Sunday Evening Hate-Read Open Thread: SALT in Our Wounds


 
It’s a big club, and you ain’t in it.” — George Carlin

In the Washington Post (which should know better by now), “Anthony Scaramucci was fired from the Trump White House after 11 days. Now, he’s convening A-listers for bipartisan healing”:

Scaramucci, fired from the White House in 2017 after a disastrous 11-day tenure, convened a parade of other jettisoned Trump administration figures, including Chris Christie, Jeff Sessions, Corey Lewandowski and, most remarkably, Gen. John F. Kelly, the former White House chief of staff who axed him.

They mingled in the Bellagio meeting rooms with Obama-era figures such as Jarrett, former national security adviser Susan E. Rice, former CIA director David Petraeus and Adm. William McRaven, the former Special Operations chief who orchestrated the raid that killed Osama bin Laden.

Scaramucci appeared onstage with Kelly, in their first public appearance together since the firing, to talk about their newfound friendship. Then he sat beside Jarrett for another panel, in which they discussed topics including climate change and gun control and agreed as much as they disagreed.

“I think what they are trying to tell us is that it’s okay to be together,” said Robert Wolf, the Fox News commentator who moderated the discussion. “It’s okay to respectfully disagree. And it’s okay to agree on things we should agree on.”

Many in the crowd of nearly 2,000 investors, hedge fund managers and entrepreneurs applauded that kind of political diversity…

Discussions ranged from the future of private equity to business opportunities in the cannabis industry to how artificial intelligence is changing investing.

But permeating much of the conference was the lament that political dysfunction in Washington was bogging down economic opportunities in the real world…

The Daily Beast, which has a better nose for the difference between business and bullshit — “The Mooch’s Hedge-Fund Festival Where MAGA Has-Beens Are Great Again”:

In the past, SALT has drawn big names on both political and cultural planes, counting Joe Biden, George W. Bush, Bill Clinton, as well as Al Pacino, Kobe Bryant and will.i.am among its guests. One night over drinks, a 10-year SALT veteran whose chest hair burst from his Hawaiian shirt, boasted it had been “the greatest hedge fund conference in the country.”

But the line-up this year reflected the degree to which Donald Trump has become the center of the cultural solar system, around which everything and everyone else orbits. Instead of titans of finance and bigwigs of industry, the conference was dominated by former Trump officials—fired and resigned: #MAGA hangers-on like TPUSA founder Charlie Kirk and almost-Federal Reserve Board appointee Stephen Moore; and an assortment of other miscellaneous politicos, like former Republican National Committee Chairman Michael Steele and Democratic presidential contender Rep. Tulsi Gabbard (D-HI). The whole thing was MC’d, of course, by the archetypal ex-Trump official: The Mooch…
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Clown Car Open Thread: Will No One Sit At the ‘President’s’ Right Hand?


 
Uhhh… why did this just pop up?








Tulips. Tulips I Tell You

Prediction is hard, especially about the future.  But a quick glance at the Wall St. Journal’s Market Data page made my eyes pop.

I wanted to see if my general sense of unease around the financial markets had any quantitative basis, so I was looking up the price to earnings ratio of the major market indices.  The first number I noticed was the current p/e number for the S & P 500: 24.13.  That’s only a smidge up from a year ago, but is still historically pretty high.

It is, it should be noted, nowhere near the stratsopheric numbers achieved in the 2009, when earnings crashed so far and so fast that market prices couldn’t crash fast enough to keep up, but it is not far off those in the summer of 2008, just before the Great Recession became brutally obvious.

That’s got me generally a little concerned, as it doesn’t take much to spook “smart” money, and a high p/e is always a good excuse to sell.

But what made my eyes pop was the estimate of forward p/e: 17.65.  That is, in essence, a prediction that company earnings are going to improve significantly over the next year — enough either to ease the market into a soft landing, a return to more historically normal valuation, or (if you’re an ebullient sort) to keep the market powering upward for a while yet.

