The Orange Phoenix - Part II: Reflecting on US Political Pathways, Alternative Universes & Despite a Trump | Vance Victory, 'job not done' ?

This is the second part of the Orange Phoenix series... which we will be running all the way into Trump getting back to the White House & through the next 4yrs of the Trump | Vance administration.

In this piece, we touch on a cocktail of topics including: ???????? ???? ????????????, ???????? ????! The implications of JD Vance as VP, as well as potential pathways for the Dems. Lastly, yet perhaps more importantly, we touch on an alternative universe, where Trump did not turn to the right just before the assassin's bullet was fired.

So last Sun (14/7), the Ascent Capital - Strategic Investment Advisory squad put out what was likely one of the fastest, concise & framework-driven pieces shortly after the attempted assassination of Donald Trump.

When you are sitting at the intersection of special situations, event-driven, global macro & AI... you more often than not, will get things fabulously wrong, as you're dealing with incomplete information in a dynamic moving environment. If you wait for perfect information the opportunity has moved on, or the danger has crashed through your book.

Yet you will also hit some truly epic spots now & then from a Global Macro lens, that truly go down into history - for context:

Now these events & dates are by no means exhaustive, yet are noted as some of the major structural shifts that you can see taking place from a Global Macro lens. When new structural changes overwhelm the dominant trends regardless of their merit.

The epitome of Global Macro investing, is to be able to go to where the puck is heading, to maximize your upside whilst limiting your downside.

True global macro trends likely have a short time frame of 12 to 24 months, a medium time frame of up to 3-6years & longer time frames that can run for decades.

It's not about next wk's CPI number, or the fact that as of Sun 21 Jul 24, the market is pricing in a 94% probability of a 25bp cut from the Fed on their Sep 18 meeting. Which for those of you smart enough not to be watching that metric, is a very high probability, especially as this could potentially be the first cut in over 4yrs.

Global Macro encompasses everything: From Monetary Policy to the often forgotten side of Fiscal Policy, to Geopolitics, to Demographics, to Technology, to History, to Constraints, to Human Nature.

It is asset class, sector, geographic & positioning agnostic. We may have a phase where all we are looking at is energy, another year where most of our focus is on crypto, yet another where we playing defense as the only thing that is clear is a lack of clarity.

Everything at the end of the day is probabilities, few things in life are 100% certain, certainly not taxes & soon not even death - check out Immortality Dude Bryan Johnson to get blown away at what is possible. Anything that is revolutionary, always looks batshit crazy & insane at the beginning.

Quick MTM & Reflections on Some Market Cadence??

Going back to our piece, crypto seems set to close positively up for its second consecutive week. This may not sound like much, yet it's pure nirvana when you've been trying to find a floor in what had otherwise been a bearish supper. Most of the traders in crypto would have totally missed these moves, as we've had more false starts than a Biden speech.

BTC seems set to be finishing the wk up +10% at c. $67,000 - which means you likely have some alts that have easily done anything from +20% to +50% over the course of the week. These are delta-one moves, no leverage for you masochistic types.

US markets were down for the wk, as we got the second consecutive down week of most of the big seven techies being sold off (i.e. $NVDA -9%, $117.93). On top of that, it's worth noting CrowdStrike's "crowd strike", occurred as the Asia Fri day was kicking off, which added dampeners on markets in general. One can already see the comedy line-ups, this is a company that takes your security so seriously, that they will shut it all down, so no one can access your computer, including yourself.

Incidentally how $CRWD was down only -11% to close at $304.96 on Fri, is beyond our faculties. Seeing the anchoring effect on a lot of the bullish posts on $CRWD, which is worth noting was trading at a +300 P/E prior to Fri.

The reputational costs to this cybersecurity darling (was up over +50% YTD prior to the faulty software upgrade) will only be dwarfed by the likely damages that will be brought to it. Which is likely going to be in the billions - expect the mother of all investigations from sovereigns around the world & governmental regulatory agencies like the SEC.

