Davos Welcomes Trump
“Davos Man” Makes His Peace With… Trump?!
A funny thing happened last week at the World Economic Forum’s annual shindig in Davos, Switzerland. Or should we say, an unexpected thing.
Oh sure, there were all the usual horrors attendant with these gatherings. For instance, there was much discussion about a “Disease X” that doesn’t yet exist but nonetheless is supposed to be “20 times deadlier than COVID.”
And given the scrutiny the WEF has gotten from ordinary folk in recent years, there was much hand-wringing about “misinformation” and “disinformation” allegedly undermining democracy.
Of course, in the parlance of the power elite, those words merely mean “anything that undermines our narratives and our agenda, even if it’s true. Or especially if it’s true.”
In the context of American politics, that frequently translates to “anything that gives a boost to the Orange Usurper who commandeered the White House between 2017–2021.”
So it’s passing strange that two titans of finance offered praise at Davos — however lukewarm or backhanded — for Donald Trump.
Begin with Blackstone Group founder Stephen Schwarzman. He’s one of several billionaire Republicans who are holding off on backing a GOP presidential candidate. “I’m in the let’s wait and see how this works,” he told Bloomberg TV at Davos last week.
Schwarzman blames Trump for the GOP’s underperformance in the 2022 midterms. But he’s not closing the door to Trump altogether — especially if Trump emerges from New Hampshire tonight as the presumptive nominee. (If he doesn’t, it will be another humiliating moment for pollsters…)
In the eventuality of a Trump-Biden rematch, Schwarzman appears willing to back what he sees as the lesser of two evils: “I don’t think the country, frankly, is ready for four more years” of $2 trillion annual budget deficits, a rising debt-to-GDP ratio and “open borders.”
But the real eye-opening remarks at Davos last week came from JPMorgan Chase CEO Jamie Dimon.
Dimon once described himself as “barely a Democrat.” Over the years, the bulk of his donations have been to Democrats. And he was once rumored as a top candidate for Treasury secretary under Barack Obama. Two months ago, he was urging Democrats to cross over to the Republican ballot in open-primary states and back former U.N. Ambassador Nikki Haley.
But here’s Dimon on Trump at Davos last week: “Take a step back, be honest. He was kind of right about NATO, kind of right on immigration. He grew the economy quite well. Trade tax reform worked. He was right about some of China.”
And Dimon cautioned Democrats not to be so contemptuous of concerns expressed by the people Hillary Clinton once dismissed as “deplorables.”
Not that he put it in exactly those terms, but… “I wish the Democrats would think a little more carefully when they talk about MAGA,” he told CNBC. “I think this negative talk about MAGA is going to hurt Biden’s election campaign.”
The NeverTrump crowd lost its feces at these remarks: “Jamie Dimon Joins the Trump Normalizers,” screeched an article at The Bulwark, a site founded by neoconservative scold Bill Kristol among others.
Bottom line: At least a sliver of the Davos crowd is making its peace with the prospect of Trump winning a second term.
Asked which candidate would be better for JPM, Dimon said, “I have to be prepared for both. I will be prepared for both. We will deal with both.”
What does it mean? Who knows? We’ll leave that for you to decide. But it’s one more datapoint in support of our own Jim Rickards’ election thesis — one he shared recently on YouTube in an interview that’s already racked up a half-million views…
The video was released Dec. 1, 2023 — but it’s still current. Give it a look if you haven’t already.
Oh, and on the subject of our company doing business with YouTube, check out today’s mailbag section later…
Think Small
No guarantees, but if history rhymes… small-cap stocks are poised for an epic run. So says colleague Sean Ring in today’s Rude Awakening.
It was Sean who alerted us last fall to a pivotal moment in IWM, the ETF linked to the small-cap Russell 2000 index of stocks with market caps under $2 billion. Sean said the $161–162 level was IWM’s “line in the sand.” Any lower, and it spelled trouble for the rest of the stock market.
As it turns out, that line held: IWM bounced to $168 at the end of October — signaling the start of the broad stock market’s huge November–December rally.
Fast-forward to the present, and IWM trades just under $197.
But a funny thing has happened: Sean points us to research by Charlie Bilello, a chart analyst with a large following on Xwitter. Mr. Biello says that while the S&P 500 sits at all-time highs… the Russell 2000 remains 20% below its all-time high.
That’s happened only three times in the last 40 years or so — January 1985, February 1991 and April 1999.
An ill omen? Hardly. In all three cases, the S&P went on to rally in the next 12 months — and the Russell rallied much harder.
In the case of April 1999, the dot-com bubble still had many more months to run: The S&P gained 14.3% over the following year — while the Russell leaped 36.5%.
“If I were a betting man,” says Sean, “I'd suggest that this situation will resolve like the one in 1999, when the Russell rallied 36.5%.”
As for today’s market action, the major U.S. indexes are catching their breath.
After notching its first close over 38,000 yesterday, the Dow is down about a third of a percent to 37,885. The S&P 500 is ruler-flat — holding onto yesterday’s record close of 4,850. The Nasdaq is slightly in the green at 15,378.
The Russell 2000 is performing best of all — up over a third of a percent. Hmmm…
Bonds are selling off, pushing yields higher: The yield on a 10-year Treasury is back to 4.14%. Precious metals are treading water, gold at $2,024 and silver at $22.35. Crude is little changed, just below $75.
