USVM - Weekly Commentary: Issues 2025

2025-01-11 05:50:14 ET

Summary

• Friday's much stronger-than-expected payroll data are further evidence of a U.S. Bubble economy at the cusp of overheating.
• China's Shanghai Composite has dropped 5.5% in seven sessions, with the growth-oriented ChiNext index hit 7.8%.
• With EM currencies and bonds under pressure, heightened Chinese instability would only accelerate crisis dynamics.
• Climate change has reached a critical juncture, and we should assume it only worsens from here.

Year 26. I've been posting the CBB for so long I barely remember what a normal Friday evening feels like. I face a dilemma this year. Potentially one of the most powerful individuals in human history takes office in 10 days. He is a most determined "disruptor" in a world deeply fractured, yet unified in one historic financial Bubble. Following epic 2024 "terminal phase excess," myriad global Bubbles inflated further to unparalleled extremes. "To me the most beautiful word in the dictionary is tariff." All too happy to sow disorder, a fragile world risks being wrenched to the breaking point.

In my first CBB, I promised readers to "call them as I see them and let the chips fall where they will." It has become a challenge to live up to a pledge I've taken to heart for so many years. I'm compelled to shoot straight on this. I've voted Republican for much of my adult life, including for Bob Dole and John McCain. I cast ballots for and against Donald Trump. More importantly, I am fiercely independent in my analysis and politics. Wary of ideologies.

Character matters tremendously. Not by coincidence do I work for an individual (David McAlvany) with unassailable character. Irrespective of talents as educators, I would have serious issues if my son's high school teachers demonstrated obvious character issues. It doesn't feel right to expect so much less from our political leaders, but that's where we've landed in this most extraordinary of environments and cycles.

I was ready to keep an open mind with Trump 2.0. That ended swiftly, with the gut punch of Matt Gaetz hand selected as Attorney General nominee. It was an affront to our deeply divided nation in dire need of mindfulness and mending.

I want so much to just stick with my analysis and avoid politics (like the plague). But the CBB has a subtitle: "Chronicling History's Greatest Financial Bubble." Especially at this cycle's perilous turning point, politics and policymaking have become fundamental to market, financial, economic, and geopolitical analysis. I would prefer not to upset readers. I could take a year or four off. But I passionately believe this period will be studied for generations - and I want my legacy to be rigorous, sound, and factual contemporaneous analysis of a critical period in U.S. and world history.

For better or worse, the Trump administration will force momentous change both at home and abroad. From the perspective of my analytical framework, it's not coincidental that our President returns to the White House with the world at the brink - with manias and acutely vulnerable speculative Bubbles; with a deeply maladjusted U.S. economy and associated inequality and acute societal strain; with political dysfunction and corruption; with escalating trade and military wars at risk of spiraling out of control; with an antagonistic world and precarious geopolitics. For the foreseeable future, there may be a need for CBB warning labels: "Some readers may find the following content offensive and disturbing."

I doubt President Trump's agenda will prove even close to feasible. A populist agenda for bettering the lives of many millions left behind over decades of boom-time economic transformation, while ensuring that stock and bond market Bubble inflation runs unabated. Stoking a boom while taming inflation. The billionaire class clearly has the President's ear, while their position in the world lives or dies with the Bubble. Populism so long as the super wealthy continue to get more than their share. The numbers don't work in today's world....

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