RANCHO SANTANA, NICARAGUA – We have begun our long perambulation.

First stop: Nicaragua. From here we’ll go to São Paulo, Buenos Aires, Salta, London, Ireland, France, Portugal, Italy, and Switzerland.

The trip will take us most of the rest of the year.

Stay tuned…

Powerful Emotions

We are here hosting our annual Bonner & Partners Family Office meeting. It’s all about money: how to get it, how to hold on to it.

View of the Pacific Ocean from Playa los Perros

“The money is the easy part,” explained one speaker. “The family is much harder.”

“Amen to that, brother!” listeners seemed to say.

Our own experience is limited. Still, from what we can tell, there is an infinite variety of ways to make a fortune. And to lose one. But for great fortunes, the losing ways tend to have a common denominator: the family fails.

There’s nothing like family money to stir up jealousy and resentment. The next thing you know, you’re in court.

“You don’t understand, Bill,” said a friend. “Envy, hate, spite… they’re more powerful emotions than money. A lot of people would rather see the lawyers get the money than their good-for-nothing relatives.”

Meanwhile, there are powerful emotions at work on the national level, too… emotions that have little to do with money.

Stocks lost about one-third of Tuesday’s gains yesterday. But most investors believe President Trump will be good for stock prices.

Crowd Pleaser


Let’s go back to basics… and try to understand what is going on.

The power of a government rests on three prerogatives: It can kill people. It can take their money. Or it can just force them to do things they wouldn’t do otherwise (win-lose deals).

Killing people is often popular. People don’t understand economics or finance. But they understand when a leader smites their enemies.

But money is our beat. And killing people will not put more of it in Americans’ pockets.

How about using the power of government to take money away from people? That is a classic win-lose deal. As we’ve explored previously… win-lose deals don’t make people generally richer. But they can make some people richer at other people’s expense.

Win-lose deals can be a crowd pleaser, depending on whom you’re taking the money from. Trump’s tax plans call for lowering the burden on the few – the rich. Corporate taxes are to be cut, which could be good for stocks.

But wait… Someone has to pay.


Trump campaigned as the candidate of the “little guy.” But it will be the little guys who pay, through “border adjustment” taxes, through inflation, or through fake-money transfers.

Of course, these non-rich taxpayers are also major consumers. And consumers are the people who buy corporate products. If they have less money to spend, corporate sales and profits should decline.

Besides, the “good” a government can do is inverse to its taking ability; the more it takes, the less people have left… and the less real “good” it does.

Phony Boom

Trump’s tax plan is supposed to be “revenue neutral”… meaning it won’t blow out the deficit.

But shifting tax burdens from one group to another (taxing some less and others more) takes time… invites uncertainty… and leaves the economy with the same net spending power.

And although the tax plans are supposed to be revenue neutral, the spending plans are not.

The feds will need money to pay for a 10% increase in military spending… and as much as $1 trillion for infrastructure boondoggles.

Those outlays represent real resources taken out of the rest of the economy so that they can be used for projects the feds (aka the Deep State) think are important.

Building ships and parking lots – financed with fake money – cannot lead to a real boom.

Miracle Man

What does that leave?

Well, there is still the possibility that Team Trump will reduce the burden of the win-lose deals in other areas.

The Environmental Protection Agency, for example, might do less damage if it were defunded. The State Department, too, is slated to be cleaned out.

There’s also the Bureau of Land Management… and a few other agencies.

Trouble is, even if they really do get streamlined, it’s still small potatoes.

The big potatoes, in terms of the deficit, are (1) entitlements and (2) the military. And the net effect of Trump proposals will be to increase them, leaving less for the rest of us.

So unless “The Donald” can perform some miracle akin to multiplying loaves and fishes, there will be no relief for the average voter… no real boom… no more jobs… nor higher incomes…

But politics is a magical mystery tour of human emotions. There’s more to it than just money. There’s spleen as well as brain… and bitterness as well as generosity.

And fortunately for Donald Trump, there’s more to a nation than just its economy.

Peronism wasted the Argentine economy, but “Peronistas” are still popular. Robert Mugabe is still in power in Zimbabwe after wrecking its economy over the last three decades. Nicolás Maduro is still running things in Venezuela.

And the Russians saw their incomes go down for 70 years before they finally turned out their rulers (and then, only partially). Even then, many still had cherished photos of comrade Stalin on their kitchen cupboards.




Further Reading: You can see more pictures from Bill at the annual Bonner & Partners Family Office meeting, right here.


Investing Insight


Editor’s Note: Today, master options trader Jeff Clark shares a unique opportunity in an otherwise “off-limits” market… Some investors are already doubling up on bets for a rally.

