Dear friends,

Chances are President Trump would have named the late Herbert Stein to be his lead economic counsel. As Herb Stein’s law dictates, “If something can’t go on forever, it will stop.” Such was the basis for Trump’s clarion call for change that resonated so with the U.S. electorate. 

With each passing day, with every sun that sets over Washington DC, the risk grows that the U.S. economy will slide into recession. While confidence remains high, the euphoria has begun to wane replaced by fears that the gridlock that’s gripped politicians cannot be broken. As has been the case more often than not, the stock market is in abject denial while bonds are potentially jumping the gun, pricing in the worst potential outcome. 

As for what is not worrying investors, look east. Europe has fallen off the risk radar. The question is, is this reckless given the unexpected has been the norm among voters over the past year? In this case, investors are probably safe in believing the polls.  

Benign outcomes in France and Germany and even Italy, however, should not suggest that the underlying anger that has given rise to populism and anti-globalism has dissipated. Demographics do not bode well for the establishment in the coming years. 

Back home, my Twitter feed has seen a quip or two about repo men as the car market slows to a stall and drivers default on their car payments.  Make no mistake, repossessions are no laughing matter. Many subprime borrowers who stand to lose the means with which to go to and from work are one in the same with Trump’s supporters who switched parties rather than withstand more of the same.  

For a longer-term outlook on Europe and unrequited anger, please enjoy, “If an electorate falls in the forest, is their voice heard?”

Wishing you well over the holidays to come,