- The Davos crowd, shocked for a second time in five months
- Trump Derangement Syndrome, whose victims can’t do basic math
- Market shock wearing off quickly
- Trump and the marijuana ballot measures that performed beyond supporters’ dreams
- Urgent War on Cash development: Billions of bank notes suddenly illegal tender
- The election forecast that didn’t pan out… the California ceviche outrage revisited… our marketing versus our financial education… and more!
“Elites are usually the last to know,” said Jim Rickards here in The 5 last summer.
“The more powerful, the more ‘plugged in’ these elites are, the more out of touch they become with popular sentiment. They dine with each other, they fly around in private jets with one another, they assemble in places like Davos together. So they live in a cocoon, insulated from popular opinion.”
That was a few days before the Brexit referendum in Great Britain — which the elites were sure would end in a victory for the “Remain” side.
Jim was far less sure — and his willingness to take the other side of the trade resulted in 129% gains in 72 hours.
Five months later, history is rhyming. Last night was — to use Donald Trump’s preferred phrase on Sunday and Monday — “Brexit plus plus plus.”
The U.S. presidential candidate who by any measure lost all three debates… the candidate who won no major newspaper endorsements outside Las Vegas and Jacksonville… the candidate scorned by all “respectable” public intellectuals… won. As Jim stood nearly alone in forecasting.
As we foreshadowed yesterday, “scientific” polling techniques were shown up as so much voodoo. The average among major polls gave Hillary Clinton a five-percentage point edge going into Election Day. The New York Times gave her an 85% chance of winning. Huffington Post projected she’d win 323 electoral votes.
(Earlier this year, the polls showed Bernie Sanders stood a far better chance of defeating Trump in a general election, but those numbers didn’t square with the elites’ agenda. Confirmation bias.)
As we suggested on Friday, chalk it up to a severe outbreak of Pauline Kael Syndrome among the elites.
After Richard Nixon’s 49-state landslide in 1972, the film critic for The New Yorker conceded her elite insularity. “I live in a rather special world,” Kael said. “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.”
“This puts it succinctly,” writes Justin Raimondo this morning at Antiwar: “the inhabitants of the ‘special world’ of the political class — self-satisfied pundits, self-serving politicians, avaricious hedge fund managers, arrogant academics, less-than-thoughtful think tankers, politically correct scolds, neoconservative warmongers – couldn’t imagine a world in which Donald Trump could win the White House.”
Clinton herself exhibited symptoms during the campaign in her speech condemning many Trump supporters as a “basket of deplorables.”
Tweeted Vice reporter Michael Tracey moments ago, “That she thought the ‘deplorables’ sneer was good politics showed how insulated and arrogant her campaign was. Ultimate hubris.”
This morning, Pauline Kael Syndrome has progressed for many sufferers into the more severe Trump Derangement Syndrome — whose symptoms include the loss of basic cognitive functions.
Last night as the returns were coming in, Princeton economist and perpetual New York Times scold Paul Krugman found himself unable to perform simple arithmetic…
Heh… At no time was the Green Party candidate’s vote total in Florida bigger than Trump’s margin over Clinton.
But other sufferers are exhibiting a remarkable capacity for self-healing, like New York Times number cruncher Nate Cohn. “Clinton suffered her biggest losses in places where Obama was strongest among white voters,” he tweeted last night. “It’s not a simple racism story.”
Which might well be true. But Jim Rickards himself is taking no prisoners in the Twittersphere…
As with Brexit, the market freakout was — umm — interesting to watch.
Last night as the returns started to roll in, Dow futures fell 100 points. Then 300 points. Then 500. When NBC called Ohio for Trump, it suddenly became 700. Then 750.
Gold, meanwhile, soared from $1,270 at 8:00 p.m. EST past $1,335 shortly after midnight. The London-based dealer Sharps Pixley reported running short of bars and coins.
Much of that freakout has reversed itself in the 12 hours since. As we write at midday, the Dow is up 167 points, cresting the 18,500 level. Gold is back to $1,282 at last check.
Depending on when they acted, readers of Rickards’ Intelligence Triggers had the chance to pocket substantial gains once again — much like Brexit. For insights into how his “Kissinger Cross” technique works, Jim has a tutorial at this link.
Eight out of the nine marijuana referendums we were following passed last night.
Recreational marijuana passed in California, Massachusetts, Maine and Nevada; it went down to defeat in Arizona. One in five Americans can now consume cannabis without a doctor’s note.
Medical marijuana, meanwhile, passed in Florida, Arkansas, Montana and North Dakota.
Supporters were pleasantly surprised — not only by the number of states but the margin of victory. “After falling short just two years ago, a constitutional amendment legalizing medical marijuana got 71% of the vote in Florida, 11 points more than the supermajority it needed,” writes Jacob Sullum at Reason. “In California, where legalization lost by seven points in 2010, the yeas beat the nays by almost 12 points.”
Of course, weed remains illegal on the federal level. But President-elect Trump says marijuana policy “should be a state issue.”
“Trump has clearly and repeatedly pledged to respect state marijuana laws,” Marijuana Majority chairman Tom Angell says, “and we fully expect him to follow through on those promises, not only because it is the right thing to do but also because these reforms are broadly supported by a growing majority of voters.”
Checking the cannabis-themed plays Ray Blanco suggested in Technology Profits Confidential, we see a mixed bag. Then again, Ray wasn’t necessarily eyeing a quick one-day gain. Indeed, they might have a new catalyst for big gains come the first of the year. We’ll stay on the story…
We interrupt this election-themed episode of The 5 for an urgent update in the War on Cash.
