BALTIMORE – Traders, investors, speculators – they’re all adjusting their medications this morning.
They went to bed last night, confident that Brexit would fail.
“Economies breathe in and breathe out,” we told Bonner & Partners Editor at Large Chris Lowe yesterday.
Chris was interviewing us for a podcast recording that goes out to lifetime subscribers of our monthly publication, The Bill Bonner Letter.
“Sometimes they are expansive… open… and optimistic. They reach out for new ideas, new markets, and new customers.
“Other times they are contracting, closed, and fearful. They put up barriers, and try to protect themselves from the outside world.
“We’re in a period of contraction,” we concluded (in a sweeping gesture that linked practically every dot in the whole matrix). “That’s what Brexit, Trump, negative yields, sluggish growth, and the Fed’s policies are all about.”
As Chris reported in yesterday’s Market Insight, the bookmakers’ odds had the probability of a Brexit at just 1-in-4.
But in the actual event, the Leave camp won 52% of the vote… a solid victory.
British prime minister David Cameron, who campaigned against Brexit, has resigned. Although, he’ll remain in office until October.
Nigel Farage, the head of the United Kingdom Independence Party, which spearheaded the Leave campaign, has declared “independence day” for Britain.
Meanwhile, the British pound has tumbled by about 10% to a 31-year low. Britain’s main stock market benchmark, the FTSE 100, tumbled about 8% with the first few minutes of trading. The euro crashed the most since it was launched in 1999. Commodities plunged. And oil is back under $48 a barrel.
Traders around the world scuttled out of risky stocks and into safe haven gold (see more on that below in today’s Market Insight) and bonds. Yields on U.S. Treasurys and German Bunds have tumbled as prices have soared.
In Austria, a Trumpish anti-immigration candidate, Norbert Hofer, came within a hair (just 30,000 votes) of winning the presidency.
In Italy, the establishment parties lost Rome and Turin to the populist, eurosceptic Five Star Movement, led by comedian (no kidding) Beppe Grillo and Virginia Raggi… an attractive young woman who just became the first woman mayor of Rome.
In France, the head of the far-right National Front party, Marine Le Pen has vowed to force a vote on leaving the EU in France, too.
Meanwhile, in the U.S., “Both candidates are deeply flawed,” say the commentators.
But that is like saying a piece of broken glass is a flawed diamond. Neither Hillary nor The Donald should be allowed anywhere near the White House.
In a better world, neither would be.
But we do not live in a better world. We live in a bubble… waiting for a pin.
We remember being told in grade school that any one of us could grow up to be president.
We thought the teacher was exaggerating to coax the bigmouth bully in the back and the suck-up prisspot in the front row to learn the basics of the U.S. Constitution.
And yet here we are, a half-century later, and we find our teacher was right. Now, Clinton and Trump are our candidates for president… and neither has any apparent knowledge of the U.S. Constitution.
The whole idea of the constitution was to limit the power of the federal government. The 10th Amendment made it clear: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”
Of course, neither Trump nor Clinton has any interest in remembering the 10th Amendment. A mob might sooner pause to recall a city ordinance against littering.
After more than two centuries, the feds can get away with almost anything. Which is why today’s candidates for the top job are perhaps the most reckless and ruthless we have ever seen. There’s so much more at stake.
We were asked recently on a radio show why we so rarely criticize Hillary.
Are we some kind of closet Democrat, the host wanted to know?
Not at all. There is just nothing to criticize. We know what she is; we know what she will do.
She will give us more of the same.
More Clinton, more Bush, more Obama… more Deep State, more crony deals, more wars, more regulations, more rules… and more smarmy blather – “The government is all of us”… “America is already great”… “It takes a village.”
Stop, we’re feeling sick…
“The Donald” is more entertaining. He says what is on his mind… such as it is.
Both candidates are scalawags. Both are flawed. But they are flawed in different ways.
One represents the international Deep State elite, desperate to hold onto its power, wealth, and privileges. The other promises an American “Brexit”… an escape.
Like Howard Stern, Trump gives voice to many things other people think. He has drilled into the American psyche and hit a rich deposit of angst, envy, and confusion.
