At the time of writing this newsletter, we’re in the final hours of what might be the most surreal, sensational election season in recent history.
Our hot take? The outcome will bring its own brand of chaos, no matter what (flavors may vary).
When it comes to our nation’s high fiscal deficit train, both candidates will have to deal with the same landscape.
Depending on who gets the Oval Office, we could see some significant differences around margins. But regardless of what happens today, we’ll still be fanning the flames of a roaring dumpster fire.
Another sure bet: American Main Street is looking for someone to blame. And who can blame them? Campaign promises are one thing. Real economic relief is another.
Plans to swap income taxes for tariffs or add in unrealized capital gains taxes still have to make their way through Congress.
As we wait on the edge of our seats for the election results, let’s not get so caught up in the hype that we lose touch with reality. Here’s what we’re focused on.
Revisionist History
No matter how you slice it, the recent jobs revisions abomination handed us evidence of a recession on a silver platter.
In October, jobs creation came to a staggering halt. The month brought with it two massive hurricanes and a major strike. Employers only added 12,000 positions and unemployment stayed at 4.1%.
This is the lowest number of American jobs added since July of 2021.
August and September were then revised lower, shaving off 112,000 jobs off earlier numbers. Over the last three months, average job growth sits at 104,000, which is down from the 189,000 reported six months prior.
With all of this evidence of a recession, why aren’t we seeing it clearly? Government hiring and spending tends to cast a spell of distortion.
Don’t forget that overly-inflated jobs numbers create momentum for presidential candidates, especially those from our current administration.
What’s really going on at the BLS? Will the outcome of the election force them to start telling us the truth?
Scandal Afoot
Now, let’s turn our attention towards the scandalous world of Big Tech.
In a move no one saw coming, Super Micro Computer’s auditor EY resigned over “integrity concerns.” SMCI is gearing up to face a DOJ probe over shifty accounting practices.
This dark cloud is also casting a shadow over NVIDIA as well. SMCI and NVDA are both major players in the AI server world and are joined at the hip. SMCI makes the servers and NVDA supplies the chips.
Back in August, a research firm published a bombshell report on SMCI, complete with accusations of selling products to Russia, subpar workmanship, and rehiring executives from an earlier era of SEC accounting violations.
Will NVDA’s auditor PwC make the same moves now that SMCI’s cracks are getting wider? It’s only a matter of time before more news on this hits the headlines.
Taking a broader look at the markets, we’re seeing Dow Jones charts eerily reminiscent of the Great Depression.
We’re now in the second month above the 125 year trendline, which is where the Dow also remained for two months before the historical collapse of 1929.
As far as the Q3 GDP data goes, real disposable income growth sits at a weakened +1.6% annual rate. Half of the growth we’re seeing came from the savings rate drawdown.
When we make adjustments to account for pre-Boeing strike impacts on transportation equipment and government support, it’s looking more like an expansion of 0.5%. More truths flying under the radar.
Playing the Long Game
To bring it all home for our fellow heroes, we know long-term success is best predicted by the smart moves we make along the way.
The larger trends that ultimately determine major events aren’t always clear. By taking a higher perspective, you’re in a better position to keep the clarity and patience to get to where you’re going.
On this election eve, try your best to not be swayed by emotion. Don’t be fooled by those who tell you the world’s ending right now and it all hinges on what happens tonight.
Heroes play the long game. The outcome of one epic battle could change your short-term plans, but your grit and commitment to a successful journey is what carves the longer road ahead.
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Until next time,