Vincent Catalano

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The Capitalization Game open.substack.com/pub/thecapit...

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ICYMI. Destruction of the East Wing of the White House began today to make way for Trump’s ballroom.

Distraction 101

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"With the major components of his agenda now coming into focus, President Trump has already left an indelible mark on the U.S. economy. The triumphs and turbulence that may soon arise will squarely belong to him." What could possibly go wrong? www.nytimes.com/2025/07/09/u...

My next appearance on Bloomberg radio is today at 4:05 pm ET. www.bloombergradio.com

Donald Trump will do everything in his power to avoid doing something in which he will be held accountable.

Trump is in a real bind when it comes to Iran. He has to do something he absolutely hates to do: be held accountable. Will be interesting to see how he bobs and weaves his way around making a decision that he has to own.

Trump understands America better than most people. He understands that America is mostly about the gullible and the greedy. The MAGA and the money. He plays one while enriching the other – and himself.

Perhaps a little deep for most non investment professionals. That said, maybe give it try. www.linkedin.com/posts/vincen...

Re the stock market: We're now approaching the erosion phase of a bear market. If I am right, the next phase will not be dramatic (until the end) but a steady erosion of stock prices until in a final panic phase. In other words, we're near the last stop before the train starts sliding downhill.

Will stagflation be as bad this time around as it was in the late 1970s? Apparently, Stephen Roach thinks so - maybe worse. open.substack.com/pub/stephenr...

Here’s a little something I am working on with the aid of AI.

As per Torsten Sløk, Apollo Chief Economist.

How low can the market go? Let's do the math: 16 x $262 = 4192 4192 - 5138 = -946 -946 / 5138 = -18.5% P/E x operating earnings for 2025 = estimated level S&P 500 estimated S&P 500 - current S&P 500 = probable change -946 probable change divided by current level = -18.5% When? Mid 2025.

Anyone looking for a reason why Trump’s support will erode need only look at this chart. Who stands to lose the most as the federal government cuts back?

Gödel’s loophole. It is already operational in the US. The Norm Death Spiral Every broken norm that goes unpunished becomes a precedent. What used to disqualify now galvanizes. We’re in a moment where norms no longer enforce behavior—behavior redefines the norms.

Trump Lashes Out at Powell, Says ‘Termination Cannot Come Fast Enough’ WSJ April 17, 2025 www.youtube.com/watch?v=Qmee...

If Trump can disregard the rule of law (courts, country agreements, migrants, etc.), is it not logical to assume he can disregard business law? Would it not be prudent for a business leader to withhold spending for the future (capex) and preserve capital for the sake of sheer survival?

"To build may have to be the slow and laborious task of years. To destroy can be the thoughtless act of a single day." Winston Churchill.

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Who knew drill, baby, drill meant drive the price of energy stocks into the ground!?!?

Anyone looking for the stock market to be their avenging angel, to right a wrong, they should drop that thought asap. The financial markets are amoral. They exist primarily for the purpose of making money. Full stop. They do not exist to make things right. They are not your avenging angel.

Q: Why do stocks go up and down? A: Because they can. It’s called liquidity. Easy in, Easy out. Q: But aren’t investors in for the long term, like Warren Buffett? A: Not all are. Most short term swings in stock prices come from short term players. e.g., hedge funds Up, down. Easy in, easy out.

“Trust is like glass. Once broken, it may be fixed, but the cracks will always be visible.” Arthur Schopenhauer

He can’t even admit he's wrong. He has to produce a convoluted statement using convoluted logic to justify his capitulation to his true master - the markets - as follows:

WSJ headline: Stocks Surge as Trump Authorizes 90-Day Pause on Some Tariffs Real headline: Stocks Surge as Trump Caves.

Hubris + Zero-Sum Thinking = Unsustainable Strategy

Markets rally today. Investors come to the conclusion (for the moment) that Trump is just crazy not insane. Phew! Thank God for that .... what? wait? uh oh....he said what?...

The thing to remember regarding the stock market is everything is relative. If your portfolio right now is focused on capital preservation (e.g., low risk assets, cash) when the carnage ends your ability to buy low to later sell high is enhanced. Relative performance. It's called generating alpha.

The baby is being thrown out with the bath water. Selective buying is prudent.

ICYMI.

Donald Trump, tech bro MD. Diagnosis: Patient has a rash on her arm. Treatment: Cut off the arm and replace with a prosthetic.

"GOP Lawmakers to Worried Businesses: Let’s Try to Wait Out the Tariff Turmoil" WSJ “We’ve never seen this before, right?…And it’s unclear exactly how it’s all going to flush out.” Sen. Todd Young (R., Ind.) Yes, senator we have seen this before. Yes, senator we know how this is going to flush out.

“While uncertainty remains elevated, it is now becoming clear that the tariff increases will be significantly larger than expected,” Mr. Powell said. “The same is likely to be true of the economic effects, which will include higher inflation and slower growth.”

“While tariffs are highly likely to generate at least a temporary rise in inflation, it is also possible that the effects could be more persistent,” Jerome Powell April 4, 2025 What to do? What to do? Wait! Maybe Trump's national security confidant Laura Loomer has the answer.

“While tariffs are highly likely to generate at least a temporary rise in inflation, it is also possible that the effects could be more persistent,” Jerome Powell April 4, 2025 This clearly puts the Fed in the stagflation box. Cut rates = boost inflation; rates up/unchanged = weakening economy.

Now I get it! The slogan America First is actually the first two words in a longer slogan: America, First Wreck The World Economy.

Has anyone heard from Trumpian supporter Jeff Bezos yet?

One seriously concerning factor re Trump’s decision-making is who he listens to: "White House Fires Several Members of Trump’s National Security Council The firings come as right-wing conspiracy theorist Laura Loomer raised concerns to Trump about the allegiance of some of his staff" WSJ

"In the context of stocks, a "plunge" refers to a sudden and significant decrease in the value of a stock or the stock market as a whole..." "A bear market is a period of prolonged decline in investment prices…" Steady down. What we have right now is a plunge - NOT a bear market. That's next.

Stocks remain sufficiently oversold (red arrow), April is the third best performing month of the year, tariffs are fairly well publicized (details remain), year ahead corporate guidance is weeks away. Odds favor a short term rally.

Did you know that Donald Trump loves MAUI? Not the island. The phrase Make America Unrecognizable Instead. MAUI. And, like the island the devastation to hit the island, so, too, Trump is doing his best to do to America what Mother Nature did to the island. Enter Tariff Day. MAUI has arrived.

Would you say this is Donald Trump's approach to adversaries and allies alike: First threaten. If that doesn’t work, then make life unpleasant hoping the target gets the hint. Then attack.

What does Sherlock Holmes, Inspector Clouseau, and Albert Einstein have to do with investing? Tune in to Bloomberg radio on Monday, March 31 at 3:40 pm eastern to find out. www.bloombergradio.com