Intolerable Immorality On Social Media Dovetails With Growing Tolerance For The Return Of Trump: The Action For May 14, 2024
The Times highlights its investigation into the filthiest side of social media on this morning’s front page, describing a declension in morality so obvious that it may marginally hurt the companies who produce this growing form of free for all discourse. At the same time it reports on Biden’s limited appeal to nonwhite voters and questions why his foriegn and economic policies should hurt so bad that people are willing to tolerate the return of Trump. The root reasons to both stories are the poverty of national discourse, where ungrammatical and jargon-based vernacular is accepted as meritable participation rather than a waste of resources that diminishes our civic vitality. By encouraging free for all discourse we have unanchored from time tested ways of speaking and the ideals that fortify them, paving the way for anything goes morality, as manifested in Trump and his ilk. Social media firms thereby pitch to pederasts and Biden pitches incoherent policies to a public who understands the consequences as inflation and surging inequality. Only role models of high eloquence and foresight can turn this persistent situation around and that’s unlikely to happen as long as investors remain foolishly confident in American productivity despite the decline in civic vitality.
Inflation roared once again this morning but investors continue to believe the worst is behind us, ignoring the narrative of national decline as evidenced in today’s Times. The bulls and bears are keeping the S&P 500 within yesterday’s trading range but I believe by the close the bears will have control as several indicators reveal pessimism on corporate earnings and the macro environment. These include:
Quality Of Earnings Trend: Over the past few quarters the largest firms have generally experienced worsening credit terms, margins and inventories, signaling future profit stagnation or decline.
MOVE Index Of Bond Volatility: Fixed income volatility is rising and implies higher inflation expectations and higher interest rates to come, potentially bearish for equities and the global economy.
Developed Market FOREX / $US: The dollar is getting stronger against most major currencies (€, ¥ and Renmimbi) and that’s usually bad for global growth.
Economic Data: The latest economic data regarding wholesale inflation is worse than expected, a negative sign for equities.
Geopolitical Issues: Developments around Eurasia are a clear negative for equities.
But tomorrow’s CPI report will determine the near-term action and that could tilt toward new highs as the action yesterday disclosed a number of bullish factors, including:
S&P 500 Technicals: The top 40 in the S&P 500 look set to move the market higher.
Zinc Prices: Few commodities are as broadly important as zinc, and rising prices for zinc signal better than expected global demand, which is usually good for equities.
Copper Prices: Copper makes the energy transition happen but is also a barometer of global growth, and rising prices signal growth may be better than expected.
My current positions include 3M (MMM and its spinoff SOLV), Pfizer (PFE), a moderate position in UPRO and a larger position in SPXU, which nets out to a modest short position in equities.