With the world’s eyes trained on the U.S. elections yesterday… India’s government moved to ban 500- and 1,000-rupee notes — which translate roughly to $7.50 and $15. They are illegal tender, effective immediately… although they can be traded in at banks through year-end, per this notice from the government of Prime Minister Narendra Modi…
Those notes are — uhh, were — the highest-denomination paper money in India… and they made up about 85% of all cash in circulation there. ATMs are closed today, and there will be limits on withdrawals when they reopen tomorrow. New bank notes with denominations of 500 and 2,000 rupees will be introduced over the next “three–four weeks,” said Finance Minister Arun Jaitley.
“Honest people,” he added, have nothing to worry about. It’s all about rooting out tax evasion in an overwhelmingly cash-based economy.
As the BBC reports, “Mr. Jaitley said that the move would also help India move toward a cashless economy, saying that farmers could ‘now keep their money in banks’… The most affected are likely to be small traders, vendors and laborers, but newspapers were quick to point out that India’s wedding season, due to start in a few days, will also be hit hard.”
We mention all of this in the certainty that similar measures are coming to a country near you, sooner or later — no matter who’s in charge. We’ll stay on top of this one, too…
And now for an election forecast that didn’t pan out — well, not so much a forecast as a thought experiment.
Yesterday, the mainstream was keen to uncover polling place bullying and Russian ballot hacking that never materialized. Here at The 5, we recalled the scenario laid out last March by John Robb at his Global Guerrillas blog — a go-to source of information about asymmetric conflicts and fourth-generation warfare.
Here’s what he suggested might’ve unfolded starting yesterday afternoon…
- “A dozen faux bombs in suspicious packages are placed at heavily (Rep or Dem) polling locations, resulting in evacuation and widespread concern
- “Robocalls pour in to police departments and polling places in heavily (Rep or Dem) polling locations with bomb/terrorist threats. Widespread poll closures occur. Calls continue until late
- “Election results are skewed. Electoral College swings to the candidate helped by the threats.
“One candidate declares victory. The other cries foul. Protests go national. Violence, looting and active engagement with police… The global economy collapses due to uncertainty over U.S. economy (ill-conceived financial derivatives ensure that virulent U.S. contagion spreads to every nook and cranny of the global financial and economic system)…
“The most interesting thing about this scenario,” concluded Mr. Robb, “is that it can be pulled off with only five people.”
Interesting, indeed. We can all be grateful it didn’t happen. Of course, there might be other catalysts for similar mayhem.
Robb’s post went viral last March. Curiously, he hasn’t updated his blog in more than two months…
“Glad to see you picked up on the ceviche crisis playing out in our state,” writes a Californian about the woman from Stockton facing prison time for selling a homemade dish on Facebook.
“Living between LA and San Diego, and with a son well connected to the underground foodie scene, I’m aware of hundreds, if not thousands, of unlicensed pop-up taco stands and other cash businesses where authorities just look the other way. Hey, you even see the black & whites parked there on lunch break.
“Meanwhile, Stockton has one of the highest violent crime rates in our state and they have the resources to set up a sting to catch a foodie Facebook group mom sharing some of her recipe with friends while recovering the cost of the expensive ingredients?
“They wanted her to agree to three years probation for the plea. Add three years of a bureaucrats’ time to monitor her rehabilitation and you have the perfect recipe for state job security. The cop gets a conviction W in the column. The assistant DA gets a conviction plea in theirs. The parole officer gets an easy-to-manage parolee to fill in a lazy schedule. Everybody wins… except for the taxpayers and the mom, that is.
“The 5 continues to be my go-to sanity check each day. Please keep it up, at least until you are hauled off to jail by the next wave of authoritarians seeking to keep readers from feeling unsafe.”
The 5: “Hundreds, if not thousands, of unlicensed pop-up taco stands and other cash businesses”?
That’s why we took notice of developments in India…
“Your responses to readers’ complaints about the deluge of marketing emails demonstrate well-thought out rationalizations for each of their concerns, but only on a point-for-point basis,” writes a reader picking up where another reader left off yesterday.
“The discussion misses the larger theme, which is that the tone of all this marketing you have found effective for your business undermines the education you provide (which is helpful to us readers in the long run). You teach us how to use our minds and not our emotions in investing, yet this good advice in our emails and newsletters is matched and sometimes (like around the election) entirely swamped by a chorus of ‘BUY! BUY! BUY! DO IT NOW OR YOU’LL NEVER EVER GET ANOTHER CHANCE LIKE THIS AGAIN EVER!’
“Having to open each one of these things and determine which is spam and which has valuable content is at best annoying and at worst detrimental to what I’m trying to learn here. I feel sorry for those who finally give up and say ‘unsubscribe me,’ but I understand their need to keep their decisions uncluttered by all this.”
The 5: We hear ya. On the other hand, it’s aggressive marketing that allows us to stay in business. We don’t manage money. We don’t perform brokerage services.
But we do have to pay the bills, and we prefer to do so in a way that doesn’t involve taking money from advertisers, with all the compromises that entails. You think CNBC is ever going to expose the cruddy, fee-laden “packaged products” peddled by Wall Street? And that’s what it’s like everywhere: Your editor worked in the local TV news racket for 20 years, where the First Iron Law is “Don’t piss off the car dealers.”
In other words… it’s the emotional tug of our marketing that allows us to offer those hard-headed investment recommendations. And every one of our readers has come to us through those marketing messages at one time or another — because they work.
Best regards,
Dave Gonigam
The 5 Min. Forecast
P.S. Want to read about a profit opportunity that has nothing to do with electoral politics? Here you go: It could be worth $2,650 to you — as long as you can keep a secret until tomorrow.
