The markets are drunk on the idea of a Joe Biden administration. The closing highs for the year occurred between December 23rd and December 31st for countless equity and commodity indices. Among them are the S&P 500, NASDAQ 100, S&P 100 (OEX), S&P 600 (Small Cap), NASDAQ Composite, Total Stock Market Index, cumulative NYSE Advance/Decline line, Dow Industrials, Russell 2000, S&P 400 (Midcap), Bloomberg Barclays U.S. Treasury Inflation Protected Securities (TIPS) Index (Series-L), and our own DTI® and CTI®. This is far from a complete list. Meanwhile, the U.S. Dollar closed at its low for the year on December 30th.
These highs were made under the assumption that Joe Biden will create a volcanic eruption of government spending, coupled with the U.S. Federal Reserve’s zero interest rate policy (which is projected to continue for years). With no concern for inflation and QE Infinity at $120 billion a month, valuations are simply not relevant. The key to this mix is “No Trump” for the multinational corporations, allowing them to go full speed ahead on the “Democratic Socialists” and their open border “free trade” policies. The primary reason Trump was hated was he cared more about the U.S. worker than the optimized profits of the globalist corporations, who control 90% of the media.
I am surprised that the U.S. Supreme Court would refuse to hear the Texas election petition on a technicality, without further explanation. The problem was the petition was filed before the electors were officially elected, so no harm had occurred yet. I leave the conclusions of the election results - and their honesty - to the reader, but let me quote a great and esteemed economist (in the league of Milton Freedman) named Alan Meltzer: “No country ever became rich without the rule of law. No country ever remained rich without the rule of law.”
So, where is the U.S. headed based on the legal trends of the law? My personal editorial view: First of all, so far no one has been prosecuted for the attempt to overthrow the Trump election (Russia-Gate), which was definable as treason. However, a total of six people from the Trump campaign were convicted and/or went to prison for “process crimes,” with two for tax evasion. Also, take the case of General Michael Flynn. Flynn was set-up and then persecuted for four years by the FBI. The FBI threatened to implicate his son on a made-up charge, so he pleaded guilty of lying to the FBI – a crime he never committed - to save his son from harassment and indictment. The Department of Justice eventually dropped the case against Flynn, finding overt evidence he was innocent, but Judge Emmet Sullivan would not follow the DOJ order and acted as a prosecutor instead of a judge, refusing to drop the case. This is unheard of in the history of American law, and corruption of the highest order. In addition, my view is Attorney General Bill Barr and Supreme Court Chief Justice John Roberts are a major part of the reason the rule of law is in deep decline, or does not exist, if you’re the wrong person. While Sullivan overruled his authority and acted as the Executive Branch, Barr looked the other way. Roberts has acted as the Legislature Branch by being the deciding vote to illegally change the ACA (Obamacare) penalty for not buying medical insurance to a tax, simply to accommodate the Constitution. If it is unconstitutional to force a penalty on the people for not buying something the government says you should buy, then one man - Roberts - can’t change the law by just saying it’s a tax despite it not being called one in the law. (The 16th Amendment says you can tax income, not penalize actions and spending that you don’t do). The penalty would have to be revoked by Congress and stated as some convoluted tax, as they are the ones that make the laws, and judges just interpret the law as unconstitutional or not.
I think you get the picture. The end of law and order is an unknown that can become a “black swan event” for the stock markets’ nirvana view of spending and the U.S. Federal Reserve. The gross and blatant violations of law are at some point going to cause a backlash that may come in many forms, potentially as radical as secession or a Venezuela. I am emphasizing that the political system has been in decline for years, but is now in a crash mode. Over 74 million people voted for Trump; they are not going away just because CNN says the election was legitimate. As Samuel Adams said: “For no people will tamely surrender their liberties, nor can they easily be subdued, where knowledge is diffused and virtue preserved. On the contrary, when people are universally ignorant and debauched in their manners, they will sink under their own weight, without the aid of foreign invaders.”
The statements in this communication are the opinions of its author, Victor Sperandeo, and are not to be relied upon by anyone as the basis for an investment decision. Any investments made by a party in reliance thereon are made at such party’s sole risk. No guarantee of any kind is implied or possible where opinions as to past or future market conditions/events are provided. Past performance is not necessarily indicative of future results.