As excerpted from the latest Weekend Notes from One River CIO, Eric Peters.
“China’s best play is to let the US stock market crash,” said the CIO. “Trump is right, they can’t win a trade war.” So they won’t try. “But Xi can consolidate if things get rough in terms of markets, but for Trump it is the opposite.” The US is far more exposed to a bear market.
“And just like US debt ceiling standoffs or just about any political standoff for that matter, the game is that things always have to get worse before they get better.” And he sighed, deeply. “But I truly hate having to trade by playing game theory. It’s just an awful way to live your life.”
"I like to do the kind of analysis that involves looking at one group of companies that are starting to make money,” continued the same CIO. “And then from that observation, I can make reasoned forecasts about how their improving fortunes will impact others, and so on and so forth.” The same process works in reverse of course. Economies have a way of spiraling up and down, like corkscrews. “I like the kind of analysis that captures the actions of tens of thousands, or millions of people.” And he sighed, again. “But now, we’re just trading late night tweets.”
And a bonus anecdote from Peters' note
“The polls say I won the debate,” said the candidate, “but you and I know all about polls.” Perry Parker’s a good friend, we worked together for a decade, buying low, selling high. And having won in finance, he headed home to give back to Mississippi. When the 3rd congressional district seat opened up he made a bid. “The men say, ‘So you’re Trump without the tweets,’ and the women are like, ‘Exactly what are you going to do to make my family’s life better?” he said.
“I’m running against fine human beings. But they’re herd traders.” Their idea of success is doing exactly what’s been done. Delivering decent services. Tracking an index. “They go wherever the establishment says, like lemmings – but for Mississippi to do better we must do something different.” The state ranks 1st in income inequality and is America’s poorest. It ranks 49th in opportunity, 46th in education, healthcare 50th, economy 48th, infrastructure 49th.
“My opponents run on conservative values, gun rights, religion. I’m running on those things too. But I’m really here to bring new investment into Mississippi.” Chicago lumber futures are near all-time highs, Mississippi timber is near all-time lows. “Each year Mississippi produces 33% more trees than our mills can process, depressing prices. Who’s calling the Chinese to make sure they build their next mill here? Perry Parker is calling,” said the candidate.
“People here don’t really talk about inequality, but it’s the source and consequence of so many of our problems.” Workers are just content to have a job. “And my job will be to bring in the new businesses that pay more. You know, people listen to me and say, ‘What do we have to lose?’ And they’re so right, I’m going to bring a bid to this state, and there’s never been a more crowded short than Mississippi.”