VIX is down, again, or the show so far (again)

A few days ago Conor Sen tweeted:

It’s close right now, but today might be the lowest close for the VIX since February, 2007.

Here is the broader chart.  How can that be?  Not to mention a high Dow.

The consensus view is that the first two weeks for Trump have been an extreme disaster.  But is that true?  Protest has been robust, and so far checks and balances seem to be working.

He issued a bunch of executive orders that mostly cannot be carried through.  He still hasn’t filled most of the second-tier positions of import, and for the State Department he fired/induced to quit a whole bunch of senior figures.  That militates in favor of not much getting done.  Obamacare abolition and tax reform are being postponed until next year it seems, for better or worse.  The Wall is stupid but won’t matter much and may not even happen, given environmental review, Native American rights, and the preferences of Texas Republicans.

Trump also trampled on just about every sacred icon held by those who inhabit my Twitter feed, most of all by having Bannon insult the press by telling them to shut up for a while, and the steady stream of absurdities continues.  Yet the underlying story (NYT) seems to be about six guys in the White House who don’t know how to use the levers and pulleys of the Executive Branch.

Or consider the assessment of E. Richards:

As of now, however, events since January 20 support the conclusion that Donald Trump is not very sincere about actual, rather than verbal chaos and that his administration will mostly defend the world order status quo.

As for beating up on the marmite crowd, is there a better form of training wheels?

People, I do not favor this kind of experiment with governance or with rhetoric.  And the market is by no means always a correct forecast.  But right now it is worried less than many of you are.  I do understand that America is consuming some of its political and reputational capital.  Yet so far the best prediction is that the relatively manageable scenarios are coming to pass.

Addendum: Just think what kind of embedded embarrassment this is for the Democrats.  Whether you agree with Democratic economic policy or not, and whether you agree with the markets or not, the Democrats in effect cannot convince the markets that their presidential rule is better for capital values than is the…scenario of Trump.  The more stupidities you see, and the more you criticize him, the more painful that ouch should become.


I'm currently long VIX - I own many shares of VXX.

I don't want to imply a connection between Trump and Hitler, but to illustrate that things can get quite bad without economic consequences, 1933-1939 Germany was a time where civil liberties and economic freedom were sharply curtailed and stock markets rose quite dramatically, at least if the chart here is graphing the right things.

The travel ban rollout made me think this administration will not be able to competently manage a crisis, whether it's trade or a terror attack or a war or something else. Maybe this will affect bottom lines and maybe it won't. Katrina was a catastrophe exacerbated by poor management but maybe it didn't affect the bottom line of too many companies. I don't think the extreme outcomes are being appreciated enough.

If you bet that equities would finish lower under a GWB presidency, you would have been correct, but it would have taken a very long time for that prediction to come true.

I would love to be proven wrong! Maybe everything will be okay.

Tetlock instructs on taking base cases, and authoritarian economies can have good stock market results. The example of China is one example.

I think the stock market under Nixon, when he resigned, was still up overall for his tenure as president, so disarray in the executive branch doesn't automatically mean go short.

Additionally, it seems reduction in corporate tax rates has to be positive for company earnings and equity values, regardless of how the tax burden is redistributed. As an investor the tariff conversations leave me the most cautious. Investments in retailers such as Dollar General, Dollar Tree, Wal-Mart, and similar seem weak currently due to reliance on imports.

Along with this, it's tough to bet on the short case given both the long term upward bias in markets, and suggestions from many great investors (Buffett and Lynch are two that come to mind) to largely ignore politics because it's not as important to stock market returns as many people think. That said, I am making a small shift in my portfolio, selling some of my US stocks and redistributing more to international with better valuations. It's only about 8% shift in my portfolio so far, but I'd probably be doing so regardless of political considerations.

I agree that the risk of something bad happening is likely higher than appreciated, and that keeps me more cautious than I'd normally be. Right now risk is not much on people's radars, and appetites for risk can change quickly.

Tax cuts are stupid and merely mean more decay in capital that matters, like infrastructure and educated workers and r&doing.

Tax cuts drive more emphasis on rent seeking and monopoly profits with insustainable debt the only driver of growth in gdp demand.

I was struck by the discussion of a book on Lancaster Ohio with "glass" in the title by the description of business leaders, mostly anchor hocking management leading the charge on hiking taxes to build up the community and the business environment. While competition like plastics and aluminum, and bad business decisions, the author charts the buyout of the glass company and removal of its management from Lancaster as the cause of the town's decline into hopelessness. I felt the same way as the author when I left Marion Indiana after a decade growing up there in the 60s, with tax hikes a frequent debate. Marion parallels the decline of Lancaster and a number of other towns in knew in the region.

The constant focus on tax cuts has merely doomed such towns since Reagan made tax cuts the sole solution to every problem, other than putting more people in prison longer.

Basically tax cuts are sold as part of cost cutting broadly which is based on workers being liabilities, and consumers never being workers by merely spenders of infinite cash based on prices being low and profits ever higher for everything consumers buy.

In the 60s, businesses wanted every other employer to pay higher wages every year and government to have more tax revenue to improve the infrastructure and provide better educated workers, plus good contracts to most every business for services.

You know, I really like mulp's posts. There is a trick to them - sprinkle the word "not" liberally. They improve no end.

In the 60s, businesses wanted every other employer to pay higher wages every year and government to have more tax revenue to improve the infrastructure and provide better educated workers, plus good contracts to most every business for services.

Indeed. But you do not get any of those things these days. If the government raises taxes on declining industries, those industries collapse even faster. If they take the money they get and waste it on lesbian outreach centers rather than repair, say, the water supply, the infrastructure does not improve. Flint has not lacked for revenue. The education system spends vastly more now than it did. The results are worse or perhaps, at best, about the same. More money is not the solution to any government problem.

The only way for the economy to improve is for business to drive innovation. That does require educated workers and electricity that works. Which is why business flees Democrat regions for Republican ones. Ultimately you need to leave businesses enough money to invest. The market has improved because people actually think Trump may improve things - by leaving people some of their own money instead of spending it on pictures of a guy with a whip up his butt or a crucifix in urine or whatever.

Flint is a pretty bad example to make your points with. The water system was usable until some incompetent managers implemented what was perhaps a world record "penny-wise and pound foolish" decision to not treat the new water supply to prevent lead leaching. Treatment would have cost a few thousand dollars; not treating will end up costing billions.

Oh and nothing reduces the effectiveness of education systems like tainting the drinking water with lead.

"More money is not the solution to any government problem".

Sure it is...spending a few thousand dollars to treat the new water supply for Flint would have been a great solution to the water problem.

So let the government have a monopoly on educating the kids because they've proven themselves with handling the water supply, Gil?

The government does not have a monopoly on education. Tax dollars are used to pay for public schools. You are free to send your kids to private school, but you still pay taxes to support public schools. This is expected. Notice that you pay tax money for public schools even if you don't have children. It isn't a user fee.

Everyone wants better education for our kids at lower cost...much like everyone wants better cars, computers, military or health care at lower cost. There is disagreement over the best ways to improve quality and lower costs.

"The government does not have a monopoly on education."

Monopoly does not mean 100% of something.

