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JRob's avatar

I’m an active day trader, so I’ll add my 2 cents. Years ago, when I use to watch TV and listen to financial news, I use to get a laugh every time I heard a stock report. Virtually every news item would go like this: “DOW down 250 points, on bad CPI data.” Or “S&P up 50 points, on good non-farm payroll data.” Everyone in the news media has to have a reason for why the market goes up or down. This is logical nonsense.

Everyday there is good news and bad news all around the world. You can just as easily pick good news or bad news to blame the market on. It doesn’t mean that news causes the market to move.

The Big Short dramatized this non-response to news in a movie. When several small hedge funds detected a bubble in the housing market and started betting against Big Money, Big Money eventually realized their own exposure and acted defensively.

There is a scene in the movie where a hedge fund manager who has shorted the mortgage market asks the Big Bank: “How can the value of an insurance contract not be affected by the demise of the very thing it insures?” This was the classic case of the market not responding to bad news as everyone expected.

What was really happening was that the Big Banks were unloading their losing positions before devaluing the underlying asset, and then shorting the bad assets to profit from a further decline in the assets. See these clips from the movie:

https://www.youtube.com/watch?v=hVbgkX3gspw

Big Money always finds a way to profit despite whatever is going on in the news. The buzz in my favorite day trading chat room is that the fed has closed the discount window to investment banks. I don’t pretend to understand how all this works, but the idea is that Big Money is unwinding their positions because they can’t play with free money anymore. They used free money to juice up the market, and now they are taking profits. I think it’s a safe bet than you can ignore all the political analysis trying to tie the markets to Trump.

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Mark Wauck's avatar

Thanks. OTOH, might it be tied to Trump to the extent that the Fed actions are influenced by Trump's policies?

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dissonant1's avatar

Along those lines, the Fed is directly influenced by consumer sentiment and expectations (for example inflation expectations). This is rightfully so as 70% of the U.S. GDP is comprised of consumer spending.

If the Dem pols and the press can convince the public that things are bad economically and are going to get worse, and the reason for that is Trump's tariffs and their impact on inflation, then every time Trump utters the word "tariff" it will both hurt him politically and cause the Fed to act in a way that hinders Trump's desire for economic growth (specifically by raising the Fed Funds Rate).

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JRob's avatar

Maybe. I just gave up a long time ago trying to figure out why prices go up and down on a daily basis, especially around news releases and fed reports. The algo bots can slam the market in a matter of a seconds and who knows where it's going!

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V. Dominique's avatar

It seems to me that the only one who can take Trump down is Trump with his support for Israel, the promotion of laws banning "anti-semitism" and by going after Thomas Massie.

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Cosmo T Kat's avatar

To many of us these are issues that cause concern and questions like, why?

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Tamsin's avatar

Very interesting. For background, PP's article on Truss: https://www.postliberalorder.com/p/the-zero-sovereignty-system

And for those of us who do not play at the casino, there is always Investopedia to explain what a "put option" is. I gather Trump is proving he can move the stock market in the direction he chooses, e.g. push it further down (which increases the intrinsic value of a put)? Will have to read more on the Trump Put.

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Nutmeg's avatar

I have a co-worker who believes Trump is intentionally acting to push the stock market down since his "billionaire buddies" shorted the market.

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Mark Wauck's avatar

3 democrat Senators have announced they are NOT seeking re-election in 2026:

Sen. Gary Peters (D-MI)

Sen. Tina Smith (D-MN)

Sen. Jeanne Shaheen (D-NH)

It just keeps getting worse for democrats — these are all swing states.

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Ray-SoCa's avatar

Trump is very aware of who hates his guts, and would love to kneecap his administration. I’m sure big money is high on that list.

First time around Trump was very naive. He did not see how politicized big money was, and how big money pushed leftist policies such as Dei, Wef, and climate change. All part of the elite agenda. He assumed big money would be happy making more money.

A previous post by Mark suggested Trumps anti Semitism actions are a way to buy time. Yes, and it’s also a way to divide his opposition, neutralize the weaponization of anti semitism accusations against him, and hurt elite universities that are a bastion of anti Trump activity and major participants in the culture wars.

AI is a bubble in the us, and deep seek seems a more efficient model:

https://hiddencomplexity.substack.com/p/deepseeks-seismic-shift?

