- A highbrow film critic and an egghead prof spotlight a one-time opportunity
- The most-accurate election poll of 2012 — and what it portends for 2016
- How this election cycle’s wealthiest donors might be throwing away millions
- The truth about today’s “decent” and “very respectable” job numbers
- The “corporate cannabis coup” that’s nearly a done deal
- What happens to gold stocks when the stock market tanks?
Pay close attention to this tweet from a little over 24 hours ago. If you know how to read between the lines, Jim Rickards says it could mean a 300% payout in the next week…
Who is Mr. Drezner, you wonder? He teaches poli-sci at Tufts University, near Boston, and he has a gig at the Brookings Institution, in Washington. So he’s surely a regular user of Amtrak’s high-speed Acela line — that ultimate in welfare-for-the-rich boondoggles.
And he blogs almost daily for that elite propaganda organ known as The Washington Post. You get a hint at how insufferable he is from the title of the most recent entry: “What Game 7 of the World Series Teaches Us About Foreign Policy.” Uh, no thanks…
Point is he’s the perfect archetype of an apparatchik within the vast machinery of America’s power elite. These people live in a bubble. That tweet shows us how they think.
That tweet… this bubble… holds the key to a profitable trade no matter who wins the election.
But first, a historical aside: Some people refer to this mindset as “Pauline Kael Syndrome” — which unfairly maligns the memory of the legendary New Yorker film critic.
The story goes that after Richard Nixon’s landslide re-election in 1972, Kael said, “How can he have won? Nobody I know voted for him.”
Here’s the actual quotation from a speech she gave, as reported in The New York Times: “I live in a rather special world. I only know one person who voted for Nixon. Where they are I don’t know. They’re outside my ken. But sometimes when I’m in a theater, I can feel them.”
Hey, at least she knew she lived in a bubble. More than you can say for the dopey Mr. Drezner, whose tweet tees up Jim Rickards’ latest forecast…
“We’re just four days away from one of the best trading opportunities we’ve ever seen,” says Jim.
“The mainstream media, pundits, markets and betting venues all say that the election is practically over and Hillary Clinton has a victory in the bag.
“But scientific polls and powerful anecdotal evidence all say the opposite. The election will definitely be close, and we see strong evidence that Trump will win.”
This morning, we’re told Clinton has regained momentum in many of the polls. But then there’s that outlier Los Angeles Times poll that’s had Trump in the lead for much of this autumn — and up by 3.5% this morning. Unlike most polls that call 1,000 or so random people by phone, the LA Times poll surveys the same group of 3,000 voters over and over.
In 2012, that poll foreshadowed Obama’s margin of victory with near-pinpoint precision. Just sayin’…
Here’s the thing: Even if Clinton wins comfortably, the trading opportunity Jim sees has big payoff potential. That’s what makes it so great.
Like his profitable call on the “Brexit” referendum last summer, it’s another “asymmetric” trade — high upside, limited downside.
“If you bet on a Trump victory and Clinton wins, you won’t lose much, because markets are already fully priced for a Clinton win,” he explains. “But if Trump wins, you’ll make huge profits, because markets will violently re-price for that unexpected outcome.
“Asymmetric trades don’t happen all the time. They are unusual because markets typically do a good job of getting the odds right on an uncertain outcome. But there are exceptions usually due to cognitive biases on the part of major market participants. Those biases get in the way of objective analysis.”
Among the wealthy and powerful, those biases are enormous. It’s Pauline Kael Syndrome, all over again.
According to The Wall Street Journal, nine of the 10 biggest donors in this election cycle gave to Clinton. (Home Depot’s Bernie Marcus was the 10th.) Among donations of $1 million or more, Clinton has collected $180 million — compared with Trump’s $33 million.
Of course Wall Street is pricing in a Clinton victory. The pros can’t bear to think about all they money they’d have frittered away otherwise!
A Trump victory would be just as shocking to the elites as the Brexit referendum was last summer — and just as lucrative if you know how to play it.
Markets were complacent in the run-up to the vote on June 23. The polls indicated British voters would opt to “Remain” in the European Union. Jim ventured to London to get a handle on the real story. “A victory for Remain will mean business as usual,” Jim said 72 hours before the vote. “That outcome is mostly priced into markets already. A victory for Leave will be an earthquake. The outcome is not fully priced into markets.”
Jim spied two asymmetric trades based on his analysis — big upside, limited downside. Within the space of 72 hours, one of them had zoomed up 64%, the other 129%.
This time, the potential is even greater — 300% if Trump wins. But even if he loses, Jim sees potential for a 46% gain.
Jim ventured to New York this week — Trump Tower, where else? — as he finalized his analysis and recorded a time-sensitive video describing the setup for this trade….
In the meantime, maybe this will be the day the S&P 500 breaks its eight-day losing streak. As we check our screens, the index has added six points, to rest at 2,094.
In the category of interesting but useless trivia, there’s this: The only other time the S&P fell for eight straight days was during the Panic of 2008. Obviously, the drop this time isn’t as precipitous…
Gold has recovered the $1,300 level, the bid $1,302 at last check. Treasuries are rallying too, the 10-year at 1.79%.
Aside from the election, the only significant trader chatter is about the unemployment numbers that came out this morning, which — as the mainstream is determined to remind us — is “the last major snapshot of the economy before Election Day” (New York Times).
Puh-leeze. As if anyone goes into the voting booth saying to himself, “Gee, the economy added 161,000 jobs last month. I think I’ll vote for the incumbent party.”
That was the number the wonks at the Bureau of Labor Statistics conjured for October, by the way.