How many people can afford taxes and private school? And save for college?

The government also highly regulates private schools. They are not free complete agents, they still have to follow many of the same rules as government schools.

So let companies run education because they’ve proven themselves with handling Enron?

Dumb example, right?

"The Government" is not a thing. Different governments are different.

"Monopoly does not mean 100% of something."

My read of the dictionary is that the public school are not a monopoly. You might read it differently.

"How many people can afford taxes and private school?"

How many people can afford taxes and private automobiles? I don't really care.

As a democratic society we have decided to fund public education through taxes. It is easy to understand why. We have not (yet?) decided to fund private education (or private automobiles) through taxes.

Corrupt Enron went out of business and people got charged with crimes. Sign me up for that model.

Gil February 7, 2017 at 8:53 am

Flint is a pretty bad example to make your points with.

Flint is a perfect example. You do not understand my point. Flint had enough money to play with. Their budget deficits are measured in the tens of millions. But they could not be bothered to do their job properly. Their basic function - providing clean drinking water for instance - was not a priority. Giving them even more money would not have solved this problem. They just would have paid themselves more, built some more community outreach centers, gone on a few more study tours of Cuba.

Sure it is…spending a few thousand dollars to treat the new water supply for Flint would have been a great solution to the water problem.

It would have been. But just as guns don't kill people, dollar bills don't fix water systems. People do. And the people running Flint could not be bothered to do so. Giving them even more money would not have made them more concerned. They still would not have been bothered to do so.

7 Gil February 7, 2017 at 10:06 am

Everyone wants better education for our kids at lower cost

Not everyone. The Unions and hence the Democrats don't.


Apologies for the unsolicited investment advice, but you might want to be careful about holding VXX beyond the very short-term. The ETN is continuously rolling over VIX futures contracts in a way that erodes its value over time. If you pull up a chart you'll see that beyond very short time horizons the price approximates exponential decay.

In other words, the "carry" here is so bad that if you're willing to hold this for the entire duration of Trump's presidency, it would take one heckuva vol event to make it even close to worthwhile.

I used to know a guy who sat on the desk that made and managed this particular product, which is how it came to my attention. He explained it all to me and I still didn't really "get" why it made sense to get into that product, to be honest.


VXX currently has a carry of nearly 1%/day. It's beta to the S&P is about 4.0 over the long term. So even if you think Trump is going to cause a 15% correction, it's gotta happen in the next four months. Otherwise the carry wipes out any upside gains.

A friend mentioned VXX to me the other day and I thought the chart looked odd. This would explain why. I'm assuming other VIX futures EFTs like UVXY have this same property?

Thanks for the primer guys!

Yep. UVXY is just 2 times the daily return of VXX. It's nearly the exact equivalent of starting with $100, borrowing another $100, and spending to $200 to buy VXX. If VXX goes up 1%, the value of your portfolio rises 2% to $102. Then you go out and borrow another $2, and use it to buy VXX for a total exposure of $204 (twice the current value of your portfolio). Vice versa if it goes down. Repeat at the end of everyday. That's UVXY, and basically TVIX as well.

XIV and SVXY are the 1X inverse. Similar to above, but instead of buying $100, short sell $100 of VXX (using your original $100 as collateral). If VXX goes up 1%, the value of your portfolio is now $99, and your short position is now $101 in size. Buy back $2 worth of VXX so now you're only holding short $99 worth, keeping your short position exactly equal to -100% of your portfolio. Repeat every day.

The point is, a lot of people overthink the volatility ETFs. They're all pretty much just re-scaled versions of each other. The bigger question is what kind of outright exposure to volatility do you want. (With the right answer being none for the vast majority of investors).

Yes, one look at the chart for VXX tells you all you need to know. There is a demand for this based on short term hedging desires. I have made some nice money by shorting a small amount of this and taking advantage of the negative carry. Can't be greedy as every now and again, the market really wants the "insurance" of holding VXX and the price will spike--at the worst time for the rest of one's portfolio.

Any decent alternative?

Not as far as I'm aware. The basic problem is, who is going to take the other side of that bet?

A programmer who thinks they know what's going on in the market who is long VXX

¯\_(ツ)_/¯ What could go wrong?

It's already been said, but the VXX is fucking EXPENSIVE. You're asking people to sell you a derivative where the value goes up when everything goes wrong. That means for the person selling you this insurance, if shit goes south, not only is their entire portfolio (job? house? ... marriage?) going to crash, they now have to pay you a bunch of money too.

Well, most people as a result require a damn high insurance premia to sell this insurance. My return on SVXY has been 80% over the past year (I keep 10% of my very long run portfolio in it). As a long run strategy I make a lot of money selling insurance.

Trying to time market crashes though is the sort of thing that really only works in movies and the minds of engineers who don't understand market dynamics. Then again, people always get lucky.

Never be long VXX! At most it should be held 1-3 days unless you are extremely risky. VXX is affected by decay and contango and will always lose value except in the case of brief spikes.
If you want to gamble, consider long puts on one of the big index funds - that will limit your losses better.

I am perplexed by the strength of the markets. I think Trump is a buffoon - but a very amusing buffoon with the right sort of political enemies. I would have thought that the markets would be more upset. After all, they bought and paid for Hillary. Surely they expected value for money?

It suggests that the Clintons weren't selling influence. They were selling protection. People had to pay them or they would regret it later when Hillary was in power. So everyone is relieved that they are gone. For now.

He issued a bunch of executive orders that mostly cannot be carried through.

This I do not agree with. A judge who deserves to be impeached - and hopefully he will be - has put a hold on one Executive order. But last I checked the Keystone pipeline was going ahead and Obamacare is dying faster than it was before.

The consensus view is that the first two weeks for Trump have been an extreme disaster. But is that true?

The consensus where? Among whom precisely? The first two weeks look like they are going fine to me. Who thinks they are a disaster? Get out of the Upper Middle Class academic bubble. Virtually every blog except the hard left thinks the past few weeks have been great for Trump. His friends even won the Superbowl.

'After all, they bought and paid for Hillary.'

Not even close - Goldman Sachs is very much an equal opportunity vampire squid.

"Not even close – Goldman Sachs is very much an equal opportunity vampire squid."

That doesn't mean they weren't paying off Hillary, just that she's not the only one.

"After all, they bought and paid for Hillary. Surely they expected value for money?"

A simpler explanation is that this wasn't true. I am honestly curious as to whether it bothers you that Trump has appointed lots of Wall Street folks and is hoping to peel back regulation on the banks. (By the way, I generally like less regulation, but I fear that the Trump administration is going to listen to the big firms, which could result in them getting rid of the regulation that encourages moral hazard and keeping the ones that deter competition.)

I am unconvinced that Wall Street gave the Clintons so much money out of the kindness of their hearts. That is what you are claiming isn't it?

