Focus in on the data box at the bottom of the chart. Probable annualized return outlook based on current valuations over the coming 1- to 11-years. 

Household Equity Percentage vs. Subsequent Rolling 10-year S&P 500 Index Total Return

I really like this next chart. The thesis is simple: the greater the exposure households have to equities, the less is available to further bid stock prices higher. Think of it as investors are positioned all in (the red “We Are Here”). The yellow rectangle highlighted the area at the top of the chart. 

Based on the current Household Equity Percentage at the end of June 2024, the blue line in the upper right section of the chart is forecasting a negative -2.3% annualized return over the coming 10-years. No guarantees, of course. As you can see, the actual subsequent returns are plotted in orange (dotted line). Could be different. I don’t like the Vegas Odds.

And The Winner Is Kennedy…

If you thought that Bobby Kennedy had exited the Presidential race, or was never really in it to begin with, think again. The movement behind him is now deep and wide. It is the most significant youth movement since President Obama and now expanded to include the many Boomer parents of these kids. His presence in this presidential race has profoundly impacted the imminent outcome. However, the real impact will happen after the election is over. Let’s consider the ways in which he has been so influential and why.

As for the outright winner, it sure feels to me like it will be Trump, but this requires an explanation, which will make more sense after we better understand the Kennedy factor. (Hint: Trump now has a team. Harris is still campaigning as a person).

First, if Trump wins, it will be in no small part due to Kennedy getting his voters to do the impossible – vote for President Donald Trump. Probably half of Kennedy’s voters swung to Trump when Kennedy asked his backers to join forces with Trump. The other half couldn’t stomach the leap. Given that Kennedy owns the under-45-year-old vote in the US today, this was a materially important boost to Trump. Kennedy had reached out to the Democrats too but got nothing but silence. Kennedy became the King-maker and threw his weight behind the Republican side. He would have preferred to align with the Democrats. But, as he says, he did not leave the Democratic Party. The Party left him. The party not only abandoned their traditional position as the opponent of war and of big business. In addition, they blocked Kennedy’s efforts to run as a Democrat. They blocked his efforts to remove himself from the battleground state ballots. He had wanted to avoid being a spoiler. The Democrats think he’ll pull more Republicans away from Trump than Democrats away from Kennedy. So, Kennedy went to the Supreme Court, asking to be removed from these ballots, but it was probably too late. He is now asking his supporters to NOT vote for him. Whata luxury position to be in.

But, Kennedy swung Joe Rogan over from the start. Frankly, that has made a greater impact than all the opposition in the traditional media. Notice that Harris thought going on Saturday Night Live had value because it had worked for Bill Clinton. But, this just reveals that the Democrats have not understood that this is a podcast Presidency. Not a TV Presidency. That era ended long ago. Kennedy understands the power of the long form podcast in the current era and was the first candidate to make serious use of podcasting to spread his message in the current race. By the way, the Democrats have tried hard to use the traditional print and TV media to trash Kennedy at every turn. It has worked with the boomers who still rely on these sources for their news. Boomers reading this will no doubt be shocked that anybody can take Kennedy seriously. But, having canvassed audiences across the country, this effort to portray him as a nut case is being constantly overwhelmed by new data that supports his arguments. The younger audiences, who don’t trust mainstream media, are ever more aligned with him on substance. Joe Rogan’s support for Kennedy and Trump has outweighed all the efforts of mainstream media.

In addition, Kennedy had called for the impossible. He said he wanted a “unity government” where Democrats and Republicans would hold hands again. This approach seemed impossible and somewhat deranged to political experts. Yet, the impossible happened not only once but twice. On the left, Vice President Dick Cheney is now holding hands with Vice President Kamala Harris. On the right, Former Congresswoman Tulsi Gabbard is holding hands with Donald Trump. Unity government options are now available to voters on both sides. Kennedy got his wish. He got his wish on both sides. This alone is a remarkable accomplishment.

