ELAM: Dear Mr. President

Dear Mr. President,

I see you are changing multiple advisors including Secretary of State, Chief Economic Adviser, National Security Adviser and various others. Let me suggest you consult another source, which is to say this column. It runs weekly in multiple newspapers and well, pardon the blatant self-promotion (but surely you of all people can understand that), it appears that you are off track. Frankly my work speaks for itself, consider the recent titles at www.themarketperspective.com:

  • “The tariff wars begin” (Actually, a total of three columns warning you about letting the Darth Vader Trade Genie out of the bottle.)
  • “Brinksmanship” (China now threatening retaliation.)
  • “Stocks Complete Nine Year Cycle” (All gains for the year are now kaput.)
  • “A Change in Mood” (Just ask Mark Zuckerberg about this one.)
  • “The Bear Market Comes in on Little Feet” (at first they call it a correction, then the kitty turns into a bear)
  • “Triangles Should Resolve in the Next Two Weeks” (didn’t take that long, downside here we come)
  • “Inflation in the Air” (gold is up $14 just today as I write)

At any rate, there are multiple advantages of utilizing The Market Perspective column. From your standpoint, it is zero cost. I am not in the White House so you and John Kelly won’t have to worry about another pesky leaker. As I am located way outside the Beltway, you can rely on an unbiased opinion. And you won’t have to fret about what I say on a Sunday talk Show (recall that Betsy DeVos problem) as no one has invited to appear. And from my standpoint, I don’t have to move to Washington, DC, a thousand thanks for that.

So what is my take on things now? I warned you not to brag about the stock market in your State of the Union speech. You can rest assured Democrat ad agencies are capturing your every last triumphant gesture during the SOTU speech, with a side panel of the DJIA falling over 700 points just yesterday. Or as Collin Powell puts it, you break it, you own it. If you claimed credit for the rally, bet your last reservation at the Presidential Suite in Mar a Lago that Democrats will credit you with the stock collapse. The headlines today say it all.

  • “President Slapping Tariffs on China, Fear of Trade War Sends Stocks Down”

You are not helping your Texas voters with headlines like this.

  • “Tariffs on Chinese Imports could Hinder LNG Ambitions”

You are putting the billions of dollars in new LNG export facilities from on the Texas Gulf Coast at risk, as well as the jobs they promise. And then there is the damage to foreign policy among whoever is left that we might call an ally. Claiming no country will be exempt from your tariffs, and then exempting Canada, Mexico and next the EU, Australia, Argentina, Brazil and South Korea, well, that leaves China which only exports 2% of our steel use anyway. Apparently someone in the White House realized you would need those countries to convince the Chinese to change their ways. But having damaged relations to begin with, the chance they will sign on now lessens.

Yes it is true that China blatantly ignores our intellectual property laws. But perhaps there would be a less contentious way to negotiate rather than putting China in charge of a New Pacific Rim Trade Group.

Your new man at the FED claims there is little inflation Have Jerome examine a ratio graph of gold versus the DJIA. It is turning up every day. And the index of gold and silver miners jumped up 3.24% today. See “Inflation in the Air” Weblog I cited earlier.

I had thought the stock market would be on a slow swoon to the downside. But with 300-700 point down days, maybe not. The 200-month moving average for the DJIA is now 13,149. It last visited that measure in 2010. But at this rate we could be back there in a couple of months. (Don’t laugh; recall the 2008 and 2014 oil collapse.) By the way, the DJIA has now closed below both the 50 and 125 day moving average, next stop is probably the 200 day at 23,359.

Larry Kudlow seems like a nice fellow and I wish him well as your latest Economic Adviser. But frankly, how about listening to someone to whom you cannot say,

You’re Fired!

Follow Dennis at http://www.themarketperspective.com