One comedian asked today if his audience was getting bored from slow-news days. Let’s consider the tumult:
Over the weekend, President Joe Biden did what he said he would not do and quit his race for a second term as US president. He also endorsed Kamala Harris for the bid. Overnight millions and millions of mega-donor and celebrity donations poured in for Kamala and for the Democrats in general now that their favorite fossil was out of the race. And that was before they even “started up the fundraising machine.” Just as quickly, all 50 state-level DNC chairs endorsed her, ready to rock with anyone other than the guy who almost is a rock, and major donors are lining up at the telephone to host fundraising events by the hundreds.
Suddenly, former President Trump has a real campaign to run against some veritable competition, and reports started emerging that his campaign people are now doubting hopeful VP Vance is up to the new job because he was supposedly picked to electrify the MAGA faithful, but the race looks like a new fight for independent voters, making it different beast that is no longer an assured landslide defeat for Dems. Democrats have swung from all-out despair to surging hope over the course of a weekend.
The globalization of political chaos
This isn’t just the most tumultuous year of political chaos in the US; geopolitics has ramped up in the last couple of months to suddenly outweigh inflation as a concern for markets.
Politics has toppled global markets from record peaks and over a turbulent few weeks stepped to the fore as investors confront the prospect of an increasingly fractious Europe, isolationist America and a slowdown in the pulse of world trade.
Geopolitics topped the risk list of sovereign money managers this year and, after a roaring rally, money is rushing out of potential flashpoints – such as Taiwan’s stock market – and into havens such as gold, which hit an all-time high last week….
(You’ll find more on that move in gold by CBs in one of the articles under “Money Matters” below.)
The line of thinking is that a period of peace and free trade is finished and the next one looks less profitable.
Nearly half the globe votes this year and results so far underpin the shift in mood: Taiwan elected a president detested in Beijing, voters lurched to the right in France and installed the largest left-wing majority in Britain for a generation.
Over just eight days, the U.S. campaign trail created shock waves: frontrunner Donald Trump was grazed by a bullet and Joe Biden quit with less than four months to go until polling day.
Secret Service chaos
That graze by a bullet and deaths caused by the assassination attempt have finally united a long-divided congress to the task of dividing the Secret Service from its leader. SS Director Kimberly Cheaty (oops, Cheatle) got her pants torched in congress today, and you can watch that happen in a couple of articles below as well. She did her best to stonewall congress, and some were not happy about it … with one congresswoman getting the decorum whistle blown on her for saying Cheaty (oops) was “full of shit.”
Several Republicans and a few Democrats are demanding Cheater be fired. But, like Biden, she refuses to step down … well, until she does in a few days (also like Biden) because pressure will keep growing, especially now that she dodged congress on nearly every question with the standard “that’s under investigation” umbrella answer. She did, at least, admit it was the biggest mission failure for the Secret Service since President Ronald Reagan was shot. Many of the questions asked by conspiracy theorists were asked by congress today, such as why her great fear over putting agents on a roof with a 10-degree slope. Some wondered if it was because the weather was 10 degrees too hot. (See the videos embedded in the related headline stories below.)
Meanwhile some Republicans are asking of the barely standing president (and I paraphrase), “If you aren’t fit to stand as a presidential candidate, how are you fit to stand as president?” Biden falls more easily than he stands.
Chaos is good for gold
Gold, considered an inflation hedge and a beneficiary of demand from central banks in a climate of mistrust, shot to a record high above $2,450 an ounce in the days after the attempt on Trump’s life, an event that has galvanised his supporters.
“All of Trump’s policies are likely to be inflationary – be it tax cuts, immigration, or re-shoring, and hence dollar bearish…so the dollar is likely to depreciate against gold,” said Prashant Kothaari, CEO at Alpha Alternatives.
At the same time more than $100 billion has been wiped from the market value of Taiwan Semiconductor Manufacturing Co (2330.TW), opens new tab in less than a week after Trump sounded equivocal about his commitment to Taiwan’s protection and chip industry.
Meanwhile, China’s growth is slowing even more, resulting in rescue packages from the Chinese government. So is US growth under Bidenomics.