The Associated Press ventured to call that number “decent” and Bloomberg “very respectable” — even though it’s little more than the 150,000 needed just to keep up with population growth. The September and August numbers were revised upward, leaving us with a three-month average of 176,000. Hooray?
The U-3 unemployment rate commonly reported in the media dipped to 4.9%. The U-6 rate that includes part-timers who want to work full time and people who gave up looking for work in the past year sits at 9.5%.
The real-world unemployment rate measured by Shadow Government Statistics — basically the U-6 rate plus all the people who gave up looking for work more than a year ago — is at 22.9%.
The number has hovered near 23% since mid-2012. If there’s a Trump upset (a Trumpset?) on Tuesday, that might be one reason…
“No one seems to be noticing, but the whole trend toward ‘legalization’ of pot isn’t really what’s happening,” writes one of our regulars.
We don’t usually jump into the mailbag so soon during an episode of The 5, but this fellow brings up a good point in light of our most recent foray into legalization yesterday.
“What’s happening is about even more government control: limitations, taxations, agencies, field agents, inspectors and even more bureaucracies telling us how much THC and other components it can contain, where, when and how it can be sold and by whom and in what forms and types of packaging, recommended daily servings (think Nutella), warnings, along with tens of thousands of pages of new laws and regulations which will be used to generate even more fines and seizures to feed the beast.
“I’ve come up with a rallying cry for U.S. citizens this election season to keep/get us focused on the real problem and not be distracted by side issues:
“‘It’s the government, stupid!’”
A “corporate cannabis coup” is how one longtime cannabis activist describes California’s Proposition 64 — the measure that would legalize recreational pot.
“The mom and pop cultivators that have been the backbone of the industry for generations would be priced out of competition in short order,” writes Dragonfly De La Luz. “While Prop 64 claims that it ‘protects small farmers’ by including ‘anti-monopoly provisions,’ this only applies to the first five years of legalization.
“After that time, millionaire Weedmaps founder Justin Hartfield — the second largest investor in Prop 64, after Sean Parker — intends to turn the current farm-to-table cannabis model into Big Tobacco.”
As we said yesterday, the tax-and-regulation regime shot throughout the 62-page text of Prop 64 will be too costly for small operators to comply with. Fortunately for them, they’ve got that five-year window in which to figure out some other way to make a living — or some way to ensure their operation can fetch an attractive sale price to the corporate cannabis crowd.
All the same, Prop 64 isn’t as blatant a corporate cash grab as Issue 3 in Ohio last year — which failed spectacularly by a 5-3 margin.
As we documented at the time, the Ohio measure specified only 10 locations in the state where grow operations would be allowed — sites that had already been purchased by well-heeled investors who, no surprise, were bankrolling the “yes” campaign.
It’s the way of the world. Here at The 5, we’re just following the money.
As we say anytime someone raises an ethical objection to an investment proposition, the final call is yours. That said, we’d be hard-pressed to assemble a portfolio of publicly traded companies run only by Randian-hero types who refuse to be corrupted by government/crony capitalism. (And even if we could, we’re not sure how well it would perform.)
And so it goes with the “penny pot stocks” suggested by Ray Blanco. We can’t vouch for their laissez-faire purity. But they do have the greatest potential to profit from what looks like a sea change in voter attitudes come next Tuesday. If you haven’t checked out Ray’s research yet, time’s running out.
“With the upcoming collapse,” writes a reader who’s clearly made up his mind about the future, “won’t gold stocks also go down?
“Are we better off taking our 2016 profits and stepping out of gold stocks until after the crash, and then reinvesting after the initial downward wave passes?”
Writes another in the same vein, “I know Jim Rickards is bullish on gold. Is he just as bullish on gold miners or concerned about owning them due broader equity market concerns? It would be helpful to hear his perspective.”
The 5: That’s an easy one. Jim’s had an emphatic answer for six months now. You can find his revised-and-updated version of that answer right here.
Have a good weekend,
The 5 Min. Forecast
P.S. A quick survey of headlines before we go to virtual press…
“The October Jobs Report Was Perfect for Hillary Clinton” (Yahoo Finance)
“Democratic Insiders: Clinton’s Ground Game Will Sink Trump” (Politico)
Maybe that’s all true. But what if it’s not? What if all the mainstream assumptions that Clinton has it in the bag don’t pan out?
The result could be major market turmoil… which you could parlay into massive and nearly instantaneous gains. Jim Rickards reveals how in this exclusive public announcement from Trump Tower, released only moments ago.
The 5’s compelled to visit our periodic theme of media malpractice — especially the elitist nature of corporate media here in the 21st century. Read More
Exposed? Media elites and other connected insiders might be colluding with finance types on lucrative trades in the markets. Read More
“Private equity companies are sitting on more than $2 trillion,” says Zach Scheidt. Here’s how these lucrative companies “make money in both good times and bad.” Read More
“There’s no legal impediment to even higher debt levels,” says Jim Rickards, “if Congress wishes.” But there’s no good way out… Read More
Social media’s swift ban hammer on “hate speech” and “misinformation” is more self-serving than you think. Read More
“SPACs right now are hot,” Ray says, “and everyone wants to get into the action somehow.” Read More
Go figure: At the time of writing, the S&P 500 is only 2% off its all-time high — which was achieved only six weeks ago. Read More
Apple’s pricey new iPhone “primes consumers for the higher cost of even more advanced connectivity that could be making its way,” Ray Blanco says. Read More
A curious mainstream narrative begs the question: Is there a 2020 version of the “Froman email” floating around Wall Street and D.C.? Read More
Regardless of the election, gold’s scarcity coupled with swelling demand — and a pandemic in the background — seem like a recipe for a Midas metal rebound. Read More