Political intelligence that matters to markets

A business or an investment fund is simply a betting pool for people who have coin or credit. The bet represents all the information that the investor has acquired over some period and the dollar amount of her bet represents the minimum cost of the information acquired. This means that the actual cost of creating the investment fund, asset, or business means nothing to the investor.

All that matters is an outcome that recovers her cost for accumulating information that helps her determine whether her preferred outcome-a return of and on her capital-will be realized. Information on sunk costs mean nothing to her (much to the chagrin of the run-of-the-mill economist).

For information traders entering information markets what should matter is providing information that addresses existential threats to profits and revenues. The information trader must have awareness of the outcome the investor is interested in.

Investors watching political markets are interested in whether a decision poses an existential threat to a firm or a firm’s profits or revenues. Existential threats posed by government come in the form of a revocation of a license, denial of access to natural resources, or denial of access to financial capital. The investor wants to know the likelihood of the occurrence of these events.

In hind sight this is why the Trump Effect became vacuous. The expectations surrounding the Trump administration’s impact on investment never took into account government’s prime operational mandate which is to exploit the natural environment of a physical area. It does this by managing the extraction of resources from that physical area. In the case of American government, it has determined that extraction would best be carried out by a private sector driven by a profit motive.

Businesses provide efficient methods for extracting resources and converting the resources into “taxable events” i.e. goods and services for sale. Businesses convert human resources into taxable events by employing labor thus making humans available for taxation by government.

The subsequent uncertainty experienced by the financial markets post Mr Trump’s inauguration was the result of investors listening to the “emotional marketing” of the 2016 campaign. Rhetoric regarding bringing back manufacturing jobs into a political economy that favors information as its primary resource or building more bridges to nowhere via infrastructure knowing that the multiplier effect is limited by a project’s termination date was baseless but pulled on enough heartstrings of investors that they forgot or were forced to overlook even further government’s prime mission.

Also, the financial markets can’t risk forgetting that the U.S. is a federal system and states have to be considered when assessing the American economy. States have to be on board with any policies that address contraction or expansion of licensing or access to natural resources. For example, it is one thing for the federal government to increase access to radio frequencies by mobile telephone companies. But if the states do not put in place rights-of-way policies that allow mobile phone companies to deploy tower facilities, then having a license to transmit wireless signals is meaningless and the firm faces a scenario of less revenues.

When discerning what information matters, the focus should be on political information that threatens the continued existence of a firm or threats to its revenues and profits. Investors need to discern between the emotional or campaign marketing noise and substantive political intelligence that addresses a firm’s existence.

Donald Trump and James Comey: Does uncouth equate to bad morals and impeachment?

In my best Heath Ledger/Joker voice, “Batman has no jurisdiction.” I think of this line today after reading a report in Reuters about former Federal Bureau of Investigations director James Comey’s assessment of the morality of current president Donald Trump. The book, set for release tomorrow, will detail Mr Comey’s four month tenure in the Trump administration. Mr Comey asserts that Mr Trump is morally unfit to sit in the Oval Office.

The assertion is likely to lift the spirits of many anti-Trump voters who have been hoping that the President’s alleged links to the Russian government will turn into a political noose and lead to an early exit from the White House. Mr Trump has been relatively out of the media spotlight for the past week given the Congressional hearings that were held regarding Facebook’s privacy shenanigans. He has managed to reassert himself quickly into the headlines with last Friday’s missile attack on Syria’s chemical weapon facilities. I suspect that attention will be diverted away from Syria long enough for Democrats to push their talking points and roil up their base.

So far the most tawdry event noted in Mr Comey’s assessment of Mr Trump is an alleged incident involving Mr Trump’s presence in a Moscow hotel room where two prostitutes were allegedly urinating on themselves. Being in the presence of this type of behavior would be off-putting to most Americans. Mr Trump has denied witnessing the event and Mr Comey admits he has no firm evidence the event happened or that Mr Trump was even present if the event happened at all.

