I wonder if the new political uncertainty in the USA is already priced in.
Both the S&P 500 and the Nasdaq 100 are at an all-time high.
Surprising, considering the new administration seems to shake up the US in a big way. Could go right, could go wrong - but shouldn't the uncertainty alone already devalue the US stock market?
That assumes that the corporations would be on the wrong side of the uncertainty.
To me, it seems that the political environment in the US is the most corporate
-friendly it’s maybe ever been, so maybe the market priced that in but for the other direction.
Which concrete corporate-friendly actions have taken place?
Just a few examples: A number of environmental regulations have been, or are in the process of being rolled back. There's pledges in Washington to open up more land for mineral exploration. "Drill, baby drill" is back in fashion. Lots of politicians talking about selling off millions of acres of BLM land for private development. Talk in Washington about selling off public land that was recently made into national monuments.
There are literally hundreds more.
If you haven't seen any, you haven't tried. It's not even every day. It's almost every hour.
To me, it seems that the political environment in the US is the most corporate -friendly it’s maybe ever been
I agree with this notion. Which is why it's so strange to see so many very large companies shedding thousands of employees right now.
Chevron: 2,000
Southwest Airlines: 1,500
Those two just off the top of my head, but there have been more recently.
I know that there is an adage that "Wall Street hates uncertainty," but I feel like some businesspeople in very high places are very worried about the near future.
Not to mention Germany's in a third consecutive year of economic recession and facing an election were the extreme right is sure to make big gains (again). Government policy has already taken a sharp-right turn (which is not good for the economy) and it's likely to do so again after the elections. It's close to being in the same situation as Russia was in 2022, where war would actually help it's economy. Frankly the population has turned every more to the right for a decade now.
UK ... well, there's the Brexit mess, and UK MAY be exiting a 1.5 year long recession (numbers "look good", in the sense that it's no longer getting worse, but a serious hickup can still make this a 2 year long recession)
France was pretty close to an extreme-right takeover (which was entirely Macron's fault, with his "elect either me or Le Hitler" ploy that he has used 4 times now and every time he uses it, it gets Le Pen closer to the presidency), and has taken a hard-right turn in policies. In this environment, parliament kicked out the government and, frankly, they're being SO stupid that it actually makes Macron look good. However, it is at least not in recession, but it's certainly going through a deep downturn.
Italy WAS taken over by the extreme-right, and has been in a crisis for decades (also before Meloni, she's a symptom, not a cause. Also not making things better).
Poland is an actual bona fide bright spot in this environment.
Spain, Portugal, Greece, Romania, Hungary ... are not.
Then there's Ukraine ... whilst perhaps not directly disrupting Western European economies, it's certainly not a positive. War, maybe constant war, has now returned to Europe. And of course, Kosovo recently felt the need to remind everyone that though the war ended, things are not resolved. And in Georgia, and the Baltic states, as well as the Polish border and Finland Putin is reminding everyone that he won't be done after the Ukraine war.
Meanwhile the EU itself seems to be disintegrating. Frankly EU cohesion has taken a sharp downturn since the EU constitution disaster. Even the Shengen treaty is falling apart. It is also making a sharp right turn and now you can find headlines that "the EU commission is turning authoritarian".
Makes you think that one, most European politicians are seriously denying economic reality ... and second maybe that the rise of the right and the failure of economic policy in the last decade is not a coincidence.
IMHO the only way the markets make sense is that investors fear inflation more than they do uncertainty. I don't personally understand how anything is priced anymore.
The uncertainty is there, for sure. Just look at the index YTD and then consider that the AI hype is in full swing and that Trump promises huge tax cuts to business. Stocks should be soaring but looks like not everyone buys the story.
It’s hard to price in an unknown quantity though. If the war in Europe spreads, who knows what happens? If Trump chokes on some novichok of just gives out from all the hard grifting he’s done all his life, who knows?
