Authored by Dan Kurz via DKAnalytics.com,

The good:

“Red state” Americans, yours truly included, are grateful that President Trump is calling out the fake news for what it is: fake — and out to get any powerbrokers that threaten its pervasive media dominance. Clearly, a media with a revolving-door to bureaucrats has facilitated unprecedented industry consolidation since President Clinton signed the Telecommunications Act of 1996. The increasingly incestuous, oligopolistic relationship between big government and big business has resulted in a crony press that rivals the Pravda (“truth”) press in the former USSR. Thus, instead of news and a check on increasingly abusive government power as the Framers intended, the misnamed “Main Stream Media” (MSM) has been generating propaganda supportive of an increasingly fascist regime, i.e., the US government.

Billionaire real estate and successful entertainment tycoon Donald Trump refused to become part of today’s MSM quid pro quo. He didn’t have to, nor did he want to. Instead, he took his “America First” (including bringing jobs back home) message to “flyover country” via the Internet/his Twitter account and as supplemented by his frequent, rousing, and well-attended speeches. Critically, he was also backed by the one largely anti-leftist entity in the MSM, ratings dominating Fox News, which has long resonated with “red state” Americans. Thus, the battle lines were drawn. An all-out MSM backlash against this nonconformist ensued, and “news” morphed even more completely into statist, anti-Trumppropaganda, a.k,a., fake news. It wasn’t only fabricated stories, one-sided allegations or quotes taken out of context, but utter and complete suppression by the vast majority of the MSM of lawless behaviorby those positioned at the top echelons of federal power during the prior administration as well as unconstitutional behavior being carried forward into the current administration and into the 115th US Congress.

The Trump administration, however compromised, appears to be making a largely clandestine effort(via sealed indictments) to smoke out the “deep state” (the unelected bureaucracy and its hangers-on both inside and outside the government) lawlessness it has been a victim of. Any success here, no matter how unlikely given the de facto “broad daylight conspiracy” — criminal decision makers keeping quiet buttressed by their staffs wanting to maintain the huge bureaucracy’s unconstitutional power, their outsized compensation and their privileged benefits status quo — would be monumental. Such an achievement could spark a rule of law revival, arresting our B.R. trajectory. Meanwhile, a strategic return to greater constitutional fidelity is getting a sorely needed lift by Trump’s fine judge/justice selections!

The bad:

Trump’s integrity. Is it there, when it counts, beyond his stellar judge selections and beyond the fact that he isn’t an “unindicted felon,” i.e., Hillary Clinton? This isn’t an idle concern, for integrity begets and nourishes credibility, which is critical to a president’s “bully pulpit” efficacy in “troubled times.”

Some worrisome signs include:

Instead of being honest about the long, tough road ahead to bring America back to manufacturing strength (reindustrialization takes time!), Trump has preferred exerting unconstitutional pressure on select manufacturers to highlight US job preservation thanks to his intervention, even as a closer look at such “agreements” disclosed heightened taxpayer expense and producers’ expanded outsourcing options. How does one spell demagoguery?

The ugly:

A potential Trump trade war is a huge risk to both the US and the global economy, but the US is especially vulnerable. This is due to America’s largely self-inflicted manufacturing enfeeblement, its huge net dependency on foreign goods (just go to WalMart’s non-grocery aisles) and foreign financing, and its dependency on continued widespread overseas acceptance of dollar-based trade, … despite America’s $7.9trn net debtor status vis-à-vis the rest of the world, over $21trn in US debt, and the US’s decade-long $1trn plus average yearly expansion in federal debt.

Some reflections:

Unfortunately, such truths don’t make for great soundbites, but they remain truths. Plus, other high-wage workforces (with generally better paid workers than in the US) operating in generally strong currency nations — e.g., Switzerland, Germany, and, for a long time, Japan — have generated sustained and substantial trade surpluses of recent vintage that sometimes extended for decades, and typically included surpluses with China.

Commensurately, those that blame high US wages or a strong buck as “America’s chief culprits” are just not getting the big picture right, much less how to best address it: with “brick-by-brick” home-grown solutions (for largely home-made problems) instead of with misleading, silly, and patronizing claims of having (virtually) instantly “made America great again!” Moreover, reputational integrity does matter when a president is attempting to make constructive deals for his country. Yes, Virginia, both policy and integrity (character) matter.

Allocation conclusion:

If, against all odds, the rule of law is restored in the US and the lawless actors infesting the governing class/controlling the instrumentalities of power are brought to justice, the profound and breath-takingly stunning “gravity of it all” would rapidly turn greed into fear in terms of so-called “traditional asset” valuations. In other words, sales would drive risk premiums much higher and net present values much lower, pricking today’s “bubble valuations.”

In the meantime, the US government’s reckless, deficitary fiscal policy would be even more exposed in a GDP-pummeling trade war — we are already way overdue for a recession amidst a historically weak, productivity-waning, debt-encumbered, artificial recovery. Huge US commitments, political calculations, and a fiat currency — “The US can pay any debt …, it just can’t guarantee purchasing power” — could result in unprecedented amounts of dollar printing. It appears to be more a question of “when” rather than “if.” This suggests that the buck will be sacrificed in a tactical attempt to protect money center bank balance sheets (and the Fed itself) from “valuation meltdowns” and to meet “nominal dollar commitments” of a strategic nature. Monetization of debt would become permanent and be expanded upon. How does one spell doubling-down on currency debasement? Against this backdrop, it is hard to imagine a secularly more bullish case for undervalued precious metals — and a more opportune time to reduce exposure to massively overvalued bonds and stocks. (And please recall, markets are “reversion beyond the mean machines!”)

Finally, it is fitting indeed, on Independence Day, that we celebrate America’s historical blueprints — The Declaration of Independence, which led to the first-ever strict enumeration of governmental powers and codification of individual liberty and inalienable rights, otherwise known as the US Constitution, including the Bill of Rights. How appropriate that Americans, and proponents of codified freedom around the globe, still have the unique opportunity to fortify their financial fortunes with the very “constitutional money” that could prove pivotal in the challenging times ahead in terms of supporting their families and in terms of helping to rebuild a return to free market capitalism and constitutionalism. An increasing number of originalist/constitutional judges should be of strategic help. Thank you, Mr. President.