No it doesn't bother me. Hillary and Obama have both shown more predictions for crony capitalism. Big firms are unlikely to expand their moral hazard even if they may try to screw over the smaller companies. The markets, to my mild surprise, don't think it is a risk

Yes, something like that. The political science research on this provides very mixed answers. It's hard to show evidence of quid pro quo behavior with donors. I suspect that most who study this issue would say that it's about getting access, and the corporations thus give money to both sides of the aisles and to incumbents and to people who they think will be or continue to be in office. But I think saying they're bought and paid for is extreme. They still have voters and Democratic interest groups to please. You're right about the crony capitalism under Democrats, but I fear we'll keep getting it under Trump, but the downside is that a Republican Congress will acquiesce on it when crony capitalism is done in a Republican's name. I have to pin my hopes on the media to suddenly start caring about crony capitalism now that a Republican is doing it.

On the stock market, I'm not totally sure what to think. I do believe that is an aggregation of the totality of information that's out their now, but predicting the future is hard. There are also legitimate concerns of "animal spirits" or even a propensity for voters to think the economy will be better (and to spend money accordingly) when their preferred party wins the presidency, but it may not reflect the reality nor predict the future. Prior to winning, Trump was warning that the stock market was a bubble, which is what I worry, too. Now that he won, he seems to see it as validation for his platform and future policies. It can't be both.

Obamacare is getting more entrenched by the day with the facts being laid out to counter the 5 years of conservative alternative facts and fake news about Obamacare.

Ironically, Trump has made repealing Obamacare impossible by his promises of free health care for all. Any loss of insurance, access, or higher insurance costs will be blamed on Trump and Republicans and health care provider bean counters are working overtime to ensure Republican in Congress understand that. Obama got corporate welfare in health care phased out, so medical bills get paid by patients and their insurance, not by secret bailouts by taxpayers.

And part of the secret bailout is heavily Muslim immigrant doctors sent by the federal government to provide primary and emergency care to Trump voters. They get visas if they serve rural America, but their pay must come from patients, not from federal bailouts to rural communities.

And immigrant doctors provide better care than US born doctors.

The consensus where? Among whom precisely? T

Among the Mercatus crew and their friends, drinking in the media. It doesn't seem to occur to them that academics are notable for not having anyone working under them in most circumstances and for not accomplishing much when they do (due to the hideous office politics which ensues whenever academics are put to work on anything).

TC's analysis is the conventional wisdom of those who get their "news" from the WaPo, the NYT and related sources. The "massacre" at the State Department is just one of the fake news stories catalogued by The Federalist :

People, you have to get your heads out of your collective ass and think for yourselves! Do read the whole thing.

Yes, all of Trump's opponents agree his first two weeks were a disaster.

That includes anti Trump conservatives like TC because nearly everyone in their social and professional circles are anti Trump, usually for reasons of style only.

I didn't vote for Trump but would today. I support just about everything he has done.

One moderator has told us that he will 'miss' the departed president and maintains as his favorite Republican commentator is a no-account named Bruce Bartlett (whose signature is attacking Republican politicians). The other moderator hates cops. Neither one are ever willing to offer the slightest criticism of the roaches which have ruined higher education and neither one are at all interested in the welfare of businessmen and landlords harassed by the legal profession in pursuit of what higher education roaches hold dear.

> hates academics
> spends all his times being a gadfly on blogs of academics

My very conservative and religious NeverTrump friend who didn't vote for him has been very happy with his first two weeks and come around. Even amongst those ideologically and temperamentally against Trump, they are much more open to him if they aren't literally the establishment.

One thing I think you need to realize is that Trump does have all the right enemies. My friend didn't particularly care about immigration policy before. After being told that anyone who doesn't believe in Open Borders is worse then Hitler by a bunch of vandals, he's moved to the right on immigration in both policy and sentiment.

I also can't state how much Trumps potential effect on the Supreme Court and Religious Liberty have galvanized such people. These people feel betrayed by a Republican party who never took them seriously. Trump may not be a Christian, but he's doing concrete and meaningful things to protect Christians. After watching all the protests people understand loud and clear that without a protector they are in for a new wave of persecution. Many of these people didn't vote for Trump in November (though they did not vote Hillary either). If he follows through they will vote for his re-election.

Amen. As you note, consider what the left has in store if they regain power. They will not take the chance that the wrong people might control the government. I'll bet this is not lost on those watching the outrageous actions of the leftist mobs.

Looks like Conor Sen was pretty wrong about the Superbowl! From his tweets he seemed to be *really* relishing the defeat of the Patriots.

As for Trump, it seems like the immigration move was a mistake, but maybe it will pay dividends in 2018. I don't see how though, as the objectionable portion of the EO, the 'temporary suspension' of existing visas has been rolled back.

The markets don't really care about these trifles. However, if tax reform gets pushed back, or the rollback in regulations is delayed, the markets will, likely, pushback.

I'm not that surprised volatility is down. Markets are still expecting tax cuts and deregulation of some kind and I think they will get something along those lines pretty soon. This does not say anything about what volatility will be in the long run, particularly since we will get bank deregulation without any repeal of the implicit or explicit subsidies for banks.

No, things like tax cuts and deregulation require a filibuster-proof majority, and right now I don't see many Dems wanting to play ball with Trump on these issues.

How about the more simple explanation: Politics is overrated for its impact on the economy!

'The consensus view is that the first two weeks for Trump have been an extreme disaster.'

What consensus view? OK, the president of the U.S. said that America is just as responsible for killing people its government opposes as Russia, which is likely the consensus view in Russia, after all. And who, except those who hate America, can have any problems with declaring a National Day of Patriotic Devotion to mark the ascendancy of our new president?

The little brouhaha about a 5 million illegal voters is just politics as usual, after all (though it is true that a few Trump Administration officials and family members will need to clean up their apparently fraudulent multiple voter registrations).

I thought the consensus view was that Trump is demonstrating exactly the qualities that he was expected to, both in the eyes of his supporters and detractors. Shame about the silent majority who apparently weren't paying attention, but since when has that ever been a libertarian concern?

Especially in light of this illuminating comment - 'Trump also trampled on just about every sacred icon held by those who inhabit my Twitter feed'

'But right now it is worried less than many of you are.'

Tax cuts for the rich work, as any member of the GMU econ dept. will tell you, even if they do not have a Twitter account.

He didn't say America was just as responsible. He said that America also killed people. Which, under Obama, it did. Obama asserted a legal right to kill any American he liked, although presumably as long as the American was overseas. Or sitting too close to someone else Obama wanted to kill. Not sure if the Obama doctrine would include the odd journalist in DC. But on holiday in Paris? Sure.

Now the Left was fine with that. Why are they not fine with Putin killing people in London?

Also, of course, Trump's delusion is no more than a standard Leftist trope, as the Left have been insisting that American Presidents run death squads for years. Robert Redford's entire career is based on playing people being hunted down by Presidential killers. Or these days ordering Presidential killings. So we are supposed to condemn Trump for believing what the Left has been consistently claiming for over a generation? Are they admitting they lied?

Why speculate, when it is so easy to quote the exchange -

'O’Reilly: But he’s a killer though. Putin’s a killer.

Trump: There are a lot of killers. We’ve got a lot of killers. What do you think — our country’s so innocent. You think our country’s so innocent?

O’Reilly: I don’t know of any government leaders that are killers.

Trump: Well — take a look at what we’ve done too. We made a lot of mistakes. I’ve been against the war in Iraq from the beginning.

O’Reilly: But mistakes are different than —

Trump: A lot of mistakes, but a lot of people were killed. A lot of killers around, believe me.'

