only TWO were down. In 1948 and 1983 the market traded down through year-end but only -1.4% and -1.8% respectively.”
All of which underscores a major Enrique theme: “The past predicts the future. Strength begets strength.
“We are a bit cautious in the very near term but we think the stock market finishing higher into year-end is a VERY high-probability bet.”
That short-term caution is warranted: The major U.S. indexes are mixed as we write — the Dow down, the S&P 500 and the Nasdaq up.
The S&P slipped below 5,800 by yesterday’s close, but it’s recovered that level for the moment. It sits about 1% below its record close last Friday.
The first of the “Magnificent 7” companies reported its quarterly numbers after the close yesterday — with Tesla posting a surprise jump in profits. At last check, TSLA shares are up a scorching 18.4% on the day. Five more of the Mag 7 companies report next week.
Gold is recovering some of its losses yesterday, back at $2,733. Silver, however, is taking longer to pick itself up — more or less treading water at $33.70. And the HUI index of gold stocks is down 2% at last check.
Bitcoin is rallying and back within spitting distance of $68,000. Crude is selling off and might well end the day below $70.
The big economic number of the day is new home sales — up 4.1% in September, way more than expected, indeed the highest level since May 2023. The year-over-year increase works out to 6.3%. Growth was especially hot in the Northeast. The median price for new construction is $426,300, more or less the same as a year ago.
The housing market might be frozen in amber thanks to high prices and high mortgage rates, but for the moment homebuilders are thriving.
Notes From the BRICS Summit
“We are incredibly fortunate the BRICS club couldn’t get it together this time,” writes colleague Byron King.
Leaders of the BRICS nations just wrapped up their annual meeting in Kazan, Russia. As we anticipated in this space on Monday, they smoothed the process of payments among member nations — but they did not roll out a unified payment currency, much less one with 40% gold backing.
That said, Russian President Vladimir Putin couldn’t resist trolling Western leaders by holding up a sample “BRICS banknote”...
Not legal tender. Instead Putin said it “represents the collective
work being carried out within the BRICS framework.”
As we’ve said for years, “de-dollarization” is a process and not an event. No doubt that Russia, China and Iran want to get out from under the U.S. dollar’s thumb. It will happen in time.
Sometime in the 21st century the dollar will lose its role as the globe’s reserve currency — as the British pound did in the 20th century, the French franc in the 19th, the Dutch guilder in the 18th and so on.
When that happens, the results for Americans will be highly inflationary; we’ve already had a preview of coming attractions since 2021.
As Byron writes, “Absent day-to-day demand for dollars to finance trade, many national central banks will spend down their remaining stockpiles of dollars. We might see one last blowout as governments and businesses buy ‘real things’ that range from gold, silver and oil to other commodities, real estate, mines, mills, industrial facilities and similar items.
“Another way to describe what’s about to occur is that a tsunami of unneeded dollars will flow into global energy and commodity markets, as well as back toward U.S. shores to acquire ‘real stuff’ to the extent it can be owned and controlled, if not exported away from U.S. jurisdiction and our crazy politicians, laws, judges and lawyers.”
For those reasons you want to be invested in those “real things” — and not just gold and silver. Byron has a shopping list, complete with names and tickers, and much more background about the BRICS in today’s edition of our sister e-letter The Rude Awakening.
➢ In the meantime, the total number of BRICS member countries is holding at nine — but the group did welcome 13 new “partner countries.” The one that will stand out the most to Western leaders is NATO member Turkey. Hmmm…
Perhaps the most immediate-impact event at the BRICS this week is a detente between founding members China and India.
The two countries have a long-standing border dispute in the Himalayas, at an elevation of 17,000 feet. They fought a full-on border war in 1962. China lost badly and hasn’t forgotten. Both have since acquired nukes.
Neither side has fired a shot since 1975 — but hand-to-hand combat broke out in the summer of 2020, soldiers resorting to metal batons wrapped in barbed wire. At least 20 Indian troops were killed.
