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Dalio Speaks and Markets Listen
Ray Dalio was on a podcast with Andy Sewer this week and the topics of the conversation echoed throughout the market. If you don’t know, Dalio was one of the founders of Bridgewater Associates, which in 2013 was the largest hedge fund in the world. So he knows a thing or two about the market.
When asked if the market was in a bubble, he said its not what it was in 2000 and 1929, "but it's kind of like halfway there." He thinks there will be a continued rotation out of tech stocks that benefited from the shut down and into what he calls “meat and potato” companies.
He then went on to talk about Bitcoin and how he thinks there is a good chance that the US government could outlaw the cryptocurrency. He also gave a quick history lesson to prove his claim was not that far out of left field. In the 1930s the US did a similar thing with gold, banning citizens from hoarding gold. He said, “every country treasures its monopoly on controlling the supply and demand. They don’t want other monies to be operating or competing.”
The last point he made was that he expects there to be rising taxes in the US to close the wealth gap. He commented that some of the legislation being proposed by Elizabeth Warren (D-Massachusetts) could make the US “less hospitable for capitalism.” He also thinks because the political parties’ extreme have now become divided along capitalist versus socialist lines, he thinks being in favor of the wealth tax will become the litmus test.
I enjoy Dalios perspective his commentary on the world. He compared himself to a mechanic, he said that he looks at which way the levers are being pushed and uses his best guess to determine what will happen.
I am very interested in seeing what the Federal Reserve and the Biden administration do regarding Bitcoin. Right now they are systematically devaluing the currency by keeping interest rates low, injecting money into a heating up economy, and adding to the national debt. Tesla this week started accepting Bitcoin as payment for their cars, and if more companies follow suit, I expect to hear more rumblings around regulation for the world’s most popular crypto.
I think Dalio is right in regards to the US become less hospitable for capitalists. This same phenomenon happened in Sweden in the past and all the entrepreneurs and innovators left the country. Now Sweden is coming up with programs to incentivize entrepreneurship because they realize you need wealth in order to redistribute it.
Suez Canal Backed Up
If you are on social media, you have probably seen this picture with a funny meme. You probably don’t know the back story and why it’s even a picture in the first place.
High Level: A colossal container ship called the Evergreen got stuck in the Suez Canal. The Suez Canal, for those who are geographically challenged, connects the Red Sea and the Mediterranean.
What caused the ship to get stuck was a combination of high winds and being too close to the canal’s outer banks. Exactly, what caused the boat to be that close to the outer banks is still under investigation.
Some estimates think that this blockage is costing around $10 billion per day.
Ending of the Fillibuster?
Democrat lawmakers have been sounding the alarms of ending the filibuster for a little while now, but it has begun to pick up steam. They have the slightest majority in the Senate, 50/50 tie, with Vice President Kamala Harris casting the deciding vote.
Mitch McConnell (Senate Minority Leader) has said if the Democrats eliminate the filibuster, it will not speed up Democrats’ ramming through their legislative agenda. Instead, it would be like a “100-car pileup—nothing moving.”
Along with the filibuster, there are 44 other rules in the Senate. The majority of them are there to enhance the individual’s power at the behest of the majority.
What is the Filibuster?
The filibuster is when a Senate member continues the debate of a bill and prevents the bill from being voted on.
This delay tactic can go on forever, but to prevent this, a supermajority (60 Senators) can vote to end the filibuster and force a vote of the bill on the Senate floor.
This move has more to do with opportunism than principle.
Former President Barack Obama, last year, called the filibuster a “Jim Crow relic” and said the filibuster should be eliminated. However, when Mr. Obama was a Senator in 2005, he voted to filibuster 24 bills that he opposed when Democrats were in the minority in the Senate.
President Biden also had similar words to say in 2005 when Republicans were threatening to get rid of the filibuster: “the Senate ought not act rashly by changing its rules to satisfy a strong-willed majority acting in the heat of the moment.”
The fact that this rule is universally despised when used against a party’s interest, but is almost always defended by the minority party when it is threatened to be removed, highlights the rule’s robustness.
Our system of government is designed to move slowly. That is why we have checks and balances.
A movement with growing popularity is the view that the government should act almost like a corporation. The parties present their corporate goals, so to speak, and the voters vote for what party they want to run the company. These elected “corporate executives” despise the institution when it gets in their way but use it to their advantage when they are not in control.
However, if that is what you expect of a government, you have to realize that an institution that was built in 1776 in response to an activist monarchy would put-in quite a few roadblocks to prevent that exact action.
Taking a Break
Hello, readers just wanted to let everyone know that I will be taking the month of April off from writing What You Missed This Week. Don’t worry this isn’t a goodbye it is more of, I work a full-time job and to make the newsletter better and to focus on other endeavors I have to free up some time on the weekends.
I plan on releasing a super simple version of What You Missed This Week, called What I Read This Week. I will just include links to the news that I was reading during the week, but without the summary and my commentary.
Thank you to all my readers and I look forward to writing again for you in May.
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