'Which, under Obama, it did. Obama asserted a legal right to kill any American he liked, although presumably as long as the American was overseas.'

A right that Trump has not renounced, at least to date. And there is no doubt that this is one of Obama's most shameful legacies, having a secret list of people to kill without following the need for due process -

'Robert Redford’s entire career is based on playing people being hunted down by Presidential killers.'

Not really, but who cares about movies like Butch Cassidy and the Sundance Kid, The Sting, Ordinary People, Out Of Africa, or The Horse Whisperer?

'So we are supposed to condemn Trump for believing what the Left has been consistently claiming for over a generation?'

I think the word you are looking for is 'confirming,' not 'believing.' And really, about the only people unaware of what the U.S. does on the global stage are Americans. Nobody in South America, to give a concrete example, has any illusions about anyone's death squads, whether they are called 'leftists' or 'freedom fighters' or 'anti-communists.'

'Are they admitting they lied?'

The 'they' seems confusing - do you mean that 'they' have now just heard the president confirming that the U.S. has, quote, 'a lot of killers.' Or are you saying that the 'they' were all the previous members of U.S. governments that denied 'We’ve got a lot of killers'? Admittedly, for those that care about their virtuous political tribe, it has become hard to keep up with the whirlwind of collapsing ideological positions that the Trump Administration is creating.

So that is a big cut and paste in order to avoid admitting I was right? Fine. Trump is not confirming anything. He wouldn't know. He has not been in government before.

Everyone in Latin America knows that Latin Americans do not need the slightest bit of help from the US to run a death squad. They have been doing it for hundreds of years. From before the US existed. The US mainly acts as a restraint on death squads. There would be a lot more of them if the US wasn't there.

'So that is a big cut and paste in order to avoid admitting I was right? '

We really are living in exciting post-modern times. I paste Trump's actual words, and this is proof you are correct? Sure, why not - everyone is entitled to their own alternate facts these days.

'Trump is not confirming anything. He wouldn’t know. He has not been in government before.'

And yet Trump, either confirming he is an utterly ignorant buffoon or that he knows more than one might reasonably expect, did say this - '"I know more about ISIS than the generals do. Believe me. ... I would bomb the s--- out of ‘em. … I’d blow up the pipes. I’d blow up the — I’d blow up every single inch. There would be nothing left. And you know what, you get Exxon to come in there and in two months — you ever see these guys how good they are? The great oil companies? They’ll rebuild that sucker brand new. It’ll be beautiful. And I’d bring it, and I’d take the oil."'

Interesting how candidate Trump mentions Exxon, while President Trump has a former Exxon CEO as his Secretary of State. What did Trump know, and when did he know it? 'Who knows' is as good an answer as any other, probably.

'Everyone in Latin America knows that Latin Americans do not need the slightest bit of help from the US to run a death squad.'

A certain Marine colonel, one who would fall on his sword to protect the president before he would actually testify (that is, until he actually testified), clearly disagreed with your expert assessment. Not to mention disagreeing with the laws of the U.S. -

'They have been doing it for hundreds of years.'

This post-modern ability to state any fact desired must be invigorating. Do post a boring link to the centuries long history of South and Central American death squads, for those who lack faith that such a history actually exists.

'The US mainly acts as a restraint on death squads. There would be a lot more of them if the US wasn’t there.'

The interesting thing would be finding any Southern and Central Americans who would believe in the benevolence of the U.S. Keep working on those alternative facts. Maybe the day will come when South Americans will throw roses in front of the Americans that have saved them from themselves again. As summed up ever so pithily in the case of Chile here - 'I don't see why we need to stand by and watch a country go communist due to the irresponsibility of its own people.'

I think he was saying something very clear. That he wasn't going to start a war with Russia.

Watching the events since the election there are two things that are very obvious. One is the march to war with Russia. The case was made, the emotions stirred. It was a campaign indistinguishable from the two marches to battle that I have seen in the modern media age; Bush post 9/11 and Bush Senior with Kuwait. The only difference is that the one who would be Commander in Chief wasn't going along.

Trump is making it very clear that the Steppes of the Ukraine will not be where the US empire goes to die. The very smart people in Washington figured that a good place to do war is in Afghanistan, and the Republicans were all ready to go into Crimea a few years ago.

Could it be that the only people in Washington who have read history books is Donald Trump?

'and Bush Senior with Kuwait'

Almost as if some Iraqi dictator didn't just happen to conquer a leading member of OPEC, with Iraqi forces poised on the border of OPEC's prime oil exporter.

There was no march to war in Russia and there is no 'U.S. Empire".

"There was no march to war in Russia and there is no ‘U.S. Empire”."

Yes, the US isn't an Empire, but there were certainly remarks being made that sounded like the first drums of war with Russia.

"'Are We Going To Go To War With Russia Over Ukraine?'" Feb 2014

 "Turkey Brings NATO to the Precipice of War With Russia"

"John McCain says US is engaged in proxy war with Russia in Syria"

The remarkers are all journalists which column-inches to fill, supervised by editors who have page-views to sell.

> "Robert Redford’s entire career is based on playing people being hunted down by Presidential killers."

Yes, that is a great summary of the plots of Butch Cassidy and the Sundance Kid, The Sting, and Out of Africa. On second thought, not. So much for subtlety, indeed.

Fair point. Redford's latest project, however, has been an attempt at deodorizing Dan Rather and Mary Mapes. Stick a fork in the old cretin.

The big long range concern is that the Establishment is in the process of thoroughly discrediting itself in the eyes of future voters with its extremist anti-borders rhetoric and encouragement of political violence against dissenters, as in Berkeley.

Trump's people don't have a lot of experience governing, but they do know the craziness of the conventional wisdom. They know that the KKKrazy Glue that holds together the Democrats' Coalition of the Fringes is fear and loathing of the cishet white male, and the more they can get the Democrats to vent their rage against Core Americans, the more the Establishment will alienate average voters.

Who is going to rebuild the Democratic Party into a pro-American people party?

The Democrats really need to be thinking hard about finding a reassuring, patriotic cishet white male to be the their standard bearer.

I'm thinking Tom Hanks.

Ideally, professional politicians work from a script and play a role so Tom Hanks or perhaps George Clooney would be the ideal Democratic candidate. My personal preference would be a different kind of entertainer, magician David Copperfield. He would be hard for Putin to handle in person-to-person encounters, being able to pull rubles from the guy's nose and make battle tanks disappear.

Why, Steve, you surprise me. I had no idea you cared.

I thought you'd be still be toasting the Donald's kickoff of the Republican Party's new Thousand-Year Reich, drinking granola-eating hippie blood from a cup made of John Stewart's glazed and fired skull, and eager to once again piss on the Democrats' smoldering ashes.

So says 'anon'!

The Dems would be smart to fight celebrity fire with fire and get Clooney, Hanks, or Ben Affleck in the game. But someone with more regular guy appeal might be needed. I actually saw a bumper sticker the other day saying: Bruce Springsteen 2020

It's too bad Joe Biden isn't 10 years younger

"It’s too bad Joe Biden isn’t 10 years younger"

That statement says a lot about the current state of the Democratic party.

