It’s Not You. It’s Bidenflation.

Never attach your name to something when you believe in nothing. [Morning Reckoning] June 27, 2024 [WEBSITE]( | [UNSUBSCRIBE]( It’s Not You. It’s Bidenflation. Asti, Northern Italy June 27, 2024 [Sean Ring] SEAN RING Good morning Reader, Joke Biden didn’t invent inflation. But he inadvertently attached his name to it, much like Jimmy Carter did in the 1970s. A few months ago, Greg Ip wrote the most condescendingly asinine article The Wall Street Journal ever had the misfortune to publish. In “[What’s Wrong With the Economy? It’s You, Not the Data]( Ip alleged The Great Unwashed™ were too stupid to realize how good everything was under Dear Leader Potatohead Biden. Ip wrote: Yes, some individuals faced higher inflation (someone who bought a house, for instance) but, for the average person, inflation went down. When it comes to the economy, the vibes are at war with the facts, and the vibes are winning. This is obviously bad news for President Biden’s re-election hopes. He can’t exactly tell voters that they are wrong; he would be called out of touch. And it probably wouldn’t change anything. The vibes seem symptomatic of a broader pessimism disconnected from the data. It’s tempting to chalk this up to a misunderstanding. Lower inflation means the level of prices is still rising, just more slowly than before. People sometimes conflate inflation with the level of prices and believe inflation is getting worse because the price level keeps going up (it rarely goes down). The thing is, Ippie thinks you should care more about the math than your wallet. Sure, inflation can fall (disinflation) while prices keep rising, and deflation (falling prices) only happens in industries where the government can’t get its paw in the jar. But the government policy counts, not the fact you can’t buy steak next month, according to Ip. Idiotic. If a product cost $1 two years ago, and last year’s inflation was 10%, and this year’s is 5% (year-on-year): yes, inflation fell 50%. But it also means that the product cost $1.10 last year and $1.16 today. That’s much more expensive (16%) for the lower and middle classes, as food, shelter, and energy costs eat up a lot more of their wallets than those of rich folk. So, of course, they — the hoi polloi — are upset at Biden. But more compelling evidence has come out lately. [Revealed: THE ULTIMATE GOLD TRADE]( [Click here to learn more]( While gold has hit record highs this year… Gold stocks are still trading as a MASSIVE discount. This is setting up what we call “The Ultimate Gold Trade.” It all has to do with a little-known gold miner trading for less than $10 per share… That stands to return 5,000% over the next 6-9 months to investors who make the right trade. Our top resource analysts NEVER recommends trades like this. But in his own words: “This is too big to ignore.” [Discover the Ultimate Gold Trade here](. [LEARN MORE]( Bidenomics Here’s a pro tip from Seanie: never attach your name to something when you believe in nothing. Joke Biden has never had a coherent economic strategy. His only economic method is to rely on his Congress to spend as much as they can without outright destroying the dollar. Bidenomics shows you everything wrong with the Beltway’s Madison Avenue obsession. But it’s worked so far, depending on how you view things. If you’re in the crowd that gets the goodies, you must be pleased as punch. But I suspect you’re not, which is why you’ll hold your nose and pull the lever for The Donald this autumn. But this chart has been making the rounds on social media, with good reason. Courtesy of [The Wall Street Journal]( Things make a lot more sense now. Biden claims household wealth has gone up nearly 20% under him, roughly the same as Trump's through three years of their presidency. But there’s one huge difference: Biden’s growth is a mere 0.7% once you adjust for inflation. Trump’s was 16.0%. But The Nobel Prize Winners Say… Old joke: Why did God create economists? To make weathermen look good. The Nobel Prize in Economics is fake, in case you didn’t know it. The Swedish Central Bank awards it, not the Nobel Committee, which is why it’s called the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. So foul is the odor that emanates from this prize, that four of Nobel's relatives have formally distanced themselves from it. And yet, we accord the people who win this gong a level of respect they simply did not, can not, and will not earn. Ever. They aren’t the coming of Hari Seldon, of Foundation fame, much to Paul Krugman’s chagrin. They can’t predict the future. Heck, they’re so awful at calling the shots, you may as well flip a coin and listen to them. And yet they keep committing their signatures to nonsense papers because they think no one’s keeping track of their awful track records. For instance, my friend and colleague Alan Knuckman brought up in our