pipe dreams and outliers

market vibes

January 3… )

“You may say I’m a dreamer, but I’m not the only one… “ John Lennon

Before I begin this, allow me to frame these ideas by saying I hope President Trump is about to settle what feels like World War 2.5. If that happens, the next few years could usher in a period of social and economic mean reversion, not unlike the 1930s, when unchecked greed, corruption, and excess finally collapsed. In the void that followed, society embraced a more scrupulous and thrifty way of life. We do not need catastrophic poverty to change, a contraction for sure, but not a depression.

In 1988, greed was good. It was almost a moral imperative. But these highs in the stock market may actually mark the lowest point for political morality and fiscal responsibility in our time. No one can be blamed entirely. That would be like blaming the wind for a hurricane and voting is better than blaming.

In my opinion, peace is the key, and peace is a win-win scenario. The cost of war has been tolerable so far since 2022, because we have paid for it with our children’s money. But tolerance is wearing very thin. War is now a massive, daily margin call with all the hallmarks of a dangerous losing trade. Major trends don’t end overnight. They stabilize before turning up.

I think 2025 will be that moment of stabilization, the bottom before a new era begins. Perhaps the dawn of a golden age, with family, loyalty, and nationalism as the very foundations on which individualism will thrive again.

In my view, the global silent majority is anti-war, and their voices are being heard. Trump will parley off the arms industry by rebuilding the U.S. military. His peace deals will be “nothing personal, just business.” It is the responsibility of all parties to get the best deal possible for their citizens rich and poor. The political future will favor those who get results. Banks, as always, will either fund both sides or fund the winning side. If Trump is nothing else, he wins.

As for Ukraine, the appetite for war is limited to a few players, the Houston Mafia, troublemakers like Obama and Soros, NATO lefties, and the neo-cons in D.C. Those guys are going to have their hands full being investigated, 100%. The Pentagon, CIA, FBI, and other intel agencies will be forced to streamline, merge, or shut. Oxymoronic agencies like Homeland Security will be gutted or completely defunded.

AI

Trump is going to weaponize AI, starting with the tax code and the IRS. Tariffs will stick, as they have historically generated more government revenue than direct taxation on labor. Deficits, federal and trade, will decelerate. If AI is the answer to productivity, the litmus test will be the federal government.

In the private sector, AI will render many accounting and legal jobs obsolete. Healthcare and medicine, same idea. But confidence in medicine will improve as HMOs go to the junk pile. Local doctors might have a renaissance. Insurance premiums will be more fluid and accurate, more competitive and transparent.

AI could be one of the most productive and deflationary inventions since the wheel and, therefore, one of the most bearish for stocks ever. Bonds? The issue with AI is its limited data from which to learn may be completely exhausted by 2026, and the scope of its use will effectively get exponentially dumber (HT Derek). That would be bearish for stocks, too.

The planet

Global migration will stabilize. Racism isn’t dying; it’s already dead. The Western world was socially liberal long before diversity became a euphemism for racism. I am learning to speak Spanish quite well, and I like it. Asia’s xenophobia will remain a different story, and we should respect their sovereignty. Africa’s future will be determined by Africans, not by western intervention.

In Europe, a place where I have attended school in France and Spain and lived for many years, I think Nigel Farage may become Britain’s answer to Trump in 2025. If not then, by 2026, when Marine Le Pen wins in France. Free speech, public safety, the rule of law, and a renewed focus on citizen’s rights will carry them into office.

Migrants, wherever they are, will either fully integrate or go home, taking their prejudices with them. Nations will rediscover their historic identities to cherish and protect. History teaches that invaders eventually return home for many reasons. Mostly because they never truly belonged there.

Finally, the younger generation is still here in America, Europe, and elsewhere. They are waiting to be inspired! We need to ask them, as Kennedy did in 1960, to be the future. That is up to us.

PS: I freely disclaim “pipe dreams and outliers” is just that: entirely my thoughts and with Jan 6 on Monday, I have written them to get them on the page for my benefit as much as the reader.

JJ

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