2024
The path of totality ran through Buffalo. It seems like a lifetime ago, but Buffalo turned out to be one of the best places on earth from which to view the eclipse. Tourists flocked here from all over the globe. Buffalo hoteliers were charging $800/night. The day itself turned out to be cloudy (of course), but the eclipse itself was visible, albeit through goofy looking glasses. The event itself was extraordinary, as darkness fell, the streetlamps came on, a hushed silence ensued as the birds stopped singing, flowers drooped. And then it all came back. Memorable indeed.
In other Buffalo-related news this year, Buffalo star running back and accused (acquitted) double murderer OJ Simpson died. OJ’s life story is one for the ages: rags to riches to rags again. Southern California, Heisman Trophy winning golden boy gets drafted by the Buffalo Bills, goes on to set the single season rushing record and a bunch of others, launches a broadcast and acting career and becomes one of America’s most beloved figures. Then, one horrible night blew it all away.
Speaking of the Buffalo Bills, a team most analysts wrote off this year is now considered one of the favorites to win it all as they wrapped up their 5th consecutive division title by week 15. Apparently the hockey team hasn’t gotten the memo.
Wars raged in Ukraine and Gaza. A massive freighter struck and destroyed Francis Scott Key bridge in Baltimore. Oh, and we held an election.
And eventful it was, starting with President Biden’s decision to drop out of the race following a disastrous debate performance. Vice President Kamala Harris emerged as the successor, but was unable to gain enough support and fell to Donald Trump. Trump staged a tenacious campaign, surviving assassination attempts and even driving a garbage truck, and ultimately prevailed against the hapless Harris.
Throughout this turbulent year, stocks staged a strong performance, up over 20% in the S&P 500 at this writing. Which goes to show you that even if you anticipated a lot of turmoil this year, you would have been mistaken to sit the market out. Wall St. may have been surprised to learn that what they viewed as an excellent economy, was not considered such by much of Main St., hence a positive stock market did not translate to electoral victory for the incumbent administration.
It turns out people really hate inflation, even if the rate goes down, because prices don’t go down, they just go up more slowly. And the unaffordability of housing gives people the sense that they can’t get ahead, even if their 401k’s are up.
And let’s not forget the border and immigration. For some inexplicable reason, Biden chose to wait until year four of his administration to finally take action to control the border, which was deeply unpopular.
What can we expect from an incoming Trump administration? We can expect strong enforcement on immigration with mass deportations. We can expect tariffs on our trading partners, which are really taxes on us. Trump has spoken about buying Greenland, annexing Canada and reclaiming Panama. I will go out on a limb and say at least one of these may occur. In order of probability, it’s Panama, Greenland, Canada.
Ukraine is likely out of luck, Israel can breathe easier.
Elon Musk’s attachment to the incoming administration is a giant unknown. As the country’s largest recipient of government money, it may strike some as improper for him to have a role in deciding how government money is spent. As someone with massive business interests in China, it may strike some as unwise that he be given access to our deepest secrets, yet here we are. On the other hand, he may end up serving as a balance against the deeply populist influences within the administration.
Right before year end, Jimmy Carter passed at the age of 100. Of all the presidents in my lifetime, he stood out as the most outside the box, that is until Trump came along. One may draw parallels between his administration and Biden’s, both being single term Democrats victimized by inflation. It should be noted that Carter appointed Paul Volcker, the fed chief who really broke the back of inflation under Reagan, and he deregulated trucking, airlines, and banking, all of which contributed to the ‘80s boom. He also instituted the deeply unpopular 55 mph speed limit on interstates, but which did help enable the country to get a handle on its energy consumption. Carter came in at the end of a bad stretch for America, between losing in Vietnam, Nixon’s resignation, an energy crisis and lasting inflation. Then he followed it up with the Iranian hostage crisis, which wasn’t necessarily his fault, but which made him look impotent.
In any case, both Biden and Carter will likely share the stigma of failed administrations despite some positive accomplishments by each. And the subsequent administrations may both reap the rewards.
The message for investors? It may be a good thing to be an investor during an administration that follows an unpopular single term Democrat victimized by inflation. History may not repeat, but it sometimes rhymes. In the current case, stocks have largely been driven by an unprecedented boom in AI. This isn’t going away. Economist Ed Yardeni refers to our current era as the “Roaring 20’s”. He may well be right.
We could be looking at a period of low inflation, low energy prices, massive capital investment and a surge in productivity brought on by utilization of AI. A very promising backdrop indeed.
The risks, in my judgment, largely stem from the possible actions of the incoming administration. Mass deportations and massive tariffs could derail the very positive fundamentals they are inheriting. Right now, the economy is growing, inflation is back under control and unemployment is low. Trump may believe he has a mandate for massive change, investors should hope he doesn’t change too much too fast. It is said that Trump looks at the markets as a real time report card on his actions. If so, it is hoped he will temper his actions to a level that won’t disrupt the positive trends in place.
Here’s hoping all who read this had a very happy holiday season! Although there are times when it doesn’t seem that way, we are living in the best time in history to be alive, and the potential advances in the next few years may be unlike anything we’ve ever seen. Stay the course!
Go Bills!