Jeff Clark

I’ve always had fun trading commodities. That’s mostly because commodities can be incredibly volatile. And it’s because most folks don’t pay any attention to the commodity market. So it creates lots of unique opportunities.

I don’t suggest that anyone trade the commodity futures themselves. Most public traders get fleeced in those markets.

But with the introduction of exchange-traded funds (ETFs) and exchange-traded notes (ETNs) on most commodities, traders can buy exposure to commodities as easily as they can buy a stock. So this otherwise "off-limits" market is widely available.

With that in mind, I like the setup I’m seeing in cocoa right now. You can trade cocoa through the iPath Bloomberg Cocoa Subindex ETN (NIB).

Here’s the chart…

NIB peaked last May near $41 per share. For the past few months, the stock has been in a declining channel pattern, hitting a new low this week at $23-ish.

NIB is oversold. It’s approaching the support line of the channel. And there’s positive divergence on the MACD – a momentum indicator that often provides early warning signs of an impending change in trend.

This is a good-looking setup for at least a short-term bounce back up to the resistance line of the channel – around $25 per share. But there’s also the chance of an even bigger rally…

You see… commercial traders – the smart money in the cocoa business – are now "net long" cocoa futures contracts for the first time in five years. The last time the smart money had a net long position, cocoa rallied 30% in about four months.

Commercial traders in any commodity are almost always net short. They sell futures contracts in order to hedge against a price decline in the underlying commodity – to which they typically have a lot of exposure in the cash market.

When the commercial traders go net long, they’re basically "doubling up" on their bets that the commodity is going to rally.

This isn’t a guarantee, and it can sometimes take months for a trade like this to work out. But this condition is often a sign of an impending bottom in the price of a commodity. So it presents a low-risk trade.

If you’re up for it, aggressive traders can…

Buy NIB at about $23 per share with an immediate objective of selling it near $25.  

My longer-term objective is closer to $28. But in the commodity arena, we’ll do better by jumping in and out of short-term positions.

Jeff Clark

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Wednesday’s Diary on Trump’s speech to Congress – and Bill’s argument that the president has no serious plans to bring the Deep State under control – continues to anger readers in the mailbag.

Do you really have to make sarcastic remarks about d*** near everything [Trump] does or says?

– Don C.

Your negativity would be oppressive, if it had any validity. Your inability to see the positive lights of the new administration smacks of personal depression. Seek help!

– Ronald S.

Let’s give Trump some breathing room, please. Your comment about the economy not growing any faster than under Obama is ridiculous. This is Trump’s sixth week in office. The U.S. is a big ship to turn around. It takes time, navigation skills, and teamwork to make it happen. I think you are wrong to not give him a chance.

– Russell W.

I must take some issue with your criticisms of the speech. I believe that undoing the enormous damage that has been done to our liberties, currency, economy, culture and monetary status cannot possibly be reversed quickly.

First, the large number of swamp folks in Congress would never allow a large scale reduction in total spending; too much to lose for them. Second, the economic impact would probably be injurious to the nation; the shock therapy would blow up the game. Third, it’s possible that Trump uses Deep State-connected cabinet people as a ruse to lull an otherwise combative Deep State into a false sense of security. Then he undoes the damage from the inside out instead of a directly confrontational approach.

Probably wishful thinking, but a culture shift must occur first to even have a chance of success. Unfortunately, I agree with you that I don’t think we have the time.

– Dale F.

I’ve been following Bill for a time and appreciate his insight, but does he ever positive about anything? Could he ever be a little upbeat about anything?

– Don H.

There you go again, Bill, questioning the capabilities of our hero to deal with the Deep state, swamp critters, and other minor vermin. Like Wiley Coyote chasing the Road Runner, Donald and us Trumpsters may be off the cliff, but we haven’t looked down yet and are still safe.

You keep trying to make us look down and spoil this fantasy. How can you be so cruel! We Trumpsters are a lot safer than those people who are buying into the markets at these prices. At least when we finally look down, we’ll realize it was just a dream and face reality again. When these markets correct and investors look down, they will see that water below is deep and those things swimming around with fins showing aren’t dolphins.

– Ken D.

America seems to have split into three main groups. A small group has found a way to become wealthier than God. We can call these people the “One Percenters.” The second group contains people who are uneducated in important ways and are who are often unemployed, underemployed, or unemployable. Consequently, they are as mad as Hell. The third group contains the rest of us. We work, we make enough money to get by, and we are educated and informed.

We have the values on which America was based, and we can tell false news from real news. We agree with your description of the problem and thank you for making the situation so clear. Meanwhile, the 1% fight any change, and the second group gave us Trump as their solution.

The rest of us are forced to watch while the ignorant and the super-rich fight over the future of our country. Perhaps with the help of people like you, we can avoid the worst of possible futures.

– Edmund S.