We have a $35 trillion problem that, following current trends, will be a $36 trillion problem by the time the November 5 election rolls around.

It will be close to a $40 trillion problem by the end of next year. And there is no model, scenario, or hallucinogenic fantasy put forward by either party that would change this trend. 

The sun rises… the sun sets… and the debt load grows. It might as well be an immutable law of nature. 

Of course, presidents come and go. That’s what happens in a representative democracy. But the messes they make have a way of sticking around. And anyone who believes that Kamala Harris or Donald Trump is the answer to our problems is either wildly naive or belongs in a padded cell.

As our Freeport Society friend Michael Gayed – publisher of The Lead-Lag Report, puts it bluntly, whether it’s Trump or Harris, we’re all screwed. 

I’ve been reading Michael’s work for nearly two decades now. He’s one of America’s leading experts on intermarket analysis, or using the correlations between asset classes to glean insights as to the direction of the market. In any random sampling, he’s always going to be the smartest guy in the room. And he’s an all-around great guy. If you want to read more from him, you’ll find what you want here.

Over to you, Michael.

To life, liberty, and the pursuit of wealth,

Charles Sizemore

Chief Investment Strategist, The Freeport Society

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Whether It’s Trump or Harris, Investors Are All Screwed

By Michael A. Gayed, Publisher, The Lead-Lag Report

Allow me to start off by saying I hate politics. I don’t find it interesting, authentic, honest or beneficial. It’s simply a necessary evil in my view. I believe you vote for the leader, not the party, but neither the president nor the parties in charge ever seem to get anything right.

That said, it’s worth addressing where things stand with President Joe Biden now out of the race. 

I’ve argued before that the tech sector would likely suffer most, at least relatively speaking, if Donald Trump were to win in November. Historically, tech stocks underperform under Republican administrations.

That’s not a political statement. It’s a factual one.

Following the assassination attempt on Trump, tech stocks took a big hit. 

Why? 

Because the attempt on Trump increased the betting odds that he would become the next president, as Freeport Society’s Chief Investment Strategist Charles Sizemore talked about on Monday. And, again, tech stocks historically do not perform as well under a Republican president.

Here’s where things get interesting though… 

Tech stocks are seemingly cheering Biden’s endorsement of Vice President Kamala Harris. This is because, as I mentioned, the tech sector does better under a Democrat. 

This tells me that the market itself seems to be betting that the Dems have a real shot at Harris becoming the next president, and investors are incorporating that into their momentum trades.

So, we can clearly make the argument here that if tech is leading, it’s the stock market betting on Harris. If tech is lagging, it’s the stock market betting on Trump. 

But you know the one bet that is consistent no matter who wins? 

Increasing government debt.

It doesn’t matter if it’s Trump, Harris, or even Robert F. Kennedy Jr. – the one thing we can say with some conviction is that government debt will only continue to rise… and that government spending will continue to run rampant, potentially leading to higher interest rates in the long term. 

What that means is that no matter who wins in the election, we as a nation lose.

Politicians will keep saddling our children with liabilities for years to come.

Take steps now to avoid suffering as a result of this insanity. 

What are those steps? 

First – don’t panic. Even if you’re bearish on the future, that doesn’t mean you short or raise cash. 

Rather, the way to think about protecting your portfolio is by lowering your exposure to the same things that are driving it. 

Gold, Bitcoin, Treasuries, utilities historically are all great alternatives to just owning the stock market. And that will matter more and more as it becomes clear just how overexposed the world is to the exact same trade.

Michael A. Gayed, CFA, The Lead-Lag Report