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This week, we will deviate from the usual macro/energy-heavy content (there is some at the end if you want to skip the kids’ stuff and go right to the macro) and discuss something close to many people’s hearts.
Have you ever lost sleep over your kids? Do they have friends? Are they happy? Are they doing well in school, work, or relationships?
Did you do the right thing in [fill in the blank from a long list of parental choices]?
Did you do enough, too much? Did you over-parent or allow too much free-range, unsupervised activity?
Did you keep them safe or rob them of agency?
I could go on. You know what I mean, right? It’s endless.
You thought it would stop when they go to college, graduate college, or get a job. But it doesn’t. The stakes get higher, and you have less control as a parent.
Small kids, small problems. Big kids…
Don’t Just Survive Them - Think About What You Want To Pass On (in addition to the DNA)
Toward the end of my sons’ high school (Class of 2018), I panicked that I would never have enough time to tell them everything I thought they needed to hear from me, so I wrote it all down in an e-book I gave them.
It contained lots of advice I wish I had received at their age. It is not a long document - about 6,500 words in total.
Here’s the Table of Contents and a few wisdom bite extracts:
...Working hard is applying the right amount of effort - however much that might be - until your talent begins to shine. Working smart is husbanding your resource so you don’t wear yourself out in the process.
...People act poorly, let others down, betray trust. They have their reasons and, sometimes, they do it for no good reason. Forgiveness is an interesting thing. We start off thinking it benefits the transgressor. What we learn is that it loosens the hold of the betrayer to continue to hurt us.
...Your goal is make sure that more of the things that shape your life are made to happen by you. Passivity is an invitation to be pushed around by others or by events beyond your control.
...Don't chase perfection. There is likely more than one good choice. Marriage is commitment. Alternatives exist but none works better. It is a fence to keep you safe. It can be climbed, but at a cost. You will have doubts, perhaps regrets. Look first within before you blame. The struggle you avoid may come again elsewhere. Couples must evolve.
They told me they had read the book. The way they are living their lives tells me they did. The advice still seems right to me ten years later.
None of this would have mattered if I hadn’t modeled this behavior for them.
So, here’s the real wisdom
Your kids’ BS detector is very sensitive. They know that you, as a parent, will make mistakes. Own those mistakes, admit them, and apologize to your kids if necessary. Your authority will not be diminished because of that.
Teach them resilience.
Life is unfair and throws curve balls.
You won’t always be there to pick them up.
They need to experience sadness, failure, pain and know how to survive them. If you don’t let them have these experiences while they’re with you, how will they cope when you’re not?
Warning: this is probably the hardest thing you will do as a parent.
Teach them to add value and recognize they need to be useful to others and contribute to the world.
Teach them to be kind humans by being kind while they’re in your care (kind doesn’t mean no discipline).
By the time your kids leave for college, 90% of the time you will ever spend with them will be gone.
If you ever want to be friends with your kids, you must be their parents first.
Your job is to provide the environment in which the child you care for can emerge - your job is not to mold them into the person you would like them to be (or want to be yourself).
Relax: 50% of the journey was over when you handed over your genes.
Yes, you have a role in the other 50%, but it’s mostly feeding them well and finding them the best school you can.
Have some fun as a parent - it teaches your kids it’s not all about them!
He works hard to produce good content, and last Saturday, he put on a tour de force of interviews in a live format that you can buy here. It runs well over 10 hours, but you can reduce that by watching at 2x.
I took notes and ran them through Perplexity to give you a taste of the content.
The conference provides insights from various economic experts (links to X profile included or, for Lacey Hunt and Scott Bessent, Wikipedia):
Lacey Hunt emphasizes the detrimental effects of government intervention on the economy, highlighting issues like debt and inflation.
Stephanie Pomboy discusses the disconnect between Main Street and Wall Street, concerns about Treasury market stability, and investment preferences in gold and energy.
Fred Hickey expresses skepticism about job numbers and AI growth, suggesting a shift to precious metals and treasuries.
Darius Dale maintains a "Goldilocks" view but anticipates liquidity challenges.
Michael Pento warns of inflation, debt instability, and potential bond market collapse.
Michael Lebowitz discusses bond market adjustments and interest rate sustainability.
Steven Bavaria emphasizes credit investing for stable returns.
Brent Johnson's "Dollar Milkshake Theory" predicts a strong dollar amidst global rate cuts.
Lyn Aldensuggests owning hard assets like gold and Bitcoin during inflationary periods.
Melody Wright observes a slowdown in sales, rising mortgage rates, and potential market intervention needs.
Rick Rule advocates for natural resources investment due to long-term underinvestment and currency deterioration.