This week at the BRICS, Chinese president Xi Jinping and Indian Prime Minister Narendra Modi met one-on-one for the first time since 2019. At the conclusion of their talks, they agreed to joint patrols along the border.
The details are fuzzy, but in a way they don’t matter. As The New York Times puts it, “Any thaw between India and China could have global implications as the United States courts New Delhi to act as a counterweight to Beijing.”
India often treads a fine line between the Washington-led West and the emerging Russia-China-Iran partnership symbolized by the BRICS.
But at the moment, Modi can’t be happy with the feds indicting an Indian government official for trying to kill a Sikh on U.S. soil. Just sayin’…
Comic Relief
We pass along the following with no further comment…
Third Parties (or Write-Ins?)
The reaction to yesterday’s third-party themed mailbag… and my critique of Trump’s first term… was remarkably restrained and reasonable.
Well, with one exception: “Wow. I guess from the way this last piece was written we know what party Dave Gonigam supports. Way to project your bias.”
“I can understand your frustration with the Trump administration,” says another. “However, I think Trump learned a lot during his time serving as president. He was new to serving in politics and did make mistakes, but I think he learned a lot about the deep state and the need to reform the corrupt bureaucracy. He has Elon Musk, RFK Jr. and Tulsi Gabbard on his side and they will help him make needed reforms. COVID was a new virus and he unfortunately deferred to Fauci and the CDC.
“I do think Trump's objective is to put America first and his policies were from a businessman’s perspective. And I do think he wants to get America back on the right track. We need to be energy and food secure and Kamala's and Biden's policies are destroying that objective.”
Dave responds: It’s a story for another day, but I don’t have the confidence in Trump’s new coterie of hangers-on that you do.
All the same, after the events of the last four years… I can’t fault anyone who sees the dominant faction of the power elite represented by the center-left of the Democratic Party as such a pernicious and unique threat that they opt for Trump in spite of his miserable record.
I only hope that Trump supporters extend the same benevolence to those who can’t bring themselves to make that choice and whose consciences lead them instead to third-party or write-in options. (Or who take the George Carlin option and stay home.)
“I have always felt that the two-party system is a flawed model that lends itself to 'tribal' entrenchment that by definition is detrimental to a nation's well-being,” a reader writes.
“The end road is implosion or rule by dictators.
“America is in need of a true third party that really represents the middle of the road, a common-sense solution.... 'by the people, for the people'.... Instead of the rule by special interests whose power lies in the size of their wallets.”
“I was recently reminded by an individual who has been educating the general public about the current state of affairs and how elections are ‘offered,’” writes our final correspondent.
“He described the current election, and many previous ones as akin to a business offering a product to market. This business will conduct what is referred to as ‘A/B marketing,’ where they run ads from two separate perspectives, promoting oftentimes wildly differing benefits for the exact same product. Based upon the response from each of those ads, the business then continues along the path of the winning ad.
“This election season is presented to us in the same manner. Two different ‘ads’ (candidates), who are going to, ultimately, offer the exact same ‘product’ (results) once they are put into office. Nothing changes. The general public is only given the impression that something will change.
“For that reason, I offer an alternative option that we, as the general public, can exercise... the WRITE-IN candidate.
“This is an option on all voting ballots in all states, and offers those of us who prefer not to vote for the ‘less bad person’ an option to voice our opinion. What opinion does this present for us? We don't like your options, and prefer not to play your game!
“And to those of you who think this is just wasting your vote, I disagree. This vote is recorded just like all other votes, and is my statement to the government. Not going to play. And if, for some wildly, statistically impossible scenario, millions of people write in the exact same ‘candidate’... the electors in each state (because a vote for a candidate is actually just a vote for the electors of that specific state to choose the candidate with the most votes) would be obligated to cast their vote for that WRITE-IN candidate. Want to talk about a surprise change?
“Imagine the results if an unknown WRITE-IN candidate stepped in and won!! It's only a matter of coordinating on a massive scale.”
Dave: Kyle Rittenhouse was onto something this summer when he suggested a write-in campaign for Ron Paul.
But then someone from Team Trump got the better of him. I’d love to know the backstory of what happened there…