Probably the clearest pathway that deciding where it's a buy or if it's still a short here, is looking for a competitor to benefit like $PANW which closed up 2.2% at $380. If we had to make an aggressive opportunistic argument for what has played out, it would be the likes of a Google, Microsoft, Alibaba, Apple, SalesForce, Palantir making a play for CrowdStrike - it would definitely take care of the branding nightmare that would otherwise handicap the stock for a long time. Yet they would have to get comfortable with the liability risk, which will be 'Huge'.

At Ascent Capital - Strategic Investment Advisory we still think a Trump presidency will be net bullish for US assets in general - as that administration will be seen as more pro-business than the Biden-Kamala part. Yet one can naturally see some increased tailwinds & uncertainty in different parts of the world, in particular North Asia equities, such as China, Hong Kong, Taiwan & South Korea - based on previous actions as well as noise on trade, US protection & general US foreign policy. Trade is something that Trump can be signing off on, on day one & it's certainly an easy one to just let his global peers know, that the big dawg is back.

Quick Check-In on soon-to-be POTUS #45 & #47 ??

Whilst everything is possible - & he naturally has to survive any more "loud noises" as per the New Woke Times - to us it is incredible that people believe there is even a credible pathway where the democrats have a fighting chance. Yes, the odds of a presidency as of this weekend are at 70% & yes, it will fluctuate as we get closer to the election day.

Yet as we stated before, this election is over. Whether it's Sleepy #46 on the Dem ticket, Kamala, Obi, Michelle, Slap Smith, hell even the O.G. himself Bill Clinton... it's all a little, too late. You reap what you sow, either way, the dems have put themselves into Zugzwang. This is a context in chess, yet often not appreciated enough in life. It's when you are in such a convoluted situation that literally anything you do, will just make the situation worse. The academic term in military parlance is FUBAR {Fcked Up Beyond All Repair}.

Even for the majority of Americans who consider themselves democrats, the fact that there was a long orchestrated cover-up on the cognitive decline of Joe Biden, in arguably the most powerful & important seat in the world, is not something that will be swept under the rug overnight. The person people thought was running the WH, has likely not been running it for a good 2yrs. There will be whistle-blower interviews, books & no doubt, a Netflix-Prime-UTube series on this. The modern-day equivalent of House of Gardens, except likely a lot sadder to be frank.

If Biden does step down, which is highly likely (as of this wk Polymarket had him at c. 22% for staying in the race), then how can the party pass on Kamala Harris - who is a minority to the power of two, being both a woman & non-Caucasian - to say another democratic candidate. And just what is that candidate going to achieve over Aug, Sep & Oct before the Nov 5. Almost everyone had forgotten about Kamala until the debate from a few weeks ago.

The smartest thing the blue party can do, is literally take the bullet. Let Biden die on the hill & look to restructure the party for 2028. Move from a party that is being perpetually hijacked by extremist views that cater to a small minority of society, that somehow seem to control the megaphone, to something that is more centered. Look for sustainability in the fiscal side of the country, because as we mentioned many times over the last year, superpower or not, reserve currency or not, you cannot play exponentially compounding games with increasing debt without structural consequences for your society, your citizens, your sovereign state & your influence as a world power.

The same issues that Team Blue has, are in many ways symmetrical to the same issues that Team Red under Trump & Vance will face. This makes sense, after-all any winning administration inherits a country whose balance sheet is stretched (+123% gov debt to GDP, +$33T in debt, +$1T in debt added every 100D, +$1T in interest commitments, oh & by the way we keep sending trillions overseas [$5T over the last 20yrs] & printing money as if we are in a recession).

Yes, the US can play this game for a while, because on a global stage, it's once again TINA - i.e. there is no other market, as deep, as wide, with net-net clearer set of rules of law & protection for investors (& citizens), with innovation in its culture & a history of entrepreneurship. Yet today's world is very different from yesterday's world. The ability of capital & most importantly talent to move, has never been easier in today's world. A lot of the things one had to move to a superpower for like education, opportunities, venture are now being distributed globally.

So the Red Pill - are we calling it a red wave? Almost certainly not... the main issue with the structural polarization we are seeing not just in the US, but globally... is that people have become so tribal, with politics & sports being modern-day religions. The term, cut one's nose to spite one's face comes to mind. Waves are going to become truly the exception - the UK's 4th of Jul election, saw the Labour Party obliterate the Conservative Party, yet the latter had been the predominant governing party for 14yrs.