The content was consistently excellent, and as Tom Peters said, “If you’re not confused, you’re not paying attention.”
Forest For The Trees Commentary
I also follow Luke Gromen’s newsletter, Forest For The Trees. It focuses on the ten most interesting takes from the previous week and brings a slightly different take from the mainstream media.
Point 10 from the 10/19/24 letter discussed a comment from one of Trump’s key economic advisors, Scott Bessent. Bessent was Chief Investment Officer for George Soros Fund Management business and has a history of orchestrating huge currency bets against the UK pound and the Japanese Yen.
“Trump would not weaken the USD, says adviser Scott Bessent” (in recent FT article)
Bessent suggested that Trump “stands by the USD as a reserve currency”, but that “the reserve currency can go up and down based on the market.” i.e., A weaker USD would NOT be the end of USD reserve status, but simply a “market adjustment.”
And “free market adjustment of the USD” does roll off the tongue a whole lot nicer than “USD devaluation” for those in the halls of power in a Washington DC where perception has mattered much more than substance for much of our adult life, and which has therefore led the Washington Consensus to “manage policies to optics, rather than outcomes” for much of our adult life.
If the USD falls sharply “due to market forces” but there is no explicit “USD devaluation”, was the USD actually devalued? Based on our experience of the past 30 years, the Washington Consensus would argue, “No, the USD was not actually devalued.”
Allow us to make the point graphically: The chart below shows the aggregate current account of the BRICS+, plus the biggest current account surplus allies of the US – EU, Japan, South Korea – v. the current account of the US.
The yawning gap between the two lines is resolved under the current system by the US running a Capital Account surplus – i.e., the “UST Export Business”, where Washington and Wall Street win on a relative basis v. the rest of the US that produces stuff.This arrangement worked well for a long time, but the rise of China, the now-demonstrated US inability to fight one major conventional war let alone two because our defense industrial base has been too hollowed out, and record levels of US wealth and income inequality, along with disturbingly rising levels of domestic political instability means it is no longer in US interests for this gap to continue…so one way or another, it will not.
What Trump (and we think Bessent) are saying is that the USD will remain reserve currency, but this gap will be closed by the free market as the UST increasingly loses its primary global reserve asset status to gold, as the USD and other currencies are allowed to “freely trade” based on their Current Account Balance of Payments……in which case the USD is by far the dirtiest dirty shirt in the world, relative to gold and by extension, relative to Current Account creditor currencies (JPY, CNY, EUR in particular.)
The resulting oversupply of USTs will force the monetization of those Treasuries (either directly by the Fed, or via Fed proxy such as bank SLR exemptions for USTs, Treasury buybacks, etc.) offering a mechanism for sending the USD down, and, aided by a program of strategic tariffs, drive the reindustrialization of America, a narrowing of wealth inequality, and a calming and then declining of US political instability.This would be bad for the USD and the real value of LT USTs and long-term western sovereign debt more broadly, but positive for gold, US equities, US nominal GDP growth, US working and middle classes, inflation, and the US (and the world) as a whole.
The US will have to produce more of its own consumption, and China, et al, will have to consume more of their own production.
Takeaways from TM Conference and FFTT
Gromen frequently points out longer-term trends in the macroeconomic environment. The timing is uncertain, but the direction is clear.
He has been bullish on gold and Bitcoin for a long time and has been correct.
He predicted that government debt problems would require the Federal Reserve to continue supplying liquidity to the market whenever conditions appeared unstable. He has been correct.
It’s worth paying attention to Bessent’s explanation. Whether you hate him or love him, Trump has 50% chance of winning the Presidency.
These themes echo some of the commentaries in the TM conference. What does this tell us?
We have to be careful to trade and invest in the market we have rather than the market that economic commentators tell us we have.
At the moment, economic indicators are strong:
GDP is still growing.
Employment is positive but softening.
Liquidity is in abundant supply—lots of money is chasing stocks—but price-earning multiples are high, and valuations look stretched.
Inflation seems to be in check and heading down.
So:
Be cautious and perhaps take some profits, leaving the proceeds in cash or short-term T-Bills.
Consider increasing your gold holdings if you have less than 10% of your portfolio in gold.
Take a look at silver: it’s beginning to move up.
Take a look at GDX - an ETF that is focused on gold miners, who generally lag the performance of the raw metal.
Take a look at industrial equities focused on producing ‘stuff’ for the electrical grid because they are likely to benefit from the increasing focus on domestic manufacturing.
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I am planning to publish the book...
Love today‘s mix of topics, clear and concise takeaways: thank you for this.