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I don’t think it’s contagious, but many of my friends are suffering similar symptoms. “Of course, I know Trump has a different leadership and negotiating style. I get that. My confusion stems from trying to figure out which is the negotiating part, and which is just bad policy.”  Trump Confusion Syndrome, or TCS, is distinct from Trump Derangement Syndrome in which afflicted people feel outrage about everything the president says or does. For me, the top source of confusion is the president’s tariff fixation.  We did lose some better-paid manufacturing jobs to China, Europe, Brazil, etc. It’s a fact that it is just cheaper to manufacture some automobile products and do assembly in Mexico. A low standard deviation means answers are more tightly clustered around the average. For inflation expectations, this was generally the case from 2000 up to 2021–2022. Then the standard deviation zoomed higher, indicating the guesses were wider apart. Trump is, if nothing else, a risk-taker....

Han har vid olika tillfällen talat om deras användbarhet för att öka intäkter, för att återuppbygga USA:s tillverkningskapacitet och för att få mer samarbete om immigration och narkotikabekämpning. Min egen uppfattning är att han ser tullar främst som en hävstång han kan använda för att förhandla om andra saker. Lagen ger presidenten bred makt att påtvinga dem efter eget gottfinnande. I Trumps tankar skulle det vara synd att inte använda den makten. Det är ett snabbt och enkelt sätt att tvinga fram en överenskommelse om vad han vill. Uppriktigt sagt är det bättre än att hota med militära åtgärder. Det verkar som att vissa länder helt enkelt inte svarar på artiga förfrågningar. Men det här verktyget är användbart bara om de andra partierna tror att Trump faktiskt kommer att använda det. Vad vi vet är att den här presidenten och administrationen inte har något emot att använda dimma, kaos och osäkerhet i jakten på sina mål. Det är inte den strategi jag skulle välja, men jag kandiderade i...

“There are decades when nothing happens, and weeks when decades happen,” says a quote from Vladimir Lenin, who may have copied it from someone else.  US companies like Nvidia (NVDA) would profit from making those chips, which other US companies would buy and use to develop AI applications in vast new US data centers.  The main worry was getting enough electricity to power it all. China, it was thought, would be hobbled for lack of the necessary chips, and thus present little competition. DeepSeek just poked a massive hole in that happy narrative.  When the topic involves China and technology, one of my go-to sources is Gavekal Research.  They know how the Chinese economy works and are really good at explaining it in ways Westerners can understand. Louis Gave knew DeepSeek was a gamechanger as soon as he saw it. He posted a report calling this Another Sputnik Moment. Gavekal’s Beijing-based tech analyst Tilly Zhang followed up with a deeper explanation. This is a good...

Treasury Secretary Yellen’s management of government debt is the single worst mismanagement since Alexander Hamilton.  Not issuing 30-year notes in the 1% range was criminally stupid.   John Mauldin 10 January 2025 https://www.mauldineconomics.com/frontlinethoughts/a-partly-cloudy-year  

  Mycket att ersätta innan vi är fossilfria. The world has had reliable economic growth for three centuries since industrialization and the fossil fuel era.  Everybody wants to be wealthier and more wealth is correlated with more energy use. Wealth brings more demand for the really poor countries that want to use what we have.  I mean, only one in 700 people in the poor part of the world have ever flown in an airplane. And in the poorest parts of the world, only one in 800 people own a car.  So, you don't have to be a mathematician or an economist to know it doesn't take much growth to create incredible demands for energy to manufacture and operate cars and airplanes,  even if only 10 percentage points more of those people get wealthy enough to want to fly and drive cars. Roughly three billion peoples’ annual energy consumption is equal to the annual energy consumption of your refrigerator.  Their total energy consumption for all purposes over the course of...

 Det vet jag tack vare AI. Det viktiga är att veta vad man skall fråga. Jag fick uppslaget vid läsande av John Mauldins nyhetsbrev. Copilot AI: Yes, Donald Trump's 2017 tax plan significantly impacted tax deductions for homeowners. The Tax Cuts and Jobs Act (TCJA) capped the federal deductions for state and local real estate and income taxes at $10,000 per year and also limited the mortgage interest deduction to loans up to $750,000. This change reduced the benefits of these deductions for many homeowners, particularly in high-tax states.  It was a controversial move, with some arguing it hurt middle-class homeowners while benefiting corporations.   --- https://www.propublica.org/article/trumps-trillion-dollar-hit-to-homeowners https://www.cbsnews.com/news/how-trump-tax-plan-changes-mortgage-interest-deduction/ https://www.businessinsider.com/trump-tax-plan-home-mortgage-interest-deduction-2017-11 --- Almost 40% of US homeowners own their home free and clear of ...