Nvidia seems to be playing accounting games to goose their stock price:

https://seekingalpha.com/instablog/50662133-james-foord/5924335-nvda-fraud-revenue-misrepresentation-and-insider-selling

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Cosmo T Kat's avatar

Ray, very nice comment and well thought out. When you write,

"First time around Trump was very naive. He did not see how politicized big money was, and how big money pushed leftist policies such as Dei, Wef, and climate change. All part of the elite agenda. He assumed big money would be happy making more money."

It made me think these programs and organizations pushed by big money was more about creating their money from the chaos and the policies provided massive money laundering schemes all tax free. Maybe better than the gains from the market. As DOGE has illustrated in their discoveries it was worth billions of money to them and their hangers on who do the dirty work for them for a small taste. One of the biggest profiteers of this corruption was George Soros. It got lot's of accolades from the press about what a humanitarian he is, but in reality he wasn't spending much he was using tax payer money. You multiply this across the tiny (.01$) operators who have the means to do this the flow of cash was massive so, the stock market may be just for fun.

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Ray-SoCa's avatar

Agree.

I’m wondering how key is/was federal money to supporting the Democrat’s Agenda. My gut feeling is only a tiny part has been discovered so far. It explains the Drmocrstic freak out.

I don’t quite understand the us economy. My guesses:

Rollup have been used to limit competition by consolidating industries resulting in higher prices. Fire engines is a classic. Ticketmaster is another. Seems to be due to cheap money and a failed theory of antitrust, that seems to be dead. https://www.thebignewsletter.com/p/did-a-private-equity-fire-truck-roll

Lots of government actions that favor large companies and consolidation. Meat packing industry going back to Johnson, with the theory bigger is better. Obamacare and the health industry. I’m reading disturbing accusations of how treatments have been discredited, to help pharmaceutical profits (ivermectin is just one).

Excessive regulation that hurts small companies.

Lots of rigging of markets, hurting the small guy.

A revolving door between government enforcers and large companies. Big pharma is a poster child of this.

Duke power v Griggs that forced companies to stop tests for hiring. And Carter then did same via settlement to Government. Trump is challenging Carter deal: https://en.m.wikipedia.org/wiki/Griggs_v._Duke_Power_Co.

Fear of leftist cancellation by companies, including shareholder activisusm.

Power of retirement funds, Blackrock, etc to force their agenda on larger companies. Goldman did fonething similar. Blackrock grew tremendously during Obama era.

Willful Ignoring of hiring of illegal aliens. E-verify? Clean up social security rolls?

Government unions have an outsize influence on state governments, especially California.

I see a lot of actions by Trump on much of the above.

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dissonant1's avatar

Ray you have hit on so many great points. Conservatives think the problem is big government and overregulation of businesses. Liberals think the problem is private industry monopolizing and rigging markets via consolidation through buyouts and mergers. As you point out both are problems.

A key point is that a big factor in corporations being able to do this is corporate capture of government agencies that should have been applying a measure of regulation that truly supports competition and doesn't freeze out small businesses entirely in favor of the big monied interests.

Thanks for the great post.

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Its Just Me's avatar

To your list.

Companies such as Nexstar, Sinclair and Tegna owning hundreds of local ABC, CBS, NBC and FOX affiliates.

Time Warner Cable acquired by Charter. AT&T, at one time owned CNN. Disney owns ABC. Comcast owns NBC. T-Mobile buys Sprint.

The list goes on and on .

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Ed McCormick's avatar

Former hedge fund portfolio manager here. I’ve moved on from listed US equities to venture investing, but I still have a deep understanding of how markets work.

First, a quick overview of market structure. In very simple terms, the bigger the market, the more foundational it is to the world economy. US Stock market < US Bond market < US Dollar market. Stocks can break without impacting Bonds (sometimes even helps bonds), but bond market breaks always impact stocks. A USD break (has never really happened over a short period of time) would be catastrophic to US Bonds and Stocks. Short intro is over.

The markets were extremely stretched before Trump was elected. Add in the uncertainty around the shifting geopolitical environment and the Globalists on the defensive and you get volatile stock markets. In other words, it will be a bumpy ride for stocks in the near term (six to twelve months). But the bond market should actually improve as US gvt spending is cut and real, ,visible improvement occurs with our deficit. The breathless idiots in the press will hyperventilate over tariffs, but these are clearly negotiating tactics used by Trump to get others to the table on his timeframe. He’s not a stupid man and I believe has every intent to improve the economic backdrop in the US by quickly stabilizing a new set of rules.