Bitcoin has broken below $39,000 — a situation we don’t expect to last long. More about that later in the week…
The Follow-up File: Fed Stock Trades, Russian Oil Exports
It’s official: Two former presidents of regional Federal Reserve banks will skate for their skeevy stock trades.
In the fall of 2021, it emerged that Dallas Fed president Robert Kaplan and Boston Fed president Eric Rosengren both traded positions in individual stocks at a time the Fed was intervening to halt the COVID crash in March 2020.
Both ended up resigning soon after… while the Fed’s inspector general took up an investigation.
That investigation is now over, and it clears both of violating any policies or laws. The only problem, it says, is the “appearance” of a conflict of interest.
Yeah, huge trades in the likes of Delta Air Lines, Chevron and Apple the very week in March 2020 that Donald Trump was shutting down the economy. Just a bad look, that’s all, no insider information or anything.
Yeah, pull the other one…
The scandal did result in reforms during 2022 barring senior Fed officials from holding individual stocks. Yay?
For the record: Russia now exports more oil than it did before the invasion of Ukraine two years ago.
At year-end 2023, Russian figures showed that oil exports were 7% higher than at year-end 2021.
Of course, it wasn’t supposed to work that way: U.S. and European sanctions were supposed to throttle Russia’s oil trade.
“The U.S. sanctions were always bound to fail,” says Paradigm’s Jim Rickards — as he said they would the day of the invasion. “The Russians have been able to sell any oil or natural gas that Europe won’t buy to China, India and other willing buyers.
“Oil export sanctions can be the easiest to get around. You simply find an old tanker (not necessarily the latest and greatest), repaint it, change the name, change the flag and send it on its way with radio and GPS transponders in the off position. It’s not the neatest form of oil exporting, but it works fine.
“I warned the U.S. government about the fact that sanctions would backfire in the early 2000s and repeated the warnings more recently in lectures at the U.S. Army War College. The U.S. government may not listen, but the Russians do.”
Phil Murphy, You Suck
By now, 43 states have rescinded their sales tax on gold and silver. New Jersey is not among them, thanks to Gov. Phil Murphy.
The Garden State’s legislature recently passed a bill exempting gold and silver from sales tax. The votes in both the House and Senate were unanimous.
Unfortunately, the vote came in the final 10 days of the legislature’s two-year session. As such, the governor has the authority to veto the bill without it returning to the legislature for an override. And that’s the authority Murphy chose to exercise.
The analysts at the MoneyMetals website point out the move makes zero sense when you consider that all of New Jersey’s neighboring states — New York, Pennsylvania and Delaware — have eliminated their sales tax on gold and silver.
That said, lawmakers plan to reintroduce the legislation in the new session. Presumably they’ll try to pass it with ample time to override another Murphy veto.
Murphy offered no reasons for the veto. We’ll point out that before he got into politics, he spent 23 years at Goldman Sachs…
Mailbag: YouTube, Substack, Etc.
“Why use YouTube?” reads the subject line of a reader’s email.
“You mentioned that the original Paradigm Press YouTube channel was wrist-slapped,” he writes, “which makes you the most recent right-leaning organization to perplex me. Why not use Rumble?
“I appreciate the ‘brand’ argument, but they have you by the short and curlies as your premium for that brand advantage.
“I do not know what the moneymaking difference is on the two platforms. What I do know is that we vote with our clicks and dollars far more frequently than at the ballot box. Don’t vote for un-American people who do not like you.”
Dave responds: You’re not the first person to make such an inquiry — and we’re keenly aware of the hazards.
“We’re a relatively small company,” publisher Matt Insley recently wrote to our Omega Wealth Circle members, “and creating high-quality content takes time and money. So naturally we focused our efforts on the website that offered the most potential eyeballs.
“Now that we’ve established a solid audience and a methodology for posting new content, we are considering posting on other platforms.”
That would give us an instant fallback if YouTube decides we’ve run afoul of their standards one too many times. “If they do cancel us,” says Matt, “we’ll expedite our plans… and hope our viewers come with us.”
Speaking of free expression…
“Dave, thanks for the report on Substack — once again exposing the threats to freedom of speech,” a reader writes after yesterday’s edition. “You are providing a good service.”
Not everyone is in agreement, however. Or at least that’s the drift I get from this reader’s mail, which I assume is in response to yesterday’s main topic…
“I am a subscriber to Altucher’s Investment Network and get the 5 Bullets newsletter free. I will be unsubscribing to it and I wanted to tell you why.
“It's a real turnoff to receive right-wing talking points in the guise of a news update regarding financial issues. And I am a Reagan Republican in Alabama.
“So you might want to make your next issues more politically neutral or you will lose more folks. And I'll have to really give some thought about not renewing with James next year.”
Dave responds: We’re sorry you’re leaving — and of course we’ll respect your wishes.
That said, when did free speech — and the ability to express oneself without fear of being cut off from access to payment processing — become coded as a “right-wing” cause?
More broadly… Like it or not, the message that’s resonated most with our readers in the last two years — and the one that’s generated the most new readership — is overtly political. Or at least it’s critical of the current occupant of the White House.
Most broadly… The reality is that politics are clashing with and intruding on money more and more. We don’t like it, but all the same we can’t ignore it.
Best regards,
Dave Gonigam
Managing editor, Paradigm Pressroom's 5 Bullets
