What made America truly great was that from its start it took tens of millions of poor, underprivileged immigrants and transformed them into a massive, vibrant and prosperous middle class which drove production and consumption to ever new highs. The Empire was built entirely upon its middle class foundation.
But starting in the 1980s ideologues took over and pushed a mantra of global free markets and, even worse, labor "deregulation" a.k.a. to destroy labor unions. There were some positive results, to be sure. But, in the long run production shifted to Asia, the well-paid middle class evaporated and Trump became President riding the MAGA wave - where the key word is "Again". Judging from the explosive growth of the middle classes in China and India, "again" is just not going to happen.
Which leaves the door wide open to bitter political disappointment for the American middle class getting crushed in the K-economy. How will they vote in the polls? And how will the current administration react to getting snubbed?
So this is the elephant in the room, one which financial markets are not yet taking into consideration: for the first time ever there is real political risk in the USA. It is certain that the Trump administration understands this very well. In recent testimony to the Congressional Judiciary Committe, the Attorney General was asked a pointed question about the Epstein files. Her immediate answer was: "you should ask about the Dow hitting 50.000 and the S&P 7.000". In other words, everything depends on markets now. This is really scary.
When the political agenda is guided by the gyration of indexes... watch out.