Kennedy said he wanted health to be at the front and center of American political debate. It wasn’t even a campaign topic at the start of this race. Now, it is central to this race and to the public debate. The Make American Healthy Again strapline has resonated with voters in all age brackets. As I have traveled the country this year, I’ve noticed how this issue began to go viral amongst young people who wanted to know why French fries in Europe have four ingredients: salt, potato salt, and non-hydrogenated oil, while the American version has 11 to 19 ingredients including natural beef flavoring, dextrose, and sodium acid pyrophosphate, and “anti-foaming agents.” Now, their parents are all over these issues, too. People are voting against cancer-causing, life-threatening products in the food chain. Everybody wants glyphosate out of their bread. Kennedy got the nation’s vote against a system where major corporations buy a regulatory stance and inject health-threatening ingredients into the food and medicine chains. The “Freedom Fries” movement is overtaken by the “No Fries” movement Kennedy launched. Getting ultra-processed food off school lunch menus has turned out to be a vote winner for him. He has not only elevated his primary issue but also forced the rest of the political establishment to address it. His most recent announcement was that the Trump Administration would eliminate fluoride in water. This may not resonate with boomers, but it does with everybody younger than that.

Perhaps the greatest coup of all for Kennedy has been Trump’s announcement that Kennedy will Chair a new Presidential Commission on Presidential Assassinations. This will dig into the long-festering wounds arising from the assassinations of Kennedy’s father and uncle (RFK and JFK) and the yet insufficiently unexplored assassination attempts on Trump.  This is likely to be the most critical outcome of this Presidential race because it will likely reveal things that may change the nation’s understanding of its own identity. After all, many have tried to get the JFK and RFK files fully declassified (left and right alike) and yet have been stymied at every turn. Now, Kennedy will be able to bring light to bear on this dark corner of American history.

The opposition to this is formidable. I watched his campaign manager and daughter-in-law, Amaryllis Fox, speak with Tucker Carlson. She is ex-CIA. She opened by pointing out the inconsistency between America being a democracy and yet having a political establishment that seems to like overturning democracies abroad. She questioned the efficacy of the continuous efforts to engage in long wars that the US never really wins. Interestingly, when I tried to comment on her interview, Linked In gave me a pop-up that said, “Amaryllis Fox Kennedy cannot be mentioned.” This is exactly what The Democrats are not getting. The suppression of public debate does not serve their interests. More and more Americans have become more and more uncomfortable with the seemingly cozy relationship between the government and the media. Some ask if the media is the government. Trump’s $10b lawsuit against CNBC for editing Harris to make her look better is at the heart of this new focus on this cozy alliance.

All this helps explain what Bezos is up to at The Washington Post. Jeff Bezos’s decision not to endorse Harris or any candidate was well thought through. Obviously, the fallout is huge. The Washington Post lost something like 250k subscribers. But remember that Bezos sits at the helm of probably the best intelligence-gathering apparatus on Earth today – Amazon. AWS also happens to manage all the data for every single intelligence agency too. Amazon can tell the mood of any nation just based on buying patterns. So, he was clearly seeing the country in the midst of a move to the right.

Even the left has been finding it hard to handle the fact that Harris and Waltz are a bit further to the left than Obama was. And, he was already too far left for much of the country. So, Bezos seems to have made the following calculation: the Washington Post has not and cannot cover the news in a Trump world. The Post readers and journalists alike can’t comprehend, stomach, or absorb the possibility of a Trump win or a move to the right. The newspaper cannot survive on disgruntled Democrats if they lose the election. If Trump wins, or even if the nation’s preferences shift to the right, the newspaper must shift too. So, there are limited choices. He could fire a bunch of the journalists, but then he’d have to pay them. It’s much easier if they resign. And that’s exactly what they did when the Post announced they’d stop endorsing Presidential candidates going forward. This means The Post can now hire journalists who can cover the important stories differently. Bezos is betting the 250k readers they lost will be more than replaced by a new wave of readers who want a different kind of coverage of the new government. Perhaps too, this is a kind of anti-coup in which Bezos is overturning the long-standing coziness between the intelligence community and the Washington Post. Long gone are the days when Katherine Graham and her top team were such trusted insider that the Washington Post was a mechanism for government managing public narratives. Perhaps Operation Mockingbird is now over? The manufacturing of public narrative, or influence over it, by government may not be so easy any more in the new Tech Bro dominated world.

