BALTIMORE – Stocks hesitated on Wednesday after the Fed announced its puny rate increase.

Then, yesterday, they continued their march to glory, coming to rest just 150 points shy of the Dow’s 20,000 mark. 

And the dollar hit a 14-year high as cracks widened in the huge emerging-market bond market.

But our thoughts turn to poor Christine Lagarde…

The IMF director and Deep State operative has been in French court defending herself against the charge of “negligence” with the taxpayers’ money.

No kidding.

Epic Waste

The details are complicated… and don’t matter anyway. It’s the accusation that is so stunning.

If you locked up every public official who has been negligent with the taxpayers’ money, Washington’s expensive restaurants and cheap bars would be empty.

And the prisons would be crowded. Almost every politician, department head, and flag-rank officer would be behind bars.

The amount in the Lagarde case is trivial, just $450 million. The Pentagon wastes that much every day.

A recent Reuters investigation revealed that the U.S. military had “lost” $8.5 trillion over the last 20 years, in what it described as “epic waste.”

Let’s see… If we did the math right, that’s $1.1 billion a DAY.

Donald Trump is on the case, though.

He’s already tweeted his opposition to cost overruns on Air Force One and on the F-35 fighter jet.

Trigger Warning

And now it’s time for a trigger warning: The Diary is no “safe space.”

Universities may be able to get away without challenging the silly ideas of students and faculty. Blah… blah… blah – one bad idea after another. Who knows? Who cares? 

But in the world of money, bad ideas are marked to market. Dumb ideas sell off. Especially those that “everybody knows” are right.

There’s no profit in knowing what everyone else knows or believing what everyone else believes – not in the investment world. Those positions are fully bought… and almost always wrong. It’s finding something others don’t know about… or finding where they are wrong… that pays.

“Find the trend whose premise is false,” says one of the most successful speculators of all time, George Soros, “and bet against it.”

You don’t find those false premises without looking for them. And you don’t see them at all unless you’re willing to confront your own prejudices and desires.

Over the next few days, we will be examining some of our readers’ fondest hopes. 

Can you really negotiate “better trade deals”? Will tax cuts “pay for themselves”? Will infrastructure “investments” improve productivity?  Can anyone “make America great again”?

And yes, we will roll these questions over, scratch them on the stomach, and have a good look.

Specifically, we’re going to look more carefully at Donald J. Trump – trying to figure out what he will do… and what it may mean… before he does it.

Why?

Because never before in our lifetime has politics been so important to markets. That is partly because politics intrudes on money more aggressively than ever before – setting the terms of trade and the price of credit and indirectly bumping into stock and bond prices, too.

And don’t forget the Fed’s trillion-dollar wealth-distribution plans disguised as “economic management.”

Devil or Savior?

And there’s another important reason politics matters.

The feds have created a monster. Now, they are afraid it will get loose.

They are desperate to keep it happy… well-fed… and, most importantly, locked up. When this $35 trillion Frankenstein gets loose, there will be hell to pay.

Many believe Mr. Trump is the savior they have been waiting for. Others believe he has horns and a tail.

What do we think?

We don’t know. Maybe he is both. Maybe neither.

We squint and look carefully. Wait… What is that in his hand?

A key!

Uh-oh…

Regards,

Signature

Bill

Market Insight


BY CHRIS LOWE, EDITOR AT LARGE


There’s no doubt that Trump’s win over Hillary Clinton has had a huge effect on stocks.

After going nowhere since the summer, starting on Election Day the index has ripped 8% higher.

Editor’s Note: Our friends at Casey Research have some great advice for how to profit from the “Trump rally” in stocks. But all those opportunities will vanish on Inauguration Day​. So make sure you hear what they have to say now.


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Mailbag

As Bill covered in Monday’s Diary, President-elect Trump has tipped former General Electric CEO Jack Welch for his new economic advisory committee. Not everyone is happy about it…

A few words appropriate in relation to Mr. Welch. I was an employee of GE several years ago, working in the General Electric Space Systems Division in Sunnyvale, CA. Suddenly, it was announced that our division was being deleted, as Mr. Welch wanted to return to “GE’s root products – light bulbs and locomotives.”

This deletion impacted 250,000 GE employees around the world. We can only guess just what Mr. Welch will try to impart upon the entire country.

– Jim H.


In Case You Missed It…

On his first day of presidency, Donald Trump will issue an executive order that will wake a sleeping giant… and send this tiny stock through the roof.

The Casey Report Editor E.B. Tucker just put together a video with all the details of this opportunity. Click here to watch it now.