He says things so dumb, so politically incorrect, so incoherent, and so foolish you rarely hear them in public. And he’s occasionally right.
Let’s see, is the Mexican-American judge prejudiced against him?
Yes, he could be!
Is Hillary crooked? Is she a “world-class liar”? Yes, of course she is!
Is U.S. foreign policy really a “disastrous mess”?
Under normal conditions, you would be happy to go to a restaurant where Mr. Trump was the maître d’ or to a rural auto repair shop with a big neon sign that shouted “DONNIE’S.”
He would be full of commercial bonhomie, feigned warmth, and acceptable competence. You might even lend him money; though, you wouldn’t expect to see it again.
As for the White House, in our lifetime we have never seen someone with so little dignity in the oval office; it’s hard to imagine him there.
That’s what makes it so much fun. Trump must be the biggest numbskull ever to win the Republican Party nomination… perhaps after George Bush.
But it is a sign of the state of U.S. politics that such a boorish clown could actually be the better candidate!
On the stage, it is sometimes the fool who speaks the truth. Others are too careful or too wise. Sometimes, it takes a village idiot, in other words. Or another sharp object to pop the bubble.
BY CHRIS LOWE, EDITOR AT LARGE
The yellow metal soared 5% following the news out of Britain… as investors seek protection from the fallout in financial assets.
This has left gold at its highest level in more than two years.
Now Is the Moment for Gold
One of the world’s most outspoken currency experts says now is the time for gold to soar. And he explains why any naysayers – including mainstream economists – are just dead wrong.
Brexit “Earthquake” – How It Happened
Politics as practiced for a generation is upended… Britain’s prime minister has quit… the European Union looks more fragile than ever… and markets are in a tizzy. Here’s how the once unthinkable happened.
Is Brexit “Proof” That Trump Will Be the Next U.S. President?
Presumptive Republican presidential nominee Donald Trump says Brexit is a “great thing.” Is Brexit “proof,” as some are now claiming, that Trump will win in November?
A video replay and transcript of Tuesday’s special webinar featuring Bill, Porter Stansberry, and Chris Mayer is now available free to Diary readers.
Don’t miss out on this opportunity to hear three of the top names in financial research discuss their personal strategies for investing in this complicated market environment.
Some interesting responses today to yesterday’s Mailbag question: Have you had any personal encounters with the Deep State?
I am an attorney of 41 years who has come to believe that the judicial system, with some exceptions, is also a product of the Deep State. I’m talking about some judges, most arbitrators, and virtually all large litigants.
When suing a major bank, my phone was bugged, my accounts were closed without warning overnight, and a truck was run at my children. When suing large Arizona ranchers, my children were stalked. When my clients in that case tried to occupy their property adjoining the ranches, they were ambushed by well-placed snipers, some of whom were local sheriffs in plain clothes.
I have no doubt that the Deep State has the willingness and has done the necessary preparation for violence when the economy collapses.— Steve R.
You can study up on Mike Rupper (if his stuff hasn’t been scrubbed from the inter webs) and how the CIA is the biggest drug dealer on the planet.
This was accidently verified to me by a friend, whose dad was in the CIA. My friend spent his youth in Southeast Asia, where his Dad worked to keep the deliveries happening.— Laurie F.
The deepest I went into the State is the DMV. Ample enough for me. I don’t want to see more.— Fabian H.
We also got lots of great feedback on the subject of yesterday’s Diary… former CIA director Bill Colby.
The Mel Gibson movie Edge of Darkness comes to mind. How one’s life can be destroyed by fabrications and lies by the deep state.— Gerald K.
I remember when Bill Colby died. I always thought he was murdered. I think Bill agrees with me.— Darrel O.
Watch The Man Nobody Knew, a documentary made by Colby’s son to understand his father. Never knew about the film until I met his son. Well worth the 90 or so minutes.— Walter T.
I fully agree with your Deep State view. It will be great if we can get full disclosure! I’m glad to see that you want to change the status quo also. Best of luck to you and your staff— Paul R.