Even the Middle East got hotter and more chaotic this weekend
Things are also only getting hotter in the Middle East, as Israel, for the first time, engaged over the weekend to directly bombing Yemen with F-15s in reprisal to a drone attack in Israel by the Houthis.
Russia also moved ships out of Crimean ports due to the decimation of its Black Sea navy by Ukraine with US missiles, making it untenable to keep the ships in Crimea, rendering them almost useless because, although they can fire from the Easter Black Sea, they have no targeting systems effective at this time in the Western Black Sea that will work for those long-range missiles.
Meanwhile, in the West, the Paris Olympics look like a police state, while Europe is gearing up for broader war with the introduction of military conscription …
… with squadrons of police patrolling Paris’ streets, fighter jets and soldiers primed to scramble, and imposing metal-fence security barriers erected like an iron curtain on both sides of the River Seine that will star in the opening show.
France’s vast police and military operation is in large part because the July 26-Aug. 11 Games face unprecedented security challenges. The city has repeatedly suffered deadly extremist attacks and international tensions are high because of the wars in Ukraine and Gaza.
In fact, Paris has now established the largest military camp inside of Paris since WWII so that soldiers (not police) can reach any part of the Paris Olympics, which are scattered around the city, in thirty minutes.
For visitors from countries where armed street patrols aren’t the norm, the sight of soldiers with assault rifles might be jarring, just as it was initially for people in France. [Such is our brave new world.]
Rafale fighter jets, airspace-monitoring AWACS surveillance flights, Reaper surveillance drones, helicopters that can carry sharpshooters, and equipment to disable drones will police Paris skies, which will be closed during the opening ceremony by a no-fly zone extending for 150 kilometers (93 miles) around the capital. Cameras twinned with artificial intelligence software — authorized by a law that expands the state’s surveillance powers for the Games — will flag potential security risks, such as abandoned packages or crowd surges,
Even Israel has shown up for the olympics … with its own armed Shin Bet security forces!
Games. Oh how fun! Are these Olympic Games or war games? Who can tell?
Weekend Internet chaos continues
Of course, on Friday we had the biggest global internet crash in history. Some said it was comparable, at last, to what had been expected for Y2K at the change of the millennium. I wrote about Friday’s business catastrophe in my Deeper Dive, so I won’t say more about it here, but it was part of the mad mix of events that have happened all around the world in less than one week’s time. I’ll merely note that the chaos continued today as Delta Airlines shut down more flights.
Many signs of chaos for stocks, but no big break yet
Stocks took everything in stride today, but according to two videos posted in the headlines below (available to everyone free today), many metrics show the stock market could be in trouble—that the great bull may be about to bellow and ball. Still, you couldn’t prove it today as all major indices went back to rising, but …
Mark Spitznagel refers to the present market, where one cannot tell if it is going to rip upward or rip apart, as the biggest bubble burst in history:
A black-swan investor, Mark Spitznagel, says the stock market is heading for a historic sell-off, reiterating an uberbearish warning for investors who are getting comfortable with steady stock gains amid the frenzy over artificial intelligence….
He pointed to similarities with the dot-com bubble, when investors poured money into tech stocks before the frenzy fizzled and the Nasdaq crashed in 2000….
But Spitznagel said the bubble — and the impact of its bursting — would be even more extreme this time around, as the government’s $34 trillion debt would make it more difficult for the Federal Reserve to turn the economy around in time to avoid a recession.
He would not, however, be surprised at all by today’s boost for all stock indices:
Spitznagel said the current rally would likely continue for months as inflation continues to fall and the Fed eases monetary policy, adding that stocks could soon lose over half their value in a subsequent sell-off.
In short, Spitznagel said the situation in markets was a “mega-tinderbox-time bomb.”
“I think we’re on the way to something really, really bad — but of course I’d say that,” Spitznagel said.
While Spitz is an uber-bear, he is not a bear to be ignored:
He made billions during the 2008 stock-market crash, the 2015 flash crash, and the onset of the COVID-19 pandemic in early 2020.
He’s been warning of a crash since January 2023, so while it’s not the first time he’s sounded the alarm, he said the timeline of a coming crisis was clearer now and that a recession could be in sight before the end of the year.
Danielle DiMartion Booth, however, is in full agreement with my timing and says that we are already in a recession, which hasn’t been declared yet, and she says it started clear back in October, 2023.