Gatsby and U.S. Monetary Policy - (Randall Forsyth Column) Randall Forsyth writing in Barron’s this week -
Forsyth mocks a recent government accounting gimmick designed to hide the full extent of the U.S. budget deficit, recalling a famous but ill-fated British effort to cope with a financial problem a century ago: “The 1925 decision to restore the pound’s parity was favored by the City of London establishment, with economist John Maynard Keynes providing a rare dissent because of the damage he correctly anticipated to the British economy. Sterling would be restored as a major international reserve currency, but its global importance, and that of Great Britain, would never regain their former greatness.”
The article examines how the trade wars may affect U.S. investors - in stocks and bonds alike. Forsyth cites T.S. Lombard’s global head of macro trading who thinks firing Powell would pave the way for a loss of faith in the Dollar as the world’s reserve currency. He also delves into global ship building, relative naval power - and much more.
In all of this Forsyth finds parallels to Scott Fitzgerald’s 100-year old classic The Great Gatsby …
Opening : ”This April marks the centennials of the publication of F Scott Fitzgerald's masterpiece, The Great Gatsby. On Long Island, the setting for the novel, much has changed. The fictional West Egg, the putatively less prestigious village just over the border from Queens, today is filled with mansions rivaling Gatsby's own along Manhasset Bay. On the bay's other side, in East Egg, where the green light shone at the end of Daisy Buchanan's dock, the few remaining legendary Gold Coast estates now are public museums or village facilities. The former old-money families, including the Guggenheims, Harrimans, and Vanderbilts, have been supplanted by entrepreneur billionaires who founded companies such as Home Depot and Arizona Iced Tea.”
Closing: ”For now, the parties continue … To paraphrase Fitzgerald, we are careless people, willing to smash things up, including the status of the dollar”.
Sourced From: “U.S. Spending Threatens the Dollar’s Status. Wake Up, America”
By Randall W. Forsyth - Barron’s April 18, 2025
Oil & Gas Industry
Investors dodge U.S. dollar and Treasurys, scared by Trump’s trade war "The trend of bond sales and other asset reallocations is likely to continue to put downward pressure
on the dollar, though strategists say it is too early to say how long the trend will last.""The moves lower in the dollar could also be large because they are reversing the rush into U.S. assets
after the November election."“'The market was cherry picking growth-friendly policies, and then there was a reality check,'
said Athanasios Vamvakidis, global head of G-10 foreign exchange strategy at Bank of America.
The expectations for U.S. policy were too optimistic."https://www.msn.com/en-us/money/markets/a-global-rebalancing-is-well-underway-as-investors-sell-off-us-bonds/ar-AA1DbWgO
Bond Opportunities?
The Week in Charts | Charlie Bilello The Week in Charts (04/18/25)The most important charts and themes in markets and investing, including:
00:00 Intro
00:
18 Topics
00:52 Global Trade Chaos
06:40 A Self-Inflicted Recession?
14:50 "The US Doesn't Make Anything Anymore"
19:35 The Mag 7 Revaluation
24:07 Are Markets Questioning US Exceptionalism?
33:02 The Golden Age for Gold
37:
12 House Rich, Cash Rich
45:49 Transition From Goods to Services
VideoBlog
Tariffs James Stack in his latest update to subscribers today:
”Our portfolio remains positive for the year, while the S&P 500 is down -10.2% and the Nasdaq Composite has tumbled -15.7% year-to-date.” - *
InvesTech ResearchI read Stack but don’t use his recommended allocations. My own portfolio is also slightly positive for the year with around 40% equities &
10%
real-assets.
Tariffs No guarantees in investing, ever. And Mr. Market hates uncertainty. There are countless possible flavors of THAT. But the current scene is beyond the beyond. This is like no one would ever have dared to imagine. That must be admitted. I pulled some profits very early in January, which is my habit each year. Glad I did not wait. Since then, I'm down, though not alarmingly. It's about -5%. My largest holding by far is PRWCX, which has clocked a YTD loss of -3.26% by itself. My single stocks (just two) are up in terms of my Total Return, but ET is still down YTD by -10.18%. No more Junk in the portfolio. WCPNX is up marginally, though I am down marginally... Cash is up to 24% of total. Presently, I'm wanting LOTS of ballast. Less than half in equities.
Tariffs There really is no plan, no genius, and no serious strategy behind 90 percent of what Trump does. The last 10 percent is mostly stuff people around Trump are doing that he doesn't understand.
Yardeni Explains Recent Behavior of Bonds Excellent read. But what to do ? Remember rule # 1 if nothing else.
Tariffs The Ask the Compound crew received many questions from anxious readers expressing concerns about stocks and the present investing environment. The crew provides some context for the current situation and offers potentially helpful suggestions.
The nice thing is there’s a point of view to match every type of investor or political leaning.
Excerpted from
Barron’s (online edition) today:
"Since I started at Loeb, Rhoades as a sell-side analyst in 1967, we've had 11 or 12 recessions," says Mario J. Gabelli, chairman and CEO of Gabelli Funds. "Since I started my own firm (in 1976], we've had seven or eight." - His point? This, too-the political, economic, and market turmoil created by the chaotic rollout land partial rollback] of President Trump's tariff regime —eventually will pass.My take - The major indexes are off for the year. But that follows a couple stellar years. PRWCX, a long-time board favorite, is down a couple percentage points. (I’d imagine Giroux picked up some bargains a week or so ago.) JHQAX hasn’t fared nearly as well. But gold is way up. Utilities / Infrastructure are having a good year. Some
real-asset funds (typically a blend of real estate, commodities, energy) are in the green. Foreign stocks & bonds have done better than domestic. My relatively new CEF collection is at least at break-even, if not up. I’ve added 3 stocks to it in recent weeks. Two “bumped” (sprinted higher) while
1 slumped (lost value).
Point is there’s always something worth investing in. Just takes work, patience and some imagination to know what. No disputing the ongoing chaos. I first began investing under President (“
I’m not a crook”) Nixon. Dutifully socked away money every payday. Could I have timed it better and bought / sold according to the continuously varying political chaos level back then? Perhaps.
Investors dodge U.S. dollar and Treasurys, scared by Trump’s trade war But who believes slapping huge tariffs on our friends is positive?They weren't the last time.
The [Smoot-Hawley] tariffs upended relations with America’s northern neighbor, Canada. The outbreak of protectionism infuriated Canadians, who retaliated strongly with tariffs of their own. Canadian nationalism surged, and in the elections that year — an eerie parallel to this year — the party that was seen as most authentically anti-American won.
Op-Ed, Fareed Zakaria, Washington Post, April
18, 2025
https://www.washingtonpost.com/opinions/2025/04/18/trump-tariffs-smoot-hawley-great-depression/
Investors dodge U.S. dollar and Treasurys, scared by Trump’s trade war notice he didn’t say anything about destruction of due process, the rule of law, ignoring court orders, or gutting the world’s best research universities.
without the rule of law, no investor in the US can ever be sure again they can get their money back. If they try to fire Powell does anyone doubt the market will drop 15%?
What people like FD1000 ignore are the methods being employed.
We can disagree that tariffs will never create show manufacturing factories again in the US, although no reasonable economist believes this. But who believes slapping huge tariffs on our friends is positive? The Canadians hate this, and are going to be extremely reluctant to cooperate in actions against Chinese dumping etc.