Indeed. They're a mess.

Consensus view? Who is that? The media? Academia? The bureaucracy? The State Department????

The State Department brilliance has presided over a series of utter failures; the Ukraine, Iran, north Africa, Syria. Turkey has turned into a radical islamic state. Not too long ago they were considered for entry into the EU and considered an ally and western nation. One would wonder why they would join the dysfunction of Europe, join a club only as everyone else wants out. China is stretching it's military influence, North Korea has a bomb and is working on delivery systems. If they aren't happy at the State Department we should cheer, especially if a bunch of them quit.

And by the way, you should stop believing the New York Times. The people leaving the State Department are a few of a very deep and wide upper management.

Your point about humiliation is important. Trump is saying things that no one dare say, he is questioning things that no one dare question. The US has been extraordinarily poorly run for two administrations, the results are now measurable and clear. It was bipartisan. The emperor truly has no clothes.

As Bill Moyers said, the Republicans won the Presidency, both Houses of Congress, and about 2/3 of the Governorships, and State Legislatures. The left made Steve Martin apologise for liking how Carrie Fisher looked in Star Wars.

As for immigration, watch what happens to that building supply company who had an immigration ad at the Super Bowl. Call it the canary in the coal mine, either way it goes.

By the way, how many US military personnel died under Obama? We will know with Trump because every one of them will be reported. Why is that? Did Obama not grasp that the most important thing for important people in the US was that they were purposely and knowingly kept ignorant of what their government was doing? That way you all could preen and gaze in wonder at the composure and cool of the President? I saw very early that he had the knack of making people believe that when around him they were in the presence of two great minds. Did you fall for that shtick? All the while the whole base of his power and by extension the political, economic and social assumptions of a large part of the country were falling apart. Or more accurately, were being systematically dismantled either purposely or by neglect.

Are we seeing a Ceausescu moment in the US?

'Are we seeing a Ceausescu moment in the US?'

Seriously, I doubt that there will ever be videotape of Trump and his wife being executed - 'The Ceaușescus were executed by a gathering of soldiers: Captain Ionel Boeru, Sergeant-Major Georghin Octavian and Dorin-Marian Cîrlan, while reportedly hundreds of others also volunteered. The firing squad began shooting as soon as the two were in position against a wall. A TV crew who were to film the execution only managed to catch the end of it as the Ceaușescus lay on the ground shrouded by dust kicked up by the bullets striking the wall and ground. Before his sentence was carried out, Nicolae Ceaușescu sang "The Internationale" while being led up against the wall. After the shooting, the bodies were covered with canvas.'

Who was itching for war over the Crimea? Care to name names?

China's productive base grew very large very quickly. Friction is inevitable as it finds its place in the world, and we'd better hope its just friction. As for Russia, the period running from 1984 to 1998 was wretched for them and they're in the throes of a revanchist reaction to that. Russian revanchism is fairly mild compared to Arab revanchism, or interwar German revanchism, or even late 19th c French revanchism; we may be fortunate inasmuch as there is a fair chance it burns out over the next generation. As for Turkey, their pathologies are self-inflicted. There's not much the State Department could have done to avert any of these problems, thought they might have been managed more deftly (Lewis Amselem, the retired FSO who blogs as Diplomad 2.0 has said that Victoria Nuland is an incompetent who should have been summarily sacked).

Obama brought nothing special to the table. His intellect may exceed that of a rank and file attorney, but he's too complacent and apathetic ever to put it to work. His world view is a summary of the attitudes abroad in the subcultures in which he has spent his life, and is congruent with the outlook of the vociferous and elite Eurotrash element. He has less individuality than anyone who has occupied that office in the last 40 years.

The US has been extraordinarily poorly run for two administrations, the results are now measurable and clear. It was bipartisan. The emperor truly has no clothes.

The country hasn't been poorly run. Congress and the Presidency have a talent for bollocks (e.g. being unable to pass a conventional budget and appropriations bills); the state government in Springfield and Sacramento (and, more intermittently, Albany) are in the hands of people similarly inadequate. With the exception of fiscal discipline, the headline results have been worse in the lifetimes of most of us on this board. (Compare the VietNam War to the Iraq War or macroeconomic policy between 1966 and 1979 and macroeconomic policy today).

Our most severe problems concern otiose law enforcement, our bloated higher education sector, and the franchise lawyers have arrogated to themselves to loot and rape every other sector of society. Recall BO's pre-political employment consisted of the simulacrum of a career as a lawyer and academic. He is the regime. (While we're at it, the Mercatus crew is perfectly at home with the regime).

Of course the checks and balances are working as intended. I told you months ago they would. Gracious of you to concede. You need more political scientists on your staff.

The job of the presidency is mainly to set the tone of the US government. Thank goodness the tone dramatically changed last month. ‘Hooray’ is all I can say, as I will be able to return to enjoying the world and getting on with ma private bisnes with a greater sense of physical and public security now that the world's superpower is finally acting super once more. You were sadly missed guys. For the next 8 years no [other] country will dare to mess about. Granted, the USA has become a little unsafe — loads of uncertainty on a daily basis if you bother to worry yourself by reading the media, which has suddenly become profitable again — but on the whole the rest of the world has become safer. Bliss.

first 'Trumble', now marmite?! How many insults can a country take in one week?

Not great for the flash boys :)

The Hitler rally went from 1933 to 1938 (more than 100% gain). Next there was a very slight consolidation until WWII. And then you could make another 50% or so until 1942. Eyeballing the chart, it looks like volatility was rather low during that time. So, no problems ahead?

Stock market indices contain a small number of very large companies with a tilt towards sectors where they are more common. Those are typical beneficiaries if unabashed crony capitalism becomes the rule. There is no contradiction that those companies can do well while the country goes authoritarian. The Russian stock index (RTX) went through the roof between 2000 and 2008 when Putin crushed what little there had been of democracy, the rule of law, or human rights. Of course, Gazprom is doing fine. That's what it is all about.

Except this is a broad based rally, not a crony capitalist rally.

Gain 1932-1941 for subindices (whole index: +203%):

+245.7% Manufacturing (verarbeitende Industrie)
+201.6% Mining and Heavy Industry (Bergbau und Schwerindustrie)
+152.3% Trade and Transportation (Handel und Verkehr)

Looks broad-based to me. Crony capitalism in its developed form (as in Russia or then Germany) can be quite expansive. And then it doesn't have to work through individual "deals." Here are other venues: protectionism benefitting incumbents, eliminating competitors and furthering cartelization, deficit spending that goes into armaments and infrastructure ...

For the data:

Maybe to stress my point (and what it is not):

I am not out to prove that the current situation in the US is entirely parallel with that of Germany in the 1930s or Russia in the 2000s. We'll have to see, there sure are differences, but also some rather glaring similarities. And, of course, I am also not trying to prove the reverse conclusion which is totally silly, namely that because the stock market is doing fine something sinister has to be in the works.

My point is this: Stock market indices might contain information on the future -- but for the stock market indices in the first place. Only indirectly do they make also forecasts for other things. The stock market is a selection of big companies (even a small-cap is not your mom&pop), heavily tilted towards some sectors and business models. There are not many private SMBs that build aeroplanes or offer reinsurance. Typical companies in a stock market index (especially large-caps) can benefit from a move towards crony capitalism, protectionism, regulation favoring incumbents, etc.

