Wow, what a week!
We gained 130 points on Monday’s close and 120 points on yesterday’s open and the S&P is up 250 points for the week – so the markets could have been open for just a few hours and we could have just skipped the rest.
CONCENTRATION is the name of the game, fewer and fewer stocks are having a larger and larger impact on the market. On Wednesday we discussed how the Market Cap Trillionaires are disproportionally moving the markets and, in our Live Trading Webinar later that day, I did the math that showed that the children of Bill Gates, Jeff Bezos, Mark Zuckerberg, Elon Musk, etc. will not only become multi-Trillionaires, but will also have, literally, ALL THE MONEY IN THE WORLD under the current tax structures.
And where do you think that money is going to come from? Well, if you are in the Bottom 90%, you currently have about 1/2 of the money in the World so, if we need to give the top 0.1% ALL the money – who’s going to be giving it to them over the next 50 years?
It’s the same with our Magnificent 7, who are already Trillionaires and getting bigger every day. Already they have simply taken over 870 Companies (and there are only 6,000 public companies) which, in turns, sucks money away from the companies that remain and, eventually, they will also be assimilated or die.
And die they do. Apple wiped out essentially every portable music competitor with the IPod and they are close enough to doing it now with the IPhone that other countries are beginning to take action before their entire personal communications system runs through an American Corporation. Those countries, of course, deliver their intentions on computers that are almost certainly centered around Bill Gate’s software and, of course, if they need to look something up – it’s usually Google and, if they want to tell their relatives what they are doing – it’s Facebook/META and, when it’s all too stressful for them – they order some more tea on Amazon.
That may not bother us but you can see how it might bother the Chinese, right? I can’t even imagine being a European these days – what do they have to point to that’s their own?
Speaking of China, Biden is preparing another round of tariffs and, though they will be more targeted than Trumps disastrous attacks on Chinese trade that started this new cold war we’re now fighting with China, we are now focused on industries including electric vehicles, batteries and solar cells – all while the existing levies largely being maintained.
This builds on Biden’s call last month to hike tariffs on Chinese steel and aluminum, and the formal launch of a fresh probe into China’s shipbuilding industry. This is, on the whole, another market-booster for US companies, who won’t have to worry about low-priced Chinese imports reducing inflation anytime soon so Yay!!!, I guess…
“Instead of correcting its wrong practices, the United States continued to politicize economic and trade issues,” Lin Jian, a ministry spokesman, said at a regular briefing on Friday. “To further increase tariffs is to add insult to injury.”
President Xi Jinping’s strategy of ramping up manufacturing to arrest an economic slowdown at home has triggered alarm abroad. US and European Union leaders have scolded Beijing over state support that they say has fueled a deluge of cheap exports that threaten jobs in their markets. The EU launched an EV subsidy investigation in October that may lead to additional tariffs by July. CARS!!! That’s a European Industry, cars! Ha – I knew I would think of one.
China has exactly the kind of low-cost electric vehicles US consumers need but 1,000 lobbyists from the Auto and Gasoline lobbies have spent Billions of Dollars to make sure those never make it to US shores. US Solar firms have been in a power dive all year as cheaper Chinese goods are being imported from middle-man countries and that’s really hard to clamp down on but, again, should we? Should we be protecting 330M consumers or two dozen manufacturers?
Trump is campaigning on the promise of a 60% tax on all Chinese imports and that would be about $600Bn x 0.6 = $360Bn of taxes but that would also make it the Dollar-Sixty store and essentially would be a $360Bn tax on the bottom 50% or about $2,000 per person for people who can’t afford to “Buy American“.
Trade Wars are not generally good for the Global Economy but, so far, the markets don’t seem to care – about this or anything else that happens as we once again, just like in 2007 – enter into the “It Just Doesn’t Matter” stage of the rally – where bad news is ignored and any bit of good news gets an overreaction.
Let’s enjoy it while it lasts.
Have a great weekend,
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- Phil