editorial meeting yesterday that sixteen — count ‘em! — sixteen Nobel Prize-winning economists wrote an open letter warning that if Donald Trump won a second term, his economic agenda would be “vastly” inferior to that of President Joe Biden’s and that Trump would also “reignite” the inflation “which has come down remarkably fast.” As the British would say, “The bloody cheek!” Thanks to Tiana Lowe Doescher of [The Washington Examiner]( we know 14 of the 16 who penned this letter also wrote a letter in 2021 supporting Build Back Better. Doescher writes: You see, 14 of the 16 economists from the 2024 letter wrote another letter in September 2021 cheering on Biden’s “Build Back Better” agenda, which would later become the Bipartisan Infrastructure Law [BIL]. Spearheaded by Joseph Stiglitz of Columbia, George Akerlof of Georgetown, Sir Angus Deaton of Princeton, Sir Oliver Hart of Harvard, Eric Maskin of Harvard, Daniel McFadden of Berkley, Paul Milgrom of Stanford, Roger Myerson of the University of Chicago, Edmund Phelps of Columbia, Paul Romer of NYU, William Sharpe of Stanford, Robert Shiller of Yale, Christopher Sims of Princeton, and Robert Solow of the Massachusetts Institute of Technology claimed that the BIL, which infused about half a trillion dollars of new spending into the economy, would “ease longer-term inflationary pressures” despite inflation already running at 5%. Again, this September 2021 letter would be less embarrassing if Stiglitz hadn’t already endorsed the preliminary portion of the BBB agenda, the American Rescue Plan. Rewind back to February 2021, when inflation was just 1.7%, Stiglitz called a refusal to pass the “urgently needed” $1.9 trillion ARP “irresponsible and reckless.” In short, these guys don’t have any better idea of the outcome of policies than you do. Trust your wallet. Don’t ever trust these charlatans, one of whom (Akerloff) is married to the most incompetent Treasury Secretary in U.S. history. Wrap Up The reason why you don’t feel any wealthier than when Trump was in is because you aren’t materially wealthier than then. If you were worth $100,000 (for math’s sake) on Day 1 of Biden’s term, you are now worth, on average, $100,700. You’ve increased your wealth by $700 over three years, or $233.33. Thanks to Joke Biden, you can go to one more baseball game than before. Of course, if you’re lucky enough to be in the arms business, I congratulate you. All the best, [Sean Ring] Sean Ring Contributing Editor, The Morning Reckoning feedback@dailyreckoning.com X (formerly Twitter): [@seaniechaos]( [Elon Musk’s Genius Plan to Save the US Dollar from Collapse?]( [Click here to learn more]( Elon is about to flip the switch on [his new money project…]( And it could trigger the biggest change to our financial system since the creation of the federal reserve in 1913. Could this save the US dollar from a complete collapse? [Click here to see the details because]( Elon said he could flip the switch “as early as mid 2024.” [LEARN MORE]( In Case You Missed It… Tech's on Summer Break — Hotter Stocks Steal the Spotlight Greg Guenthner, Editor [Greg Guenthner] GREG GUENTHNER Good Morning Reader, Send in the National Guard! Tech stocks are red! The tech sector plummeted nearly 2.5% on Monday following weeks of melt-up action. And the main culprits were some of the same stocks responsible for dragging the averages higher this year, specifically the semiconductors. The VanEck Vectors Semiconductor ETF (SMH) continues to fill those gaps, dropping more than 3.4% yesterday — its third straight decline. It’s now fallen nearly 8% from last week’s highs. But a funny thing happened as tech stocks took a beating… The rest of the market started to perk up. All those forgotten stocks the semis steamrolled in June are suddenly attracting fresh buyers. You’ve probably heard rumblings about the market’s little breadth problem recently. Despite the impressive win streaks posted by the S&P and Nasdaq, recent action hasn’t looked very healthy. It’s the same old story: A small number of massive stocks have consistently driven the market’s gains. Under the surface, most stocks were struggling. The Bulls had an opportunity to take control following the May CPI release and positive Fed minutes earlier this month. Instead, we were treated to more than a handful of false moves as stocks gapped higher, only to fail and slip lower. They fumbled the ball, and the semis and mega-caps picked it up and ran with it. Like most indicators, breadth doesn’t matter… until it does. And if the market can keep the party going, it will be because the laggards catch higher as overbought tech resets. To be clear, trading a market rotation doesn’t mean you should sell all your stocks and hide under the bed. Instead, you should attempt to find and exploit the sectors that are perking up and beginning to outperform. We’ll get to the details in just a