However, the shifting geopolitical moves will actually help the USD retain its place as a world reserve currency. Loss of that status will absolutely destroy our bond and stock markets. Further, the Globalists (currently on their heels from Trump’s shifting priorities) will benefit from a stable USD. Restated, they’d have to pull a Sampson and destroy the system where they transact to cut off Trump. I believe that given a choice, they will choose money over power (with the belief that their money will eventually lead to power again).

TL:DR – The Globalists won’t succeed in delaying what is coming and when given a choice to protect money or power, they will concede power to protect wealth.

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Amanda R's avatar

I watched this video last night. It's a month old now but I'd appreciate your thoughts - not so much about the gold side as what he says about the markets and currencies I'm not an expert but what he says resonates with me.

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Ed McCormick's avatar

I didn't have time to listen to the whole video, but here is a short take on what I skimmed through. I mentioned market size in the original comment and one key aspect to market size is that the larger the market, the harder it is to break. So, the world pivoting away from the USD over the next 25 years seems unlikely because too many people will see enormous value destruction. Don't forget that the euro should have broken apart years ago, but it is still with us in all its glory.

I don’t have the exact stats in front of me, but roughly speaking, the US is 25% of world GDP. So, any country that exports in size to the US will be heavily impacted by a dollar collapse. For example, China is significantly dependent on the US Consumer. If their goods are now 2 to 3x more expensive due to a currency event, China (a collection of cultures not unlike the old Soviet Union) will face unbelievable internal tensions. Tiananmen Square on steroids. A sudden shift from the USD as reserve currency would hurt the entire global economy…even our frenemies. I don’t think they go down that path in the next 30 years.

US Debt bears will often concentrate on our debt to GDP (which is at uncomfortable levels on a historical basis). However, the piece that the bears miss IMO is to evaluate our debt on an asset basis. When you get a mortgage, you could easily borrow 2 to 3 times your annual salary (i.e. your Debt to Income or GDP in govt. speak). However, the debt load in this example could be a very comfortable even at 3x the equity value in the home (25% down or 75% LTV). The lender's comfort comes from the value of the asset in the transaction (the home), not the income.

Stretching this analogy to the USA, how much is the country worth or what is the asset value of the USA? How much would it cost to rebuild Manhattan from scratch? What is the value of the Mississippi and Great Lakes waterways? The total value of our resources? I don’t know but if you told me the value was 500 trillion or even a quadrillion, I wouldn’t push back on the number. It is probably significantly higher than the total value of outstanding debt and promissory obligations (Social Security, Medicare, municipal debt, state / local obligations, etc.) the USG has taken on. Now, we couldn’t really sell off the Mississippi or Manhattan, but you get the idea.

In conclusion, I’m not really worried about a sharp break from the USD absent a global nuclear war….but in that case, we’ll all have far more pressing concerns.

Please note that I wrote this quickly and I reserve the right to be completely wrong. Don't make any investments based on this advice or any other advice you get for free from the internet. Always remember that Mr. Murphy and his eponymous law are undefeated.

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Mark Wauck's avatar

Makes sense to me. Thanks for the very clear explanation.

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Steghorn21's avatar

The US economy is in a bad state, but Trump has a brief honeymoon period when he can blame everything on Biden. However, I hope he has a better strategy for the economy than he does for peace with Russia.

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Nutmeg's avatar

Fitch noted that subprime auto loan delinquencies at 6.6% are at the highest level going back to when it was first tracked in 1994. Subprime delinquencies have been steadily moving higher from a low of 2.5% in the spring of 2021.

401k hardship withdrawals were made by 3.6% of participants in 2023 and that percentage rose to a record 4.8% in 2024. The hardship percentage was generally around 2% pre-2020.

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Its Just Me's avatar

"The breathless idiots in the press will hyperventilate over tariffs, but these are clearly negotiating tactics used by Trump to get others to the table on his timeframe. He’s not a stupid man and I believe has every intent to improve the economic backdrop in the US by quickly stabilizing a new set of rules."

And I believe he is employing tactics with regards to Ukraine and the Middle East.

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Ray-SoCa's avatar

Must be the local dialect:

“Once these EVs catch fire, they're a dickens to deal with”

Or us California just don’t use “dickens” much.

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AmericanCardigan's avatar

Just us Chicagoans.

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Steghorn21's avatar

Darn it, that's another place crossed off my bucket list! :)

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D F Barr's avatar

JB will Big Foot them mob boys in Rosemont. JB can over rule the laws of physics. Just ask him.

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ML's avatar

Lord knows JB himself is a walking refutation of the laws of physics…and, he was born in Cali! Whoops!

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