Let’s start with the big picture.  Over the 40 years or so since Deng Xiaoping, China made a historically remarkable leap from widespread poverty to industrial prowess. Other countries have gone through this cycle, of course, but none so large and certainly not so fast. This had many global effects, including a massive boost to commodity demand. A growing but resource-constrained China imported vast amounts of energy and raw materials, which were then transformed into infrastructure, housing, and most of all exports to the West, often at prices low enough to render others uncompetitive. Chinese creativity, resourcefulness, and an impressive ability to “scale,” combined with what used to be cheap labor gave them a massive Ricardian comparative advantage. China transformed internally as rural farm workers took factory jobs in gleaming new cities. Living standards improved, at least near the coast, further boosting consumer goods demand.  The nominally Communist government seemed...

  The chart shows quarterly HUD data for actual selling prices For sales in Q2 2014, the average price was $288,000. Ten years later in Q2 2024 it was $426,800, a 48.2% increase.  That was actually down a bit from the Q4 2022 peak, when the average selling price was $442,600, a 53.7% increase in 8½ years.  Notice, however, when most of the gains occurred. Home prices zoomed higher in the COVID era, gaining 39.6% in the 2½ years from Q2 2020.  I think the COVID-driven monetary and fiscal stimulus was a much bigger factor. The Fed’s easy policy made borrowing cheap while other programs put cash in people’s pockets.  Consumer goods spending boosted profits at many businesses. This led to higher salaries, bonuses, and stock prices. A small number of business owners and executives ended up with a lot of extra money, some of which went to buying new homes.  Naturally, prices rose. A similar trend unfolded in rental properties.  Homeownership became “the Amer...

 I am going to liberally quote from Gurri’s book and interviews, trying to let him explain himself in his own words. Fifth Wave of human communication The invention of writing, for example, was one such wave. It led to a form of government dependent on a mandarin or priestly caste.  The development of the alphabet was another: the republics of the classical world would have been unable to function without literate citizens. A third wave, the arrival of the printing press and moveable type, was probably the most disruptive of all.  The Reformation, modern science, and the American and French Revolutions would scarcely have been possible without printed books and pamphlets. I was born in the waning years of the next wave, that of mass media—the industrial, I-talk-you-listen mode of information…” For Gurri, the establishment of the internet and the web slowly and then like a tsunami overwhelmed traditional sources of information, which threatened the entrenched order—not jus...

  The story about sandpiles and the financial system may be the most popular letter I’ve written in the last 25 years.  It is one we should all re-read every few years to remind us how change happens slowly, then suddenly.  A very important book by Mark Buchanan called Ubiquity, Why Catastrophes Happen.  I HIGHLY recommend it if you, like me, are trying to understand the complexity of the markets.  The book is about chaos theory, complexity theory, and critical states. It’s written so anyone can understand—no equations, just easy-to-grasp, well-written stories and analogies. Imagine, Buchanan says, dropping one grain of sand after another onto a table. A pile soon develops. Eventually, just one grain starts an avalanche. First, economist Dr. Hyman Minsky showed how stability leads to instability.  The more comfortable we get with a given condition or trend, the longer it will persist, and then the more dramatic the correction when the trend fails. Go back t...

  Eliternas uppror och sveket mot demokratin – Karneval förlag (karnevalforlag.se) https://www.bokus.com/bok/9789189494558/eliternas-uppror-och-sveket-mot-demokratin/ “All over the world, elite institutions from governments to media to academia are losing their authority and monopoly control of information to dynamic amateurs and the broader public.  This book, until now only in samizdat (and Kindle) form, has been my No. 1 handout for the last several years to anyone seeking to understand this unfolding shift in power from hierarchies to networks in the age of the internet.” —Marc Andreessen, cofounder, Netscape and Andreessen Horowitz The above quote refer to a powerful must-read book by Martin Gurri called The Revolt of the Public.  https://www.amazon.com/Revolt-Public-Crisis-Authority-Millennium-ebook/dp/B07J2V3PG4 Now we have Spotify an d  its competitors, and we all think it is natural to have 50,000 different choices.  With the development of the internet...

  The giant federal debt isn’t just borrowed money. It is also lent money. Loans are two-party transactions. One side receives temporary use of cash which it agrees to repay with interest. The other gives up the current use of that cash in exchange for receiving interest.  Ideally, it works out for both… but not always. The US Treasury Department doesn’t have to visit a banker, hat in hand, when it wants to borrow money. The opposite is more accurate. Treasury holds periodic auctions to which it invites the bankers, giving them the “opportunity” to have Uncle Sam borrow their money. Who are these lenders/bondholders? The Treasury Department keeps track of this (it’s always good to know your lenders). The calculations below come from Wolf Richter of the Wolf Street blog,  https://wolfstreet.com/2024/06/23/who-holds-the-recklessly-ballooning-us-national-debt-of-34-7-trillion/ who nicely summarized the current situation last week.  I’m often asked what will happen when/...