This line of thinking requires that we understand that Bezos is running one of the best intelligence agencies on the planet (Amazon + The Washington Post). He can see that Trump is either heading toward a win (or at least that the country is substantively moving to the right). If so, they can afford to lose some readers and need to lose staff to make way for a new kind of reporting that more accurately reflects the true state of American politics. Or, perhaps the Washington Post decision signals that the Tech Bros are all aligning at this moment not because they support a particular candidate but because they can see that traditional politics may take us into a period of uncertainty that they will have to manage while government cannot manage itself. More on this shortly….

One wonders if this isn’t a more profound story about the relationship between the media and the government. That relationship is more than cozy. It’s partly about journalists being afraid of being pushed off the White House/government department press briefings invitation list. But it may be more than that. It may be that the government makes it impossible to pursue certain lines of inquiry. Therefore, Bezo’s has fired a salvo that warns of a very fundamental restructuring of the relationship between the powers that be in government and media alike.

Meanwhile, most media headlines are now shouting that Harris is pulling ahead across the country but also in specific and unexpected places like Iowa. This is mainly based on the predictions of famous pollsters, like Ann Selzer. The Iowa polls had shown Trump ahead by 18 points in June, by only 4 points in September. The volatility of the poll results is partly a function of early voting. The committed and the poor vote first. The uncommitted and the well-to-do vote late. This makes it harder to get a grip on the swing voters, though there really aren’t many swing voters left. The market is betting that Trump will win but by a narrow margin. It is worth remembering that traditional pollsters and the media will keep saying it’s really close because it doesn’t pay to tell your clients that they are on the losing side. Nervous readers buy more papers and click more. So, it’s hard to trust much of the noisy commentary.

All this may be part of an even larger story: the fight in the US Presidential race is not between the left and the right. It is between the Establishment and the Anti-Establishment. Or, more accurately, between the Old Establishment and the New Anti-Establishment. This helps explain the Cheney-Harris alignment. This is the Old Establishment, which likes the way things have been done. They like a world where the government knows best and external commentary is not welcome. Putting it bluntly, they believe in the old adage, “after the war begins, to reason is to treason”. This side says any commentary that opposes the government’s position is misinformation, disinformation and its ok to use the state apparatus and the media to maintain the government as it exists. The Old Establishment is not opposed to reform, but the basic apparatus and core narratives must be kept intact. They might hire Tech Bros to make government more efficient but have not grasped that the Tech Bros can already anticipate their every move because they already have a clear picture of everyone in the Old Establishment because their digital twin gives away their actual position. The Old Estabishment group wants to know everybody else digital twin secrets but does not want the government’s digital twin available to external parties, including voters. But, its too late.

The New Establishment is comprised of Tech Bros who have more insight than any existing government apparatus. They increasingly align with each other because they see that the government (whether left or right) is failing to meet the needs of the public. The nation’s finances are blowing out (see: US Treasury Adds $104,000,000,000 To National Debt in One Day As Total Outstanding Debt Shatters Record High at $35,951,000,000,000). Congress is so embroiled in fights that it can’t seem to pass legislation. The dysfunctionality of government is a core issue in this election. Everybody agrees that the government is dysfunctional. Both sides proclaim their love for the Constitution. But, who will defend the Constitution best: those who want to attack government dysfunctionality or those who want to defend a system that fundamentally works but needs a bit of reform? That is the fundamental question dominating this election. That is the question that divides the public.