minute… But before we get down to business, we need to pause for a moment to reflect on the insane market strength we’ve witnessed so far this year — and where it might be headed next. Crowded at the Top Barring a huge move in either direction this week, the Nasdaq Composite will finish the first half of the year sitting pretty with a gain of almost 20%. The S&P isn’t too far behind, clocking a year-to-date gain of more than 15%. Of course, historic performances from some of the biggest stocks on the market have played a major role in the market’s first-half surge… Semiconductors and the Magnificent Seven mega-caps have foiled the bears at every turn and powered this most recent push to all-time highs, even as breadth has deteriorated and other stocks and sectors have failed to keep up the pace. Simply put, it’s getting a little crowded at the top. Here’s a telling passage from a recent MarketWatch piece: The 'Long Magnificent Seven' trade has kept its spot as the most crowded trade for the 15th month in a row, according to Bank of America's Global Fund Manager Survey, which shows 69% of fund managers now view it as the most crowded trade, versus just 51% in May. The bet on the seven high-performing tech stocks is now viewed as more crowded than any comparable trade since the 2020 dotcom rally when fund managers repeatedly cited 'Long U.S. Tech' as the most crowded trade, including in July (74%), September (72%) and October (80%) that year. The result of this mega-cap dominance has been an incredibly smooth ride higher — a rally devoid of the typical gut checks and resets that keep investors honest and punish anyone who gets the itch to take profits too early. Here’s a fun tidbit making the rounds: The stock market has now gone almost 380 days without a one-day selloff of at least 2%, which CNBC notes is its longest stretch since the Great Financial Crisis. The kicker is that the S&P hasn’t posted a 2.15% gain over this same stretch, either. Volatility is virtually nonexistent as stocks quietly push higher. The most recent comparable conditions would be the low-volatility melt-up months of 2017. Seven years ago, the S&P notched “just eight daily moves of more than 1%, while the VIX fell to historic lows below 9.” according to CNBC. But Summer is here — a time when more difficult market conditions could prevail. That doesn’t necessarily mean we’re going to see a big move lower. But I expect choppy action at the very least, even if we do see a bigger market rotation begin. If markets do remain choppier for longer, I don’t want to be fighting gravity. Yes, we’ll be looking to add downside plays if breakouts fail and stocks begin to trend lower. But that doesn’t mean we won’t find solid long opportunities. Rotating the Bull While most investors and the financial media can’t take their eyes off NVDA and the semis right now, we’re starting to see some viable rotation trades brewing. For starters, the Dow is in the midst of a five-day win streak as some of its non-tech components fight higher. Financials and industrials — two groups that have not posted new highs this month — continue to firm up. Both finished Monday trading in the green. Energy is another strong contender for a summer rotation play. Crude has retaken $80 and the big oil and gas companies posted market-leading moves to kick off the trading week. You might recall that the energy sector posted a huge breakout move in April. XLE rallied double-digits, only to run into trouble in early April — and it’s faded ever since. What about small caps? The Russell 2000 looked like a world-beater during the Q4 melt-up rally as it posted a 20% move off its lows. But it’s been a choppy mess for the past several months after it failed to extend higher in the first quarter. Can it finally break free of its choppy range and extend higher? Remember, it’s grossly underperformed the major averages for nearly two years. Yesterday’s gains were a start… but it needs to follow through. Bottom line: Don’t sweat the semis. They’ll reset and potentially offer strong buying opportunities once they blow off some steam. For now, concentrate on the names that are showing signs of life as tech fades. And of these plays could quickly become market leaders this summer. Best, [Greg Guenthner] Greg Guenthner Contributing Editor, Morning Reckoning feedback@dailyreckoning.com Thank you for reading The Morning Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:dr@dailyreckoning.com) [Sean Ring] [Sean Ring, CAIA, FRM and CMT]( is a former banker and financial educator and is the editor of the Rude Awakening. Sean has trained interns and graduates from Goldman Sachs, Morgan Stanley, Citi, Bank of America, Standard Chartered Bank, DBS (Singapore), the Abu Dhabi Investment Authority (ADIA), Bank Indonesia (the central bank), HSBC, Barclays, RBS, and BlackRock. 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