If Warren Buffet believes people with the "short straw" need help, why doesn't he just give away his money to individual people in less comfortable circumstances?
Edit: I'm not talking about "forming a charity". I'm talking about just giving actual money to actual individuals.
I'm pretty sure he's doing that. The problem is that if you were to give away all your money and the underlying system that creates poor people doesn't change, well, then giving away all your money is noble but kinda pointless since there will always be a next batch of poor people who need help.
I don't see that the stuff he's given his money to (e.g., the Gates Foundation) is really doing much to change that underlying system. On the contrary, it's all working comfortably within that system.
For instance, not just make offhand comments about taxation, but form a political group that pushes for higher taxes the same way other shadowy political groups push against them.
> why doesn't he just give away his money to individual people in less comfortable circumstances?
Because he is advocating systemic changes.
He may very well also give money away to people in need (it seems he does), but this would not actually address the issues he is alluding to here since it would not change the system. Hence there is no value for him to bring it up here.
"Berkshire would not have achieved its results in any locale except America whereas America would have been every bit the success it has been if Berkshire had never existed."
-- https://www.berkshirehathaway.com/letters/2024ltr.pdf
Not just a great investor, Buffet is a great man. Not many "self-made" billionaires think like that.
I wonder if the new political uncertainty in the USA is already priced in.
Both the S&P 500 and the Nasdaq 100 are at an all-time high.
Surprising, considering the new administration seems to shake up the US in a big way. Could go right, could go wrong - but shouldn't the uncertainty alone already devalue the US stock market?
Apparently Berkshire Hathaway has a substantial investment in T-bills in their portfolio. So, not so sure Buffet is convinced.
That assumes that the corporations would be on the wrong side of the uncertainty.
To me, it seems that the political environment in the US is the most corporate -friendly it’s maybe ever been, so maybe the market priced that in but for the other direction.
Which concrete corporate-friendly actions have taken place?
A corporate overlord, the richest person in the world is the acting president.
All of the Magnificent 7 have kissed the ring and paid their indulgence, earning unlimited favor.
The federal agencies are being gutted left and right, regulations, where they still exist, have no one to enforce them.
Maybe it's me but that actually doesn't sound very corporate at all. Sounds very Godfather.
Which concrete corporate-friendly actions have taken place?
Just a few examples: A number of environmental regulations have been, or are in the process of being rolled back. There's pledges in Washington to open up more land for mineral exploration. "Drill, baby drill" is back in fashion. Lots of politicians talking about selling off millions of acres of BLM land for private development. Talk in Washington about selling off public land that was recently made into national monuments.
There are literally hundreds more.
If you haven't seen any, you haven't tried. It's not even every day. It's almost every hour.
To me, it seems that the political environment in the US is the most corporate -friendly it’s maybe ever been
I agree with this notion. Which is why it's so strange to see so many very large companies shedding thousands of employees right now.
Those two just off the top of my head, but there have been more recently.I know that there is an adage that "Wall Street hates uncertainty," but I feel like some businesspeople in very high places are very worried about the near future.
It sounds odd, but there's more uncertainty in other markets. The US is the least sick of the heard.
Which uncertainties do you see in Europe and China?
Europe has a demographic problem, and China has been postponing its great recession for decades.
Not to mention Germany's in a third consecutive year of economic recession and facing an election were the extreme right is sure to make big gains (again). Government policy has already taken a sharp-right turn (which is not good for the economy) and it's likely to do so again after the elections. It's close to being in the same situation as Russia was in 2022, where war would actually help it's economy. Frankly the population has turned every more to the right for a decade now.
UK ... well, there's the Brexit mess, and UK MAY be exiting a 1.5 year long recession (numbers "look good", in the sense that it's no longer getting worse, but a serious hickup can still make this a 2 year long recession)
France was pretty close to an extreme-right takeover (which was entirely Macron's fault, with his "elect either me or Le Hitler" ploy that he has used 4 times now and every time he uses it, it gets Le Pen closer to the presidency), and has taken a hard-right turn in policies. In this environment, parliament kicked out the government and, frankly, they're being SO stupid that it actually makes Macron look good. However, it is at least not in recession, but it's certainly going through a deep downturn.