It is entirely possible that the stock market goes up while the effect for the rest of the economy (much larger), consumers, etc. is quite different. It is possible that the government becomes authoritarian or even totalitarian while stocks go through the roof. And it is even possible that stocks rise and rise when the country is actually headed for disaster.

Dividends would be juicier if there were some kind of tax amnesty for foreign earnings.

This is a very good summary of the contrarian view, in this case the view of Seth Klarman (the "Oracle of Boston"). I have expressed similar views myself, that investors are hypnotized by the illusion of stimulative tax cuts while ignoring the full ramifications of the enormous deficits and inflation the tax cuts may cause and Mr. Trump's erratic leadership style and the likely uncertainty and volatility that will result from it. But of particular interest is his view of index funds that now dominate investing, the effect of which is to lock in today's relative valuations between securities. And this: “Stocks outside the indices may be cast adrift, no longer attached to the valuation grid but increasingly off of it. This should give long-term value investors a distinct advantage. The inherent irony of the efficient market theory is that the more people believe in it and correspondingly shun active management, the more inefficient the market is likely to become.”

Thanks for the link. I hadn't seen Klarman's take.

From Todays NYT describing the views of a hedge fund manager who is the favorite of Warren Buffet:

“Exuberant investors have focused on the potential benefits of stimulative tax cuts, while mostly ignoring the risks from America-first protectionism and the erection of new trade barriers,” he wrote.

“President Trump may be able to temporarily hold off the sweep of automation and globalization by cajoling companies to keep jobs at home, but bolstering inefficient and uncompetitive enterprises is likely to only temporarily stave off market forces,” he continued. “While they might be popular, the reason the U.S. long ago abandoned protectionist trade policies is because they not only don’t work, they actually leave society worse off.”

In particular, Mr. Klarman appears to believe that investors have become hypnotized by all the talk of pro-growth policies, without considering the full ramifications. He worries, for example, that Mr. Trump’s stimulus efforts “could prove quite inflationary, which would likely shock investors.”

Here is the link:

To the extent that the stock market is premised on future tax cuts, he states further:

"And he appears deeply concerned about a swelling national debt that he suggests could undermine the economy’s growth over the long term.

“The Trump tax cuts could drive government deficits considerably higher,” Mr. Klarman wrote. “The large 2001 Bush tax cuts, for example, fueled income inequality while triggering huge federal budget deficits. Rising interest rates alone would balloon the federal deficit, because interest payments on the massive outstanding government debt would skyrocket from today’s artificially low levels.”

Yes, I just finished dreading the article at the breakfast table. I agree with Klarman and think that there may be a little bit more short term gain but then things are going to get rocky. Repeal of the ACA now appears to be in 2018 if then and if something isn't done to prop it up stuff starts to get real bad. We've yet to see what Navarro/Ross have in mind for "fixing" global trade and of course have no idea at all what tax reform is going to look like. The executive orders on regulation are largely worthless. The only thing that can be done is to repeal the late stage Obama regs which they are doing but anything else has to be done via notice and comment rule making (very long and involved ) or by legislation which the Senate will bottle up.

Personally, I've got sell orders on most of my equity holdings so that profits will be locked in. If the market keeps going up, I just adjust the sell points. I have a feeling that things could go south pretty quickly.

That you have to repeatedly remind everyone you don't like this whole Trump thing throughout a post where you are merely arguing things aren't quite so terrible shows how batshit crazy people who are trying to compare Trump to a rising totalitarian are.

The current social requirement is apparently for a Trump disloyalty oath in every statement relating to him, his policies, or his Presidency. But yeah we are about to be arrested for not clapping. Seems more likely some group will try to boycott people out of their jobs for clapping.

Boycotts are useless, Uber just promised flying cars.

You and those around here who support Trump are proceeding from the presumption that Trump and his immediate circle (Bannon, et al) are mature, competent people who know exactly what they're doing, have a comprehensive and fully thought through policy platform, and that all of the conflict with the media is carefully crafted rhetorical kayfabe.

The establishment elements which oppose Trump are proceeding from the presumption that Trump is a fundamentally unserious, narcissistic, emotionally unstable man-child with minimal to no understanding of how government works whose policy positions consist of whatever the last person he talked to told him, that his immediate circle consists of a mish-mash of ruthless reactionary zealots (e.g. Bannon) and corrupt crony capitalist apparatchiks from Wall Street and Big Oil, that the truly serious and experienced people in Trump's administration (i.e. Tillerson, Mattis, et al) have been frozen out and neutered precisely because of their expertise, and that the perpetual conflict with the media is exactly the sort of juvenile, mean-girl high school slap-fight that it looks like.

Occam's Razor supports the latter view.

I fail to see how your post addresses TV's observation but feel free to rant on.

"The current social requirement is apparently for a Trump disloyalty oath in every statement relating to him, his policies, or his Presidency. But yeah we are about to be arrested for not clapping. "

That post by Alex T. is indicative of someone deep in a bubble. Tyler at least shows signs of not spending all of his time in the bubble.

Richard Cohen has a great description of Mr. Trump: Trump is a boy's idea of a man. It's similar to Andrew Sullivan's description of Newt Gingrich as a dumb person's idea of a smart person.

"It’s similar to ..."

Charles Barkley calling Shaq a little man.

Cool kids did not fight for Hillary, because she was not cool.

Now cool kids distance themselves from the very checks and balances that do keep Trump in line.

Fine, but remember how better we'd be if this hadn't been the game last year as well.

(And no one wants to crash the markets to make a point)

What the uncool kids have to roll up their sleeves and deal with:

Sebastian Gorka, deputy assistant to President Donald Trump, said Monday that the administration will continue using the term "fake news" until the media understands that their "monumental desire" to attack the President is wrong.

"In an alternative reality President Hillary Clinton is boring an audience with renewable energy statistics while we get on with our lives"

The marmite crowd?

To quote an Ozzie/Catallaxyfiles:

Trumbull has to go.

Obama left a landmine.

That was a fun post, I'll say. Brings back the traditional fishing.


Good times, good times!

Obama and Trumbull agreed to keep the deal quiet BEFORE the election cos Obama knew it would help Trump.

Trumbull, when he came to the States, did not meet with candidate Trump. I think he met with Rubio and Hillary.

Obama signed the deal/order AFTER the election.

This is NOT Trump's fault. It'll make it worse for the Ozzies as well from a refugee standpoint.


I do understand that America is consuming some of its political and reputational capital. Yet so far the best prediction is that the relatively manageable scenarios are coming to pass.

1. That is your guess. Right or wrong I'm not sure there is a basis for calling it the best guess.

2. Even if it is the best guess, you ignore variance. Do you think the range of possible outcomes is no wider than with a different President? Do you think it is symmetrical around your guess?

For reference, our new reputation.

The VIX is a measure of variance. Variance is down.

He means variance in Trump outcomes. VIX does not include handcuffed 5 year olds.

"The consensus view is that the first two weeks for Trump have been an extreme disaster."