There are policy issues this year, but not the ones you think. People are not voting on economic policy. They are voting for or against tax hikes. They are protesting voting over inflation that hurt them and was not corrected soon enough. They are not voting on health policy. They are voting on whether or not vaccines and medicines should be mandated in an emergency or just made available.

They are also more interested in voting for a team than a person, it seems. This is new.

Trump smelled this change and strengthened his chances enormously by showing up with a team. Harris, in contrast, is running on behalf of a team that does not show itself. Trump brought in a whole bunch of Tech Bros and decided to start building the team in advance of the race results. The transition team is already in motion. Much to the chagrin of the Democrats, they now can’t track who is on that team because they declined to use Federal funds and are financing it privately. Trump helped people get past their reservations about him by offering what Jordan Peterson calls “the X-Men.” The New York Post quoted Peterson saying, “The Marvel Comics superheroes, the “misfit mutant” geniuses, have joined Trump to save the Republic. They are Trump’s warriors against the monsters of the Deep State and the Blob of censorship, surveillance, and war.” That team includes the modern X-Man, Elon Musk, Vivek Ramaswamy, Tulsi Gabbard, Kennedy, and Nicole Shanahan.

Harris and President Biden never took a team approach. After all, Harris and Biden were never a team. Biden pretty much locked Harris in the closet when they won office and relegated her to the least savory, trickiest tasks like immigration. The Democrats tried hard to get rid of her. The Obamas took too long to endorse her. The Democratic National Committee takes the view that the person is not that important. People are voting for the party. This helps explain why Harris has not campaigned in certain states like Michigan. The point is to have someone who will execute orders rather than make them. This philosophy of governance makes sense if the goal is to keep the existing establishment in place.

Whatever the betting is, we have to consider what happens if there is no clear winner and a contested outcome. Harris is highly likely to do whatever is needed not to have to certify Trump as President. This includes the new effort to narrow Trump’s future into two places: The Presidency or prison, as Axios put it. The first step in this potential fight is to see if The Electoral College can resolve it. If it can’t, then it will fall to The Supreme Court. If they can’t figure it out or if their position is not accepted, we enter new territory. Could we see the markets needing to be shut down in a temporary “bank holiday”? It’s not impossible, though I disagree with Musk’s idea that this is our last election. Thiel says no one will win the election. Instead, one side will simply “collapse.” I suspect that whoever the loser is, they’ll take quite a while to go through all the Moss-Cantor stages of grief: denial, anger, bargaining, depression, and (eventually), acceptance. In other words, the losing side won’t truly understand the why for a very long time. That’s how entrenched everybody is.

The bigger possibility is that this becomes the moment that the New Anti-Establishment reveals that it already controls public opinion more than the Old Establishment. While the two parties argue and fight, the New Establishment may commence what might be called a “reverse coup” in the future. I’m watching for Thiel, Zuckerberg, Elon, and various others who are usually fighting amongst themselves for turf to start to align and offer public stability. They will also turn on their Tech Bro opponents. One wonders where the P Diddy information came from and why it suddenly appeared at this time. Perhaps because it implicates a number of the Old-Guard Tech Bros? Is there more to that story? It matters that so many past and potential US Presidents seem to be part of the P Diddy story and were present at these parties. It seems part of a larger pattern. The Old Establishment is compromised in ways they are not even aware of. The New Anti-Establishment knows exactly who is compromised (because all that data is digital – videos, emails, calls) and will use this information to seek power as the traditional players in politics lose control over the election process. This would explain why some Tech Bros are hugely excited, and some are remarkably taciturn as they throw massive money at the political process. It also explains why Jeff Bezos appointed Will Lewis to The Washington Post and kept him there over staff objections. We now live in a world where the peccadilloes of Old Establishment figures are easily available to industrious journalists who know how to tap into the digital twins of politicians. His so-called “shady” tactics for Rupert Murdoch, are exactly what is needed to overthrow an Old Establishment and make way for a new Anti-Establishment. The Tech Bros are now waging a guerilla war against old fogeys. The P Diddy story marks the start of a new kind of political warfare.