The Red Wave that Ronald Reagan inherited post his assassination attempt [525 electoral votes out of 538, 49 out of 50 states & close to 60% of the popular vote], was in a very different time, with a lot fewer echo chambers & likely a much higher signal to noise ratio. As well as let's be honest, likely a tighter influence on control & narrative by the government.

The main issue in politics globally, is people have already decided what team they are playing on before seeing who is even heading up their team (left, right, centrist - with no universal definition of either by the way), rather than starting at the key issues that are important to them & then deciding. Yet once again, those "key issues" need to be predefined so we can have a taxonomy, as well as a sense of importance on the different topics. For instance, it's hard for a taxpayer to be concerned about the level of deficits, if they are stressed out about making the groceries this week & safely navigating the homelessness in their neighborhood.

Anyone in a society that is focused on the sustainability & well-being of the collective, needs to have an open mind, that can be liberal, as well as conservative, extreme on some views, centrist on others... there is a micro-bottoms-up, root-to-treetop component... & there is a Macro-bottoms down, treetop to roots component.

Its as the Blackswan's author Nassim Taleb says:

"I am, at the Fed level, libertarian; at the state level, Republican; at the local level, Democrat; and at the family and friends level, a socialist."

Also if you are mandated & legally required to pay taxes, you should be mandated & legally required to vote - take a page out of Australia, that tends to have a voter turnout above 90%. After all, it is the taxpayer's money.

In the US (& elsewhere) in addition to a few of the thoughts above, the presidential cycle likely needs to be extended to be a 6yr to 8yr term. Getting serious structural change & reform over 4yrs, where the 1st yr is getting into the role, setting up your dream team & the last is working on your re-election, really only leaves one with 2yrs to make a serious change for a country with +330M people of different ages, needs, resources, capex needs, etc.

Preferential voting needs to also be extended across all levels of public office. People's first choice tends to be emotional (read tribal), but if they have to list their 2nd best 3rd best & 4th best pick... they will start to naturally gravitate to the center.

Career politicians need to be checked - measures such as, no trading of any single stock securities. We can call it the Pelosi Principal - You want the honor, status & privilege of governing the American people? Ok, well all you can own is the S&P, Nasdaq & US bonds - the epitome of the American people. This also falls to your partner & immediate family, in addition to being policed in whatever legislative branch, federal & state level your public role may fall into.

There should be a transparent, accountable & reported framework that looks at government officials crossing over to the public side. I.e. Typically speaking they get hired into billion-dollar hedge funds, private equity funds, banks & corporations. #NotSayingItsGraftButItsGraft

Lastly, the sovereign's budget should just be put on the blockchain, on a Federal Level, State Level, cash in, cash out. Every citizen should be able to see the balance sheet, income statement & cashflow statement of their taxes. At the end of the day, it's their country. A great blueprint of this is the Norwegian Sovereign Wealth Fund, which has a public website that allows anyone (including you reading this) the ability to go see where they have allocated their +$1.5 Trillion of Citizens Assets. This is not magic folks, it's just a function of, what standards, values & principles are you willing to hold yourself, & your country (community, household) to.

What about that Yale Hillbilly, Tech Browski, JD Vance? ??

In a nutshell, 39 earth years young, from the midwest, educated as a lawyer from Yale, venture capitalist & until recently Ohio US Senator. Regardless of your pill, these are all huge structural winds for the country. Someone who is generations younger than a lot of the incumbents, who seems stuck in a loophole of making decisions in an alternative reality.

Here at Ascent Capital - Strategic Investment Advisory, we came across Vance for the very first time in 2016, due to his phenomenal book; Hillbilly Elegy: A Memoir of a Family & Culture in Crisis. This book flagged by a bud (Shout-out to Tesla Jesse, a.k.a. DC Jesse), who was on the Trump for the win train back in early 2016, really captured what the mainstream (clickbait) media missed from Trump's 2016 upset of the US elections.