His approval rating is at 53%, down from a high of 59% taken just before the immigration hoopla. Most are OK with the freeze, so it's probably the ham handed way it was implemented that brought down the number, so it'll be temporary. Trump could use more consensus view like that.

Why do you even post this? Do you think readers have no memory of yesterday? Of the many polls going the other way? Trump's acknowledgement and complaint about those polls?

Rasmussen has been more reliable:

Without going into the weeds, no results do not prove one or another proportional odds is correct. Only people claiming 100% or 0% are disproved, and there were no such claims.

Here's a list of the orders:

Some controversial, and a couple that will not happen, but maybe 17/20 are popular and good for the country.
Pretty solid start for Trump. Much better than I expected.

You should stop and think how much happier YOU would be with Hillary.

You could just attack her policies all day, without having to defend a Whitehouse that cannot spell "attak."

Monday's list additionally includes repeated misspellings of "attacker" and "attackers" as "attaker" and "attakers," respectively.

I do not take joy in complaining about bad government. I'd rather have a government I can ignore safely.

I'm glad to see you finally found something of substance to complain about in the Trump administration.

As I say, happier with Hillary.

The sad thing is, an amateurish and misspelled communication from the Whitehouse really surprises no one at this point.

It certainly would have been big news from a Hillary Whitehouse, but here no. We all know this is what to expect.

Yes, yes, instead of the guy who doesn't use spell-check, we get the woman who will import ISIS.

Why do you think "bringing the crazy" is a good strategy at this point?

"import ISIS" has no place in sane conversation. It is not anyone's policy explicitly, implicitly or even accidentally. There are positive controls in place.

Forget importing ISIS, the woman who bragged about destabilizing Libya and exacerbating the refugee crisis.

You guys aren't impressing me. You always had that kind of tenuous connection, from Hillary to Libya, nevermind the UN votes that set everything in motion.

Trump defenders, the last of the low information advocates.

According to this email from Cheryl Mills, HRC's fingerprints were all over Libya.

"March 19 — HRC travels to Paris to meet with European and Arab leaders to prepare for military action to
protect civilians. That night, the first U.S. air strikes halt the advance of Gaddafi's forces on Benghazi and
target Libya's air defenses."

Bad, bad, Hillary. "Fingerprints" protecting civilians.

You guys. You always try to make a UN/NATO action into Hillary's wild off the reservation adventure. Instead she was a cog in a much bigger machine.

How "protected" are those citizens now? As always, intentions over results.

Anon, a couple weeks ago you made the same point and I replied with quotes from Hilary's aides that she initiated and led the effort in Libya, and that it was set up to be her "signature" foreign policy achievement going into the election.

And yet here you, not just unaltered in your opinion but actively arguing the same laughable point. Even a plant changes its position in response to the son.

My point is that if you started with a true telling of the Libyan war of 2011, you wouldn't have a case against Hillary. You are elevating footnotes to story.

So you never tell a true story. You do things like quote a guy who said a thing.

True history:

And amazingly the words "Hillary Clinton" do not appear in the text of this article AT ALL. Yes, some mention in footnotes.

Yes, yes, government "vetting," the same government that "vetted" Manning and Snowden. Color me unimpressed.

Your spell-check misdirection is irrelevant and we would not be happier with Hillary as President, much like Belgium isn't happy with EU courts telling Belgium it has no right to deny entry to Syrian migrants based on legitimate visa overstay concerns.

Spelling in official communication is kind of a low bar to pass.

I would it it at more like 13/20, but many of the good ones are toothless or so vague as to be worthless.

Gorsuch is not a bad pick for SCOTUS (marginally better than Scalia from a libertarian standpoint), but I don't think Trump is responsible for that at all.

re: Gorsuch. Yeah, any Republican would have picked someone like Gorsuch. Though the Left ain't comparing him to Cruz or Rubio or Jeb! but to a spectrum delineated by Berlusconi and Mussolini.

Cowen's blog post reminds me of the popular Calypso song from about 25 years ago, Don't Worry, Be Happy. In his latest Bloomberg column, Cowen compares the underrated American economy with the underrated Pakistan. Pakistan? Isn't that the country that protected Osama bin Laden? But Paul Krugman wins today's award for wishful thinking. In has latest blog post, Krugman says we can expect lots of sound, fury, and tweets from Mr. Trump, but little in the way of actual policy that might crater the American and world economy. If Cowen and Krugman agree on something, it must be true. Ooo-oo-hoo-hoo-oo hoo-hoo-oo-oo-oo-oo-ooo Don't worry. Woo-oo-woo-oo-woo-oo-ooo Be happy. Woo-oo-oo-oo-ooo Don't worry, be happy.

Bad timing in the Pakistan piece.

Dude, Trump is just getting started with his disasters.
Wait until someone actually attempts to implement his desire for a 20% tax on imports from Mexico and/or China.
Not a single piece of legislation has been passed yet. It can get much, much, worse.

There is also the "scum rises" problem. While Tyler has completely written off crimes run from the Whitehouse, there are always people who will do them.

And we face the risk that a failing Trump will turn to those people.

I can't even pretend to take citations from the MSM seriously anymore. Washington post? I'll bet if I go to their website right now it's going to be majority hit pieces on The Donald. Oh look at that I just did and it is. It is mono-negative clickbait. "Federal court considers...", "Trump plays the blame game", and finally this gem: "Trump tried and failed to build a wall at his Irish golf course. He hasn’t forgotten."

The MSM is just pushing the same memes over and over again. Trump is a jerk. He's undiplomatic. His understanding of wall physics is bad LOLOLOL. He's racist/sexist/misogynistic/hates puppies.

I'd take Brietbart more seriously at this point. At least they acknowledge a heterogeneity of viewpoints, even if it's all caricature.

But what if WP and NYT actually have the objective reality?

Is it really safe to turn it off? It is very telling that Trump wants you to, and to just go to Kellyanne Conway for what's true.

If I was willing to take Pascal's wager, it wouldn't hinge on having an accurate opinion on something that is virtually unactionable.

"The MSM is just pushing the same memes over and over again. "

The NYT just did a huge three reporter article with completely un-sourced and almost certainly false rumors of a muttering Trump in a bathrobe and aides who can't turn a light switch on. All the trained seals in the media ate it up.

At this point Alex Jones is more reliable than the big media outlets.

At some point the stories don't pass a sniff test. The probability to someone can't operate a light switch is extremely low. I'm sure somehow in some way it could be technically true that there was trouble with a light switch, but nothing that reflects actual systematic buffoonery.

I remember working in the dark on a few Saturdays because my co-worker and I had no idea where the light-switches were. So I'll buy it as possible.

So this is sort of maybe an obvious observation but:

February, 2007 was not a great time to buy stocks

18 months later people were asking real questions about whether the institutions of financial capitalism would survive.

I'm with Andrew. I'm confused why a low VIX should make me feel better about the future. The U.S. was in a recession by December, 2007 and in a catastrophe 9 months after that. That it is falling now doesn't seem to tell me anything about how worried I should be about Trump's policies, attitudes and actions going forward.

I'm not sure a volatility index tells us anything about the future... Crude oil volatility reached record lows (since November 1986 when oil options started trading on an exchange) of around 13% in June 2014 and by the end of the year was up to 50%... (As measured by implied volatility..)