Izabella Kaminska, formerly of Alphaville at the FT and now running The Blind Spot, has been digging into this idea. She, like Niall Ferguson, suggests that this year is like 1988/89 in the old Soviet Union – the year that the technocrats and oligarchs stepped in to take over a dysfunctional state. Like then, we have ever-more ancient political leaders who cannot resolve their disputes or make the country work better. The public is impotent (except at the ballot box) and pretty much clueless about the goings on in the corridors of power. Eventually, as Lenin said, “Things fall apart; the center cannot hold.” The main person in politics to clock this possibility that tech might be central to resolving the mess is, wait for it, Kennedy. That’s why he picked an AI/Silicon Valley person as his running mate, Nicole Shanahan. The idea from the start has been to let tech help resolve the problems if humans can’t negotiate their way to an acceptable outcome. If Tech Bros effectively takes over, Kennedy and Shanahan will be seen as the Godparents of the movement. Note that all tech innovation can go both ways. Musk and Thiel and others are clearly both terrified of and thrilled at this opportunity. AI is cool and scary. But, Kaminska makes the case that a dystopian tech-driven future might also unfold in her lecture on the “Uberization of the Economy.” I see the upside and downside. Both have to be managed. But, if we have no clear winner today or in teh next few days, it is likely to give the tech community a window to gain greater influence over the political arena.

The Washington Post advises everyone to “Keep your Head” because things might not go as hoped. Whichever side wins, the New Anti-Establishment sees a window of opportunity to turf out the Old Establishment on both sides. Can this happen without a fight? The real danger is that we end up far from anyone having a mandate and instead end up in a muddle. Then, it’s going to be guerilla lawwarfare.

If I were China or Russia, might I choose this fragile moment to introduce some geopolitics to this already explosive cocktail? Yes. Russian fighter jets are now in China for the first time. Yes, it’s ostensibly for an air show, but it’s also an “air show.” But, both China and Russia are in the midst of serious internal fights. Xi is increasingly under pressure from the Communist Party to stop talking about war and start making headway on improving incomes. President Putin keeps hacking away at his inner circle, which leaves ever-fewer supporters around him. Russia can’t seem to get anybody in Washington to pay attention, no matter how much they threaten to nuke the world. And that’s the real difference between Russia in 1988/89 and America today. The US knows how to change. It knows how to break things fast. It knows how to move on. So, whatever happens, the US will figure things out. Yes, it may be messy. But it won’t be lights out, free-for-all civil war. It may be a sophisticated, nearly invisible, uncivil war. In Russia, purges bring things to a halt. In America they speed things up. America’s belief that a technology-led future will be a brighter one diminishes the chances of this election descending into something that can’t be recovered from.

If Trump loses, the Democrats will still be hugely influenced by the Kennedy factor. The issues he has raised for the Democrats will not go away. Their cozy alignment with various industries – pharma, food and the so-called military industrial complex is not proving to be a vote winner for them and they know it. The young are not on board. Their belief in a surveillance state is not winning the public over. Their approach to immigration isn’t working. Frankly, if Trump loses it won’t be because the public affirmatively voted for Harris but because they could not stomach the anger and vitriol that Trump descended into at the end. Why is it so hard to be Presidential? To be magnanimous. To bring empathy to the task? These have been Kennedy’s questions from the start.

The markets are still betting that Trump wins. Word is that the heads of the major financial institutions are privately saying that it’s going to be a Trump win. That means Kennedy will be unleashed on healthcare, environment and more. He won’t hang back, especially because Trump won’t be running again. Therefore, there’s no need to worry about campaign contributions. The markets are not yet properly discounting what this will mean. If Harris wins, Kennedy will be her most formidable critic and opponent. RFK will remain center stage either way, asking both sides to come together. Red + Blue = may mean the future is purple.