The book captures the tale of two Americas, one that is on the coastlines of New York, Miami, San Diego, LA, San Fran, Seattle & the other that is in "fly over country" - which is a widening part of America's populace that have felt neglected, unheard of & unspoken for. The paradox here is that these same people - prior to the Clinton | Gore globalization years - were once pioneers, they were at the forefront of American Production & Manufacturing, when places like Detroit were the mecca of manufacturing & production. Yet due to offshoring, Wall Street CEOs (MBAs) focused on nothing but profit on the books... these regions have been gutted to their core & forgotten.

The paradox here is, that one can see that nothing has changed in regards to a lot of the incumbents who have historically controlled the narrative. When Trump won the 2016 election, through the electoral vote [304 to Trump, 227 to Gmail-Hillary, 7 to Others], he still got 63M (46%) of the popular vote. When he lost the 2020 election, he got even more people voting for him at 74M (47%).

So either camp, cannot truly say they won 'Merica... even when Trump | Vance win in Nov. Because the country is more than likely, going to be as divided if not more so.

The issues that are captured in Vance's book, were decades in the making, they will not be solved over the next 10yrs, let alone a 4yr presidential cycle. Yet they need to be solved for, because if they are not... well, let's touch on that in our final reflection for this Sun's Orange Phoenix.

What If Trump had not turned to the right... ??

Imagine an alternative universe where everything is exactly the same as ours, except on that blue planet called Earth, Trump did not turn his head to the right, just as the assassin pulled the trigger.

Imagine that in that world. The Assassin had succeeded & POTUS #45 died on the campaign trail for his country, a legend, yet not a living legend as we have in our world today.

Now - if you have not gone down the rabbit hole of X (twitter), on some of the comments from the Blue or the Red corner, after the events from Jul 13th. Let's save it for you. It gets ugly, really, really quick - especially for those people who wished he had died in this universe.

Now imagine the sequence of events. The bullet is shot, Trump does not turn to the right, he drops, killed instantly. A large part of the democratic tribe would be "euphoric", the "that's what you get" theme... "he had it coming..", etc, despite what they may have said in public.

So let's pause there for a sec... For House Ascent... the Assassination Attempt was no surprise... we have been running calibrations on potential consequences of assassinations going back to the Obama era... including other world leaders... such as Putin, Xi, etc...

Yes - part of being a House Mentat, is to run some very dark simulations, no matter how low probability & outrageous they may be.

And in the world where Trump was killed. There would almost have been instant pockets of immediate retribution & violence. Whether these sparks would take flight into fires, then eventually bonfires is hard to say. But civil wars do not start from one key event, they are an escalation of frustration, anger, conflict, a compounding "us vs. them" mentality... which is exactly where we are today. Don't be surprised at how little it takes to set something off. We are always four meals away from a civil society.

And if your so-called "nemesis" is taken out, well guess what... it blows the door open on now anything being "fair game". Next, it will be your champion on stage that gets carried out with a bullet, bomb, explosive drone, poison, etc. Pulling into a blue (red) town with a red (blue) bumper sticker, that now becomes a permanent wrong turn.

It's interesting that two of the biggest gangs in the US are the Bloods (red) & the crips (blue). Yet the biggest cartel of them all, are swearing allegiance to the exact same colors, over their fellow country women & men. Their neighbors, who bleed like them. Who like them have everyday modern challenges. Who like them have grandmothers, grandfathers, mothers, fathers, sisters, brothers, daughters, sons, nieces, nephews. Who like them, at their core all want the same thing - a life worth living for, for themselves & for their loved ones.

So be careful what you wish for. The paradox is, that the failed assassination attempt should be bringing a country together. It should be a sign that things have escalated much too far. That a reset is needed, alongside a reform of the system.

Will it change things for the US?

Honestly... from a probabilistic perspective, we unfortunately doubt it. It likely still needs to get worse, before things get better.

However, in this case, we will take the lower probabilistic skew - in life, it's often better to be optimistic & wrong, than pessimistic & right... especially when it concerns our fellow sapiens & a sustainable global society.

So, perhaps we will see much more of the presidential & measured Trump that we saw at the RNC. A younger VP, has already created a bridge & potential pathways that never existed before.

-KVP