Correct, it's a measure of PRESENT volatility and 'fear'. Look at the long term chart, all the big spikes happen DURING crises not before. If anything a low VIX means the market is getting complacent.

I'm guessing you are a long term reader of calculated risk.

Falsch wieder, mein Freund

What a shame - calculated risk is the best economics blog on the web. Particularly when it comes to things like highlighting the folly of trying to judge events or cycles by using single data points.

Which just might explain why so few commenters here seem to read it. It is much easier to understand why academic economists ignore a man who runs rings around them, simply by using data consistently, and laying out his reasoning.

I know the stuff he knows already, I do have a look from time to time. I already knew the folly of basing too much on single data points.

It's a measure of PRESENT *expected* volatility. Markets don't 'get complacent.' Don't anthropomorphize complex systems of interacting humans.

Trump does harm by saying really stupid things. "We've got a lot of killers" "Mexico will pay for the wall" "Muslims will be extremely vetted" There is a real cost to this crap. I like his appointments. Just shut the hell up.

The more the Dems whine and look like spoiled rotten brats, the better, easier, it will be for a Trump to be far far less than Hitler, yet still mediocre, and be far far better than the Trump-hating brats are screaming he is.

The Wall is going up ... er, something will be built and it will be called the Wall, and be called Yuuuge.

But using VIX to measure the markets is unlikely to lead much profit -- far too much random walk running around like monkeys right now.

This is all part of his plan. The one thing that conservatives hate most is outspoken (eg protesting) loud mouth liberals. Trump is intentionally pissing off such people in order to embolden his own supporters and thus solidify his rule.

" Trump is intentionally pissing off such people in order to embolden his own supporters and thus solidify his rule."

He is intentionally pissing off people. But it's not to embolden his supporters, it's to make the media and the Left over react and push the middle voters his way.

And he doesn't "rule" any more that Obama did. He's a President. He issues Executive actions, and if he's smart about his legacy, he passes substantial Legislation through Congress with at least a sliver of bipartisan support. (We'll see if Trump is smart or not. I have no idea at this point.)

I can see you are not yet on board with what occurred on our National Day of Patriotic Devotion.

" our National Day of Patriotic Devotion."

What is this German holiday you are speaking of?

I kind of doubt that any of the improvements in the markets actually trickle down to the base that elected Trump. Generally the profits go to wall street and the losses to main street, nothing that Trump proposes will change that. All the Democrats have to do is to point out the Trump and Wall Street are again making money hand over fist and screwing them in their own pocketbooks.

Of course the core Trump supporters are not all that bright, so there are plenty of opportunities to distract them from reality with shiny objects and give him a second term. Those same voters did not really mind Bush the younger killing their sons and daughters so they are pretty resistant to self-interest.

The fight is for the moderately intelligent middle, such as it is.

Fake news from Breitbart, Fox, Drudge, and the many Right Wing pundits and columnists who are even on liberal TV and news sites, is pushing hard to grab the voters from the moderately intelligent middle.

Many of Trump supporters are not that bright. But some are bright and yet are emotionally immature and easy to stir up with fear, rage, and lies. Since we are immersed in Right Wing propaganda in the U.S., and since so far liberals are doing almost nothing to effectively communicate the truth and their own progressive vision to the voters in the Center, DT could very well get a 2nd term.

Yes, Republicans routinely screw over the ordinary folks, and they believe the Right Wing media's lies and vote them in again, as they did with W.

That post perfectly encapsulates the Modern Leftist American mind set. Disdain & sneering condescension, not merely for the other side, but even for those who aren't declared for one side or the other.

So easy to stir up yet...

Which side is emotional, marching and wearing ridiculous hats?

Which side is emotional, marching and wearing ridiculous hats?

Yeah, I agree.

As Kevin Burke mentioned in the first comment, with a citation, "1933-1939 Germany was a time where civil liberties and economic freedom were sharply curtailed and stock markets rose quite dramatically,"

But this is to be expected in a culture like the U.S., that is so worshipful of money and of rich people that we elected an ignoramus billionaire as president-- someone who, even now that he is in office, shows no interest whatsoever in learning how government works.

"Democrats in effect cannot convince the markets that their presidential rule is better for capital values than is the…scenario of Trump."

Well, let's see after 4 years of Trump-- if he makes it that far without being impeached-- how the market has done, in comparison with Obama's first 4 years.

Saying that Trump's effects are manageable due to the stock market rising in the short time since he's been president, is very much cherry picking a small time period, for the apparent purpose of manufacturing an embarrassment for the Democrats.

So perhaps those Alt Right here who have been claiming Tyler is a Democrat himself, because he is the the Left of Attila the Hun, will now welcome him into the fold of Trump supporting cherry pickers and lemon pickers. Trump supporters who watch for Trump to do something incredibly unacceptable, like blame a judge for any terrorist attacks in the future, because the judge rules Trump's EO unconstitutional. And then when people criticize Trump for it, the Trumpeters say "But here, look, Obama once did something that I somehow imagine to be similar to that, and you didn't complain then, did you? So it's fine what DT did. Just fine." Maybe Tyler will join them in doing that too.

This makes me think of Scott Alexander's recent post on SSC called BOOK REVIEW: EICHMANN IN JERUSALEM, where he discusses how the Jewish leaders cooperated with and tried to compromise with the Naziis, tried to pretend the Naziis weren't so bad. Spoiler Alert: That didn't work out very well for them. Scott is a great and reflective writer, even thought he is a brutal moderator who will easily bans a Left of Center person for very little reason, from his Right Wing safe space echo chamber comment board.

I wonder how many variations on "Trump's not so bad, because {stock market rise/ WWII hasn't happened yet/ whatever} we will see.

Like Warren Buffett said "Only when the tide goes out do you discover who's been swimming naked." He meant it about stock market risk, but in this case it's about being naked of principles.

Wow, you leftist sensitive types can't stop complaining that SSC isn't a leftist hugbox. You truly feel like you deserve ownership of that place, and it's fascinating to watch you contort yourselves to avoid such an obvious truth.

There's an article in the Baltimore Sun today called: Ordinary Americans carried out inhumane acts for Trump.

Interesting reading, in view of the issue of "swimming naked" of principles.

Consensus view? You need to expand your consensus. I understand that David Frum, the NYT, New Yorker, et. al. might see it that way. But, the view from everyone I talk to ranges from ecstatic to surprisingly happy.

we need to cut the deficit even tho all the markets are screaming low inflation for ever (20 yr tbill rate) cause markets can be wrong and change rapidly and greece is around the corner

markets based on a two week history that is 3 sigmas off the norm are correct and predictive

about cover it ?

Its one of the grand myths that the VIX is actually a volatility predictor. I have been tracking it for ages and its correlation with actual negative events is extremely poor. Somewhere the business press decided that VIX said something meaningful, and as usual, the business press was wrong. Its an extremely contrived indicator with lot of really whimsical assumptions. Additionally, it is in fact a LAGGING indicator. It usually goes up AFTER stocks drop, rarely before. So let's stop right there, why would a lagging indicator tell us anything about the future which the stock market isn't telling us anyway.

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