The Issue, Top Down vs Bottom Up
If you believe in a Bottom Up World, you are in a majority in terms of numbers, but in a minority in terms of influence. Top Down people are the elites who are in the minority in terms of numbers but in the majority in terms of influence. This equation thrives in Economics, Politics, Religion, and probably in a lot of areas we have not thought about. The thing that keeps it going is money, who controls the money has the initial edge..
Today’s political and Economic Situation
Trump’s management philosophy, basically the usage of bullying tactics, stuff most of us remember from high school, seems to be making progress with the power politics surrounding the bad guys around the world. If we don’t all die, this is probably good and is a big contrast to Obama’s nice guy global negotiating style.
For economics, this contrast is central. Obama’s two big initiatives, the Iran Agreement and the Affordable Care Act created a world where the country could economically start to heal from the debacle of the prior 8 years. Now the people who buy stuff are being buffeted by real personal economic issues, the access and cost of health care, and the rich guys trying to push more money to the top in Washington.
We will get a little insight into how the new paradigm is working this coming week with earnings reports starting in full force and we will see if the top-down hype in Washington has pushed any stellar results. The public declarations by Wall Street so far are for strong numbers. It is difficult to see why that could occur as the Atlanta Fed GDP forecast for the first quarter is only 0.6 %. Maybe Corporations have figured out how to squeeze workers even more and keep the money in-house, but the key issue for Corporations, in my mind, is not making stuff but selling the stuff to someone. Todays consumers are very bifurcated, recent consumer research is showing record differences in sentiment between conservatives and progressives. This effect will probably show up mostly in discretionary spending, cars, retail, etc.
Our Tracking funds had a breakout yesterday, the EXTH Fund (No Reflation Fund) performance broke out above where the safe harbor investors were hiding (in the NASDAQ stocks) and the ECT Fund (Reflation Fund) went negative. More on that Monday morning.