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postcards from the florida republic
what you missed, what I’m watching, and what’s investable now
sunday, may 28, 2023
Dear Old Friend,
And on the third day, the great sea god emerged from the Gulf of Mexico, raised its angry tentacles to the sky, and bellowed:
“LET THEM SPEND MORE MONEY!”
And so, Congress did… and it was good.
Congress has reached a tentative deal to raise the debt ceiling. In a deal that does the bare minimum to bring down out-of-control government spending and dollar debasement (combined with unenforceable future deficit mitigation), everyone in Washington gets to pretend they did their jobs. Now, the fun part starts…
The winners of this deal are still in the alternative energy world – both on the streamlining of permitting and the never-ending gravy train of subsidies and centralized spending.
The losers? You’re among them. We are probably going to add about $4 trillion more in debt by the time we have another debt ceiling conversation (limit hit) in 2025. The U.S. government will spend into oblivion to prevent a recession on paper – but we know the productive economy is “proper screwed.” The Fed’s recent rate hike to 5% won’t deliver its strength until… 15 to 18 months from now. We’re only in the 3rd inning.
This “Macro Bear Clown” now looks to the market to decide. We can engage in another Dot Com period or 2008-style bear market rally… largely on the back of momentum in the AI names. Or reality can start to return… and this is a sell-the-news event.
As a trader, I’m happy if we move higher – because the turn here will likely take us back to 3,800 at some point. As an investor, I’m cautious – but I think this debt hike is another justification for investing in oil and other real assets.
See you out there,
Florida Republic Capital
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About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.