How did your business do during COVID? All good? I suppose if you're business is still standing we can call that a win, right? 70% of Private small business lenders closed their doors during that time, unable to withstand the massive losses from business owners who through no fault of their own couldn't make their payments so, I consider myself very fortunate to still be here. You know who else is still here? This guy and everyone who caused the pain. They're doing just great!
“As democracy is perfected, the office of president represents, more and more closely, the inner soul of the people. On some great and glorious day the plain folks of the land will reach their heart’s desire at last and the White House will be adorned by a downright moron.” ― H.L. Mencken
Last week TACO Tuesday came early as we all waited for the "shock & awe" bombing campaign against Iran which was then suddenly cancelled on Saturday for the umpteenth time. Although I'm glad we didn't face-plant our economy, it's still disturbing to see America's global credibility disintegrate in real time. Now we can all get back to the business of dealing with the inflation, high interest, tariffs and regulatory madness which is our new "normal"
Good news, The Tariff rebates came in! Bad news? It was only for these guys:
"Apple received a $2.2B tariff refund this quarter. Consumers were stuck with the price of tariffs, with corporations now receiving massive refunds from the government, effectively passing Trump’s tariffs, which the president promised wouldn’t hurt consumers, onto the very people he promised to help."
The effects of higher input costs will affect most small business owners eventually regardless of what happens (or doesn't happen) in the Persian Gulf. Most of the effects are already baked in the cake including the critical feed stock elements like Diesel fuel, fertilizer, Sulphur & Helium. Does your business depend on Trucks delivering goods? Shipping? Transportation? How about computers and tech, do you depend on technology at all? The only businesses that seem to getting all the juice are anything connected to AI which itself depends on stuff like data centers which use massive amounts of copper, fuel, water, and money. Lot's and lot's' of money! How's that going?
"Markets have a habit of explaining every move with the most obvious narrative available. This week, that narrative was earnings. Investors spent days dissecting cloud growth, AI capex, free cash flows, and also Fed messaging, while some of the most dramatic price action of this summer was being driven by something else entirely.
That "something else" was Situational Awareness, the AI-focused hedge fund run by a 24-year-old whizz-kid, which reportedly had to offload most of its public equity book to Citadel following the recent tech rout. It turns out that loading up on leverage and high-beta names works both ways, also if you're exceptionally smart. In a market where everyone is a momentum investor until they become a forced seller, those unwinds are never pretty. You take the escalator up, but the elevator down."
One industry I expect to benefit is anyone who makes weapons and their vendors:
"We had spent years or even decades accumulating our enormously expensive arsenal of “boutique” weapons, only to have now expended a large fraction of those munitions during just a few weeks of combat against Iran, combat that failed to achieve any of our stated military objectives. A recent CSIS report fully confirmed this situation, indicating that in many categories we had exhausted at least one-third to one-half of our entire global stockpiles, which would take years to be replenished."
The only thing we are "obliterating" is the middle class and the small business owners who make up a large part of it. It is interesting that the 1% control around $4 Trillion, the bottom 90% control the same amount but, the middle class controls $170 Trillion. Thats right. THAT is what "they" are coming for.
Normally this is when I get into the micro-aspects of the economic conditions which affect small business owners such as interest rates, loan availability, inflation and future expectations. Franky, after the last few weeks I have no clue what to expect anymore. There are of course some things I can say with certainty that are steamrolling right for us like Diesel shortages, computer chip shortages, stagflation (higher prices - stagnating incomes), higher interest rates (unfortunately), shrinking consumer demand and more TACO's! I can't help but think a lot of this is planned but I tend not to put too much credence in conspiracy theories about decisions that can easily be explained by incompetence and abject stupidity. One thing I keep noticing is that the protagonists of these problems are unaffected by the pain they cause. No one in the ruling echelon's of power is currently suffering the effects of the policies they implement. Sure, they may get "owned" by some plucky reporter or "thrashed" live on TV by some grandstanding senator but they are completely insulated from the suffering I see in most small businesses.
We need to ask ourselves what price is being paid for these catastrophic policies? Thomas Sowell put's it best:
Here are a few interesting articles I saw last week:
"America may be rapidly approaching “tank bottom” in its stockpiles of advanced munitions."
"DID YOU GET YOUR TRUMP TARIFF REBATE?"
"There was no “mass deportation.” RFK, Jr. looks like a lost lamb, and has not been allowed to Make America Healthy Again. We are engaged in a nonsensical war with Iran. We captured the president of Venezuela for no apparent reason. Trumpenstein has threatened everyone from Greenland to Cuba. And not a single Deep State villain has been prosecuted. Trump now loves “Little Marco” Rubio, the globalist tool who is as devoted to Israel as he is. Elon Musk and DOGE- the best thing about the second Trump administration- are long gone. And accomplished nothing. Trump said recently that Americans should embrace the new data centers."
"It's getting worse. Diesel rationing is right around the corner."