One question that comes to mind is, assuming that the event occurred, should the event give buoyancy to arguments from the left that Mr Trump be impeached? My answer is no. Article II, Section 4 of the United States Constitution reads:

“The President, Vice President and all civil Officers of the United States, shall be removed from Office on Impeachment for, and Conviction of, Treason, Bribery, or other high Crimes and Misdemeanors.”

The event is alleged to have happened in 2013, almost four years before Mr Trump took office. In addition, if watching prostitutes pee on themselves in Moscow is legal, I see a very weak argument for convicting him of a crime. “Batman” has no jurisdiction in Moscow.

Another question I have is, what is immoral behavior and does such behavior disqualify a president? Morals are defined as standards of behavior or beliefs concerning what is and what is not acceptable for a person to do. Morals are personal codes until society expresses its disagreement with them and codifies that dissatisfaction in law or statute. As head of a democratic nation-state, Mr Trump is expected by many Americans to manage his personal code within the parameters of community expectations. For a man who reportedly has no problem expressing a tough guy Queens personality, being a boar may not go over well with a progressive socialite from San Francisco. Such behavior, whether it occurred prior to or during the presidency may considered disqualification as head of state, if not head of government.

Going forward, the allegations will not mean much for capital markets. They do not speak to Mr Trump’s management of public capital or the institutions that manage or influence the allocation or distribution of capital. The allegations do put a further dent in Mr Trump’s ability to persuade, probably the most important power a president has. And in the political marketplace, bad optics drives down a political actor’s brand and market value.

A reining in of the political media should be expected under a nation-state model

Forbes reported today about a statement of work issued by the U.S. Department of Homeland Security on 3 April 2018.  The statement of work seeks prospective vendors capable of providing the Department’s National Protection and Programs Acquisition Division with the capabilities to monitor traditional and social media. The specific objective of the services is:

“Services shall enable NPPD/OUS to monitor traditional news sources as well as social media, identify any and all media coverage related to the Department of Homeland Security or a particular event. Services shall provide media comparison tools, design and rebranding tools, communication tools, and the ability to identify top media influencers.”

The statement of work does not get into any specifics as to why the Department would need such a program. It could be one of three reasons. One reason could be a push back by the Trump Administration on what it calls “fake news.” Mr Trump has shown a disdain for what he terms as unfair reporting typically from media perceived to be left leaning. He has no love for CNN, a lack of love expressed with so much disdain that he came out against the Time Warner-AT&T merger, one that is now being challenged by the Trump Justice Department.

The second reason for the proposed statement of work may be to create another tool for dealing with the media attacks a Russian troll service has been accused of. By monitoring media influencers, the United States could make a preemptive strike against journalists, bloggers, broadcasters, etc., that spread fake news and set the stage for divisiveness in American politics.

The third reason I see is that the political media has to be reined in by the nation-state. Part of the nation-state’s political ordering of and for society should include keeping the collective in order by controlling the messaging. While some spin is allowed in order for news organizations to establish some type of brand differentiation, i.e., MSNBC leans liberally forward while FOX is conservatively fair and questionably balanced, the general messages issued by the nation-state via the political media must be uniform enough to keep the masses in line or distracted. Too much spin to the left or to the right creates chaos in the collective, a disturbance in the force that the nation-state cannot afford.

I believe reason three is the purpose for the Department’s statement of work. Some Americans may see the proposal as an attack on a free press, but has the press ever really been free? Except for the occasional “breaking news” (which amounts to a press secretary given their favorite reporter or a reporter they can use the first shot at a story), most political news is initiated by a state actor with the media being tasked for commercial and political reasons for distributing it.

Probably over the weekend we may see some discussion on the meaning of a “free press.” Given that this story is not even trending on Twitter anymore has me wondering how seriously the media is taking the Department’s action.

