If there is one thing that is clear as we end this truly insane week it is that it was a good one for President Donald Trump.
Between his acquittal in the Senate over an impeachment that is the apotheosis of three years of patent nonsense and the fiasco that were the Iowa caucuses, Trump comes out of this first week of February in better shape than he’s been since he won the election back in 2016.
The Democrats have made a complete mockery of their candidate selection process. At least back in 2016 when Trump knocked people off one by one the GOP didn’t openly try to rig primaries against him.
Of course, Trump isn’t as much of an outsider as he portrays himself, so his real threat to the entrenched political establishment in The Swamp was never as great as someone like, say, Ron Paul’s was in 2012.
But the depths the DNC are willing to dig deep to in order to stop Bernie Sanders from being their nominee are truly breathtaking. In 2016, the Clinton machine had declared her the candidate. Bernie was getting in the way of her coronation as the first woman president.
In 2020, however, no one actually running for the Democratic nomination, except maybe Bernie Sanders in a perfect world, can actually beat Donald Trump. So, the whole process is really academic at this point.
Honestly, after this week the only person who can beat Trump nationally is Trump himself. So, that leaves me with 65/35 odds he’ll be re-elected.
But with impeachment behind him, an agenda of retribution against his accusers ahead of him and a Democratic party deep in the preparations for committing ritualistic suicide, Trump should have no problem carrying at least as many states as he did in 2016.
Caitlin Johnstone believes that the DNC’s ineptitude is a ruse, a clever ploy to look stupid and corrupt but doing so to ensure their preferred outcome, which is a brokered convention and the return of Hillary Clinton from the grave, as I said recently, “like some zombie whose head we forgot to cut off.”
While I love Ms. Johnstone’s thesis, I think she’s missing the much more salient point. As the Democrats flop from one fiasco to the next, they are doing two very important things.
First, they invalidate the idea they operate as a functional organization. This excludes them as people who can solve the country’s problems to voters who are pretty content with President Trump.
Second, it sets the stage for an irrevocable split of the party itself as the Bernie Bros become more convinced the party doesn’t represent them. I’m convinced that the end game for the DNC is to drive Sanders and Tulsi Gabbard from the party through these shenanigans.
This is why no matter who is eventually declared the winner in Iowa, the winner there is Donald Trump.
And, guess what? There’s only 49 more states like this to go!
I’m really regretting swearing off popcorn.
The good news is that, for now, the markets recognize that the biggest threat to U.S. political stability has been averted. Stocks bolted to new all-time highs after Trump’s acquittal, but couldn’t follow through to end the week.
It only gets better from here if the DNC is set on sowing distrust, chaos beneath a veneer of practiced stupidity.
So, while there are a number of sincere challenges to global growth both right in front of us (the coronavirus) and far ahead of us (the growing insolvency of the European financial system now that Brexit is finished) equity markets are more than capable of rallying for the next few sessions.
But expect volatility to increase from here. The dollar is strengthening. While the euro narrowly avoided a catastrophic January close last Friday, the dominant bear trend reasserted itself with a vengeance this week, breaking below the all-important $1.10 level.
And that should finally see eurobond prices begin to collapse. The rally we’ve seen over the past two weeks has been nothing short of ridiculous. A classic ‘false move.’
Oil is now in a bear market after 2018’s reaction high above $86 per barrel Brent and the terrible results and guidance from industry leaders this week like Exxon-Mobil (XOM) and Royal Dutch Shell (RDS.A) only reinforce that view. If not for some noises from OPEC+ and the hopes that Russia will go along with extending current production cuts kept Brent from collapsing further this week as shorts piled on early.
But everything comes down to King Dollar and whether real fear which lurks just behind the headlines grips the plumbing of global markets, which had an outstanding week.
This surge in the dollar confirms the December low as significant which sets up a difficult few months. Given everything else we’re experiencing from the shutdown of major Chinese cities, travel, etc. there’s every reason to be cautious here even if the equity markets keep grinding higher, though I’d expect a whole lotta grinding sideways from both equities and gold while this goes on.
Expect a lot of this schizophrenic behavior as capital sloshes from stem to stern trying to figure out where it should best be deployed in this age of central bank heroin.
The central banks are still desperate to keep a lid on volatility to extend the lie that they have things under control, but if that’s the case then why is the Fed still having to deal with repo market interventions being oversubscribed and the rate creeping back up toward its target Fed Funds rate and IOER (Interest on Excess Reserves)?
They’ve lost control over the short end of the yield curve.
And that’s where things get interesting for this election cycle.
For Trump, the primary season should work out well as the Democrats continue imploding. And I have no doubt he will now go on the warpath to take down those who he rightly feels wronged him and the country. And he’ll be merciless on Twitter using it to goad the Democrats into even more lunacy, more mistakes.
This is what he truly excels at and it will all but guarantee him surviving any crises that appear on the horizon between now and November.
For now, New Hampshire is next. Bernie should win the most votes it in a walk. But the real winner, regardless of anything else will be Trump.
Author: Tom Luongo
Republished by permission of Gold, Goats ‘n Guns.