I think the answer is December 19, 2029. (Please note, sarcastic humor and not a forecast.) The CBO now projects federal debt will reach $50.7 trillion in 2034 which will, if their other economic assumptions are correct, equal 122% of GDP. I expect our political heroes to keep kicking the can down the road until the road gets too steep, as it will at some point. The limits are real. Private investors can’t and won’t buy government debt whose repayment is doubtful in real inflation-adjusted terms—or will demand such high rates the debt will explode even higher. This came to mind as I was thinking about the magisterial 2009 book This Time Is Different by Carmen Reinhart and Ken Rogoff.  - Highly indebted governments, banks, or corporations can seem to be merrily rolling along for an extended period, when bang!, confidence collapses, lenders disappear, and a crisis hits. - There is no way to know when it will happen. There is no magic debt level, no magic drop in currencies, no percen...

Most of the country, investors, politicians, and the general public assume that the fabled bond vigilantes us old folks talk about are really and truly dead, if they think about it at all.  When the people find out that they are indeed not dead, it will be the most startling resurrection in 2,000 years. “It truly was an unfettered laissez faire economic world back then. Booms and busts in the economy and the markets tended to be violent because there was not much in the way of government interference. Human nature being what it is, the booms were associated with all kinds of excesses just as they are in modern times. However, these excesses tended to get completely washed out in the downturns. Debtors went bust, banks failed, and balance sheets were cleansed. “Things changed dramatically after the 1930s’ Great Depression when the government decided that it could not let such a severe contraction happen again. John here again. It’s important not to sugarcoat the past as somehow idea...

LLMs read documents then calculate, letter by letter, word by word, how bits of information usually go together.  This requires many millions of computations. Note also, the power isn’t just for the microchips. Running so many calculations so quickly generates heat. The disposing of it requires cooling systems which consume yet more power (and sometimes massive amounts of water—another not-cheap resource). You begin to see the challenge. AI generates enormous new energy demand on top of everything else. This is pure growth, not the replacement for something that will go away—at least not yet. It’s hard to get to Net Zero when we keep inventing new technologies that consume ever larger amounts of energy. The goalposts keep moving. We are also shifting some energy demand from direct burning (gasoline, heating oil) to electric vehicles and heating systems. The amount consumed may not change much but it puts more strain on the electric grid.  US electricity demand growth has tripl...

You may have noticed the stock market rising lately  Much of the gain isn’t so much “the market” as a handful of mega-cap stocks. Nonetheless, the bulls are clearly in charge.  The question is how long they will stay there. History suggests longer than many market bears think. Sarah Hansen at Morningstar thinks the market is fairly valued. David Rosenberg, not so much. Bank of America strategists led by Savita Subramanian recently concluded that stocks are still poised to climb higher.  But then we get to that timing thing.  The market today trades at a healthy 24X trailing earnings. For the record, I am not selling my stocks and I'm actually shifting a larger portion of my portfolio into equities, although not growth stocks. My good friend David Bahnsen note that 75% of the S&P 500 stocks are trading at 15X their earnings, or more.  That means you are paying $15 to acquire $1 of profits—which makes sense only if you think someone else will pay even more....

 We’ll start with comments on my February 10 letter, Desperately Seeking Neutral.  I talked about the Federal Reserve’s endless pursuit of the undefinable “neutral” interest rate, often using models with questionable assumptions. It’s no wonder that economics is voodoo science based on complex math models that lack any firm, objectively set parameter values for its modeled variables. Then, too, does anyone really believe the Fed would raise rates as the ‘24 election approaches? Instead, the Fed will be inclined to support the Administration that selected the Fed’s members by lowering rates. How do Fed lower rates when PCE is still close to 3%, the economy is doing better than most expected, the markets literally seem to be making highs almost every other week, and unemployment is under 4%? The Fed rate didn’t actually exceed inflation until about March of last year. So, for all the wailing, sack cloth, and gnashing of teeth, the economy has only been paying a real interest rat...

  we just found it much easier to attract the best talent when they could live wherever they liked. When the pandemic forced this arrangement on every company, millions of workers decided they liked it.  John Mauldin 2 February 2024 https://www.mauldineconomics.com/frontlinethoughts/industrial-size-surplus

My ongoing series about cycles contains some of the most important information I’ve ever shared.  John Mauldin 8 September 2023 https://www.mauldineconomics.com/frontlinethoughts/cycle-review

I have reviewed The Fourth Turning before, recommended it numerous times, and feel it is one of the top five books of the last 30 years.  The core idea behind the Fourth Turning is a repeating pattern of four society-driving, generational “archetypes.” Howe and Strauss observed how societies change in a cycle as each generation assumes cultural dominance in its middle age years. No generation is like the preceding one. Rather, generational change corrects excesses, ultimately sustaining a stable society. Otherwise, civilization would have collapsed long ago. The Fourth Turning is Here gives us a view of the future landscape of the economic, political, social, and geopolitical pressures that will be building up over the next 5–10 years After the Nomad Archetype, the cycle repeats with another Hero generation. The Millennial Generation, born from 1981 through about 2003  If the pattern holds, they will face a great crisis. It will influence the rest of their lives just as World ...