That’s all well and good, and as I’m a lot closer to retirement than my first day at work, I’ve got no objection to such an outcome.

But what has me antsy is that I don’t know the assumptions that went into that estimate, and known or not, I don’t trust ’em.  I’m writing now about the South Sea Bubble of 1720, and I’m continuously struck by how easy it was for very smart people — Isaac Newton, forsooth! — to persuade themselves the party would continue, even very late in the game.

All of which is to say that three hundred years of securities market adventures tell us that it’s always when, not if for unpleasant surprises.  I don’t know if one is imminent, but I do know two things: given current events, a big crash could produce true social and political ugliness in a hurry; and there are at least a few reasons to watch out for market hubris.

Any jackals got a similar feeling? Any actually knowledgeable types out there want to weigh in?

Necessary disclaimer:  I’m not a financial expert. I do not watch the markets closely.  Most of my retirement funds are in the most boring possible index funds I can find.  I have enough time — a decade-ish — so that I can ignore near term gyrations (ask me again around 2025 how I feel). And I’m certainly not an expert on company valuation, or the connection of or utility of macro- and political economics to something as fine-grained and context-dependent as a market investment.  I’m not a financial advisor, nor do I play one on TV.  I’m just a guy getting a little queasy.

Also too — a guy who thought we could use some more thread.

Over to you.

Image: A Stock Market Cleaner, cover of Puck, v. 15, no. 376,  May 21, 1884



Another set of amazingly expected indictments

This is about as surprising as finding out that North Carolina is a bit humid in the summer.

Open Thread








Late Night Open Thread: 24-Carat Ingratitude

Much more of a symbolic protest than an actual boycott, of course; if not to the Repubs, where are a bunch of bloodthirsty economic parasites gonna go?

As national Republicans scramble their resources for a high-stakes midterm election year, some of the party’s biggest and most reliable donors have quietly withheld their support for Senate and House Republican groups out of frustration with the new tax law, CNN has learned…

…[S]ome of the Republican Party’s powerhouse donors in fact feel deeply stung by the law and have made their displeasure known to party leaders by keeping their wallets shut, according to multiple sources familiar with the situation, who spoke with CNN on condition of anonymity. Although some of the donors have not sworn off contributions to individual campaigns or even the Republican National Committee, all have so far withheld contributions to the House and Senate Republican campaign arms — which are key players in the 2018 midterm elections — as a way to send a message over the law.

The donors who have boycotted, all of whom are leaders of prominent hedge funds, include Paul Singer, of Elliott Management; Citadel’s Ken Griffin; Warren Stephens of Stephens Inc.; Cliff Asness of AQR; Bruce Kovner, formerly of Caxton; and Third Point’s Daniel Loeb. Combined, their donations accounted for more than $50 million to Republican groups during the 2016 election cycle; Singer ranked among the top 10 donors of either party, while Griffin and Stephens ranked in the top 20.

Collectively, they have bristled at what they view as favored treatment for corporations under the law. While the corporate tax rate was slashed from 35% to 21%, hedge funds are largely taxed at the top individual rate, which ticked down from 39.6% to 37%…

Although Singer has donated six figures to the Republican National Committee this year and has given directly to the campaigns of Reps. Martha Roby and Claudia Tenney, he has uncharacteristically not donated to groups supporting House and Senate Republicans. Stephens’ only engagement has been maxing out to a few congressional campaigns in Arkansas, his home state. Griffin has not donated to any federal campaigns or committees this year, according to FEC data, although a source familiar with his thinking said donations to congressional candidates and national Republicans are forthcoming.

Asness donated $250,000 to the Congressional Leadership Fund last year, in addition to more than six figures to the NRCC — but has not given since Trump signed the tax law. Loeb has supported Mitt Romney’s Senate campaign in Utah and Roby’s reelection bid but has not opened his wallet for any national Republican groups. And Kovner has not donated this year to federal candidates or committees — after last year giving six-figure sums to the NRSC and Speaker Paul Ryan’s PAC…