Italy WAS taken over by the extreme-right, and has been in a crisis for decades (also before Meloni, she's a symptom, not a cause. Also not making things better).
Poland is an actual bona fide bright spot in this environment.
Spain, Portugal, Greece, Romania, Hungary ... are not.
Then there's Ukraine ... whilst perhaps not directly disrupting Western European economies, it's certainly not a positive. War, maybe constant war, has now returned to Europe. And of course, Kosovo recently felt the need to remind everyone that though the war ended, things are not resolved. And in Georgia, and the Baltic states, as well as the Polish border and Finland Putin is reminding everyone that he won't be done after the Ukraine war.
Meanwhile the EU itself seems to be disintegrating. Frankly EU cohesion has taken a sharp downturn since the EU constitution disaster. Even the Shengen treaty is falling apart. It is also making a sharp right turn and now you can find headlines that "the EU commission is turning authoritarian".
Makes you think that one, most European politicians are seriously denying economic reality ... and second maybe that the rise of the right and the failure of economic policy in the last decade is not a coincidence.
IMHO the only way the markets make sense is that investors fear inflation more than they do uncertainty. I don't personally understand how anything is priced anymore.
The uncertainty is there, for sure. Just look at the index YTD and then consider that the AI hype is in full swing and that Trump promises huge tax cuts to business. Stocks should be soaring but looks like not everyone buys the story.
It’s hard to price in an unknown quantity though. If the war in Europe spreads, who knows what happens? If Trump chokes on some novichok of just gives out from all the hard grifting he’s done all his life, who knows?
Just look at the index YTD
I think a more interesting measure is looking at indicies since the change in leadership.
They all went up at the beginning of the term, but have fallen back to just below where they started.If Warren Buffet believes people with the "short straw" need help, why doesn't he just give away his money to individual people in less comfortable circumstances?
Edit: I'm not talking about "forming a charity". I'm talking about just giving actual money to actual individuals.
I'm pretty sure he's doing that. The problem is that if you were to give away all your money and the underlying system that creates poor people doesn't change, well, then giving away all your money is noble but kinda pointless since there will always be a next batch of poor people who need help.
I don't see that the stuff he's given his money to (e.g., the Gates Foundation) is really doing much to change that underlying system. On the contrary, it's all working comfortably within that system.
“ More than 99% of my wealth will go to philanthropy during my lifetime or at death.”
https://givingpledge.org/pledger?pledgerId=177
I think he’s already given away more than 50% of his Berkshire holdings.
He also wants the return of the 90% tax rate for the extreme rich, similar to what we had before the GOP started to steal from the working class.
Is he giving his money in a way that materially advances that goal?
How would he do that?
For instance, not just make offhand comments about taxation, but form a political group that pushes for higher taxes the same way other shadowy political groups push against them.
> why doesn't he just give away his money to individual people in less comfortable circumstances?
Because he is advocating systemic changes.
He may very well also give money away to people in need (it seems he does), but this would not actually address the issues he is alluding to here since it would not change the system. Hence there is no value for him to bring it up here.
I believe he has been doing that. He started a pledge to donate almost all of his net worth to charities some time ago.
"Berkshire would not have achieved its results in any locale except America whereas America would have been every bit the success it has been if Berkshire had never existed." -- https://www.berkshirehathaway.com/letters/2024ltr.pdf
Not just a great investor, Buffet is a great man. Not many "self-made" billionaires think like that.
Discussion: https://news.ycombinator.com/item?id=43141481
With $334B in cash sitting around doing nothing, Buffett doesn't need anyone else to take care of the "short straws".