Trump calls out the big guns at the Mexico-United States border…

A few moments ago, President Donald Trump issued a statement describing his authorization of national guard troops to provide back up for federal customs and border agents along the Mexico-United States border. Mr Trump caused a little confusion on 3 April 2018 during a conference with some Baltic region presidents when he told the press that the Administration was “preparing for the military to to secure our border between Mexico and the United States.” Military was a poor word choice thus the confusion not only in published press reports but on the part of the Mexican government as they considered Mr Trump’s proposal last Tuesday..

Under 18 USC § 1385, no part of the Army or Air Force can be used as a “posse” to execute any U.S. laws. The Department of the Navy has rules that follow Posse Comitatus Act, but I can see a president trying to get around that hole in the law by arguing that the statute does not specifically prohibit the Navy and the Air Force from playing police.

Under 10 USC § 12406, however, the president can “call into federal service members and units of the National Guard of any State in such numbers as he considers necessary to repel the invasion, suppress the rebellion, or execute the laws.”

Mexico may not take too kindly to an implication that their citizens are invading the United States, but a significant number of Americans, particularly those living along the southwest border, may believe that. I don’t see the actions of Mexicans attempting to enter the United States without so much as a visa or passport as being aggressive, especially those who get in front of a border agent and are willing to plea their case for some type of amnesty.

What could be looked at as aggression would be a tragic scenario where a guardsman shoots a foreign national. Gunned down by a federal or state law enforcement agent is one matter. Gunned down by a soldier becomes an international nightmare.

 

30,000 marching in Atlanta is a waste of time

Thirty thousand people allegedly marched for their lives today in Atlanta in protest of the current state of gun control laws. Using children as an indirect attack on Donald Trump is bloody apparent to anyone who has spent five seconds in the strategic communications game. This kumbaya moment is inconsequential and ineffective progressive, left-wing liberal bullshit.

When compounded by the upcoming 50th anniversary of the assassinations of Martin Luther King and Robert Francis Kennedy, the timing of the messaging is insidious. Why grown ass people fall for the emotional optics is amazing and scary.

If these individuals want to put a dent into the gun industry, they should take the direct approach. First, parents need to look into their stock portfolios and divest themselves of any holdings in gun manufacturers or the suppliers of gun manufacturers. Second, parents need to identify any other suppliers of service to gun manufacturers and stop buying their products.

All this marching does is create a video portfolio that the next Democratic nominee for president can use on the campaign trail.

Fox News, kneeling, and the #NFL

Took five seconds to watch a Fox News Facebook stream where the secretary of the Department of Homeland Security is discussing security for some event happening in Minneapolis on Sunday around 6:18 pm.

What I found interesting were the live comments in the timeline next to the video. Let’s just say that President Trump via his State of the Union last night has added to the attempts by many to equate “African American” with “anti-American.” A lot of the commenters expressed their displeasure with athletes who want to “kneel before Zod” versus placing their hands over their hearts acknowledging one nation under “God.”

It probably helped him that the Congressional Black Caucus was there to “stare racism in the face” as they did no clapping or standing for any parts of his speech while looking resplendent in all black and kente cloth. That was to be expected. However, in politics, optics always wins and in an economy where most Americans are not enjoying any upside from the surge in Wall Street (with the exception of the last two or three days), Mr Trump has provided certain factions of white America with an insidious excuse to point fingers ….

….fire rises….

Democrats leveraging a descendant of Camelot against the Orange One

Interesting …. A majority of the population in the United States wasn’t alive when Joseph Kennedy III’s grandfather, Robert F. Kennedy, was assassinated in June 1968. Senator Kennedy picked up a little political capital when he took the opportunity to tell spectators during a campaign stop in Indiana on 4 April 1968 that Martin Luther King had been assassinated earlier that day.

Fifty years later, the Democrats are still leveraging anniversaries and emotions, this time by wheeling out another baby-faced Kennedy who they probably hope will remind urban, white, relatively affluent progressive voters and the grandparents of urban minority youth of freedom trains riding between John Kennedy’s Camelot and Lyndon Johnson’s Great Society….

….Politics. The bullshit is so predictable….

Grab your bag of Cheetos and a couple Big Macs. The Orange One cometh ….