Case 1: The giggle

I wrote about a pattern I was seeing in Democratic politics, leaders using humor to wave away positions they can no longer defend. That’s not Leadership.

Two weeks later, Glenn Greenwald, the journalist who broke the Snowden story, wrote a piece making nearly the same case, anchored in AOC dismissing her own defund-the-police advocacy as “Woke 1” hysteria on live television.

I’m certainly not claiming he read me. I’m pointing out that when two people looking at the same landscape independently spot the same tell, that’s usually a sign the tell is real, not a coincidence of two writers being cranky on the same week.

Case 2: The debate that wasn’t one

Mark Cuban and Ro Khanna staged a wealth tax debate. Watching it, my read was that it felt performed rather than contested, Cuban playing the business-defending free-market voice, Khanna playing the reformer, both hitting their marks a little too cleanly for a genuine disagreement.

Days later, Cuban came out in support of a Democratic candidate known for shifting positions depending on the room.

If Cuban genuinely believed what he was defending on stage, the endorsement that followed doesn’t track. You don’t spend an hour making the case for lower taxes and lighter regulation and then hand your support to someone who bends whichever way the wind is blowing on exactly those issues, unless the hour on stage was never really about conviction.

Same mechanism, two arenas

I read headlines for a living, or close enough to one. Most days that means separating what’s said from what’s being covered for. These two weeks, the cover was thin enough to see through in both directions at once. That’s not politics. That’s just cause and effect, with the politics stripped out.

How to apply it daily

You don’t need two weeks of headlines to run this. You need two questions, asked every time someone performs a position in public.

First, what did they just spend energy defending. Second, what’s the context of these arguments?

If you’re new here, that’s what a majority of my posts are about.

But everyone will have a subjective bias when interpreting the news so I developed software to avoid my bias and most certainly yours. The software is to keep the score objectively.

Premium subscribers get a software beta version that I built out of years of watching how headlines get constructed to persuade rather than inform, so you can run the same read yourself.

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Follow me to learn about the subtle art of reading, implementing software to take the burden off of you, and how someone scales an online business where you can participate.

If you are following the news, Mark Cuban was in a X dispute with Ro Khanna over the proposed wealth tax in California.

Mark Cuban was stating that California won’t have a chance if implemented while Ro’s position was that no one will notice.

For a summary, The Hill has a nice play by play.

It makes sense if you have more traditional values, and if, not, Ro’s views sound sensible.

The problem I have is that both are posturing while we just wait to see what happens. If Mark Cuban truly wanted to make a “statement” he would do it on BlueSky to inform users over there about the dangers of Socialism and a wealth tax.

What’s the point of doing it on X?

Broadly speaking, X, has a robust community with divergent opinions. A townhall if you may. So much so that Europe and the UK have been in court battles with the company for a year or two, unlike Bluesky. If Bluesky really is the progressive echo chamber its critics claim then Ro’s views on taxes are a given on that platform.

So why would Mark do this on X where the audience that should be considering the implications and dangers of a wealth tax are using another platform? The only answer I can think of is to give Ro’s viewpoint and maybe a few ignorant fellas a chance to vote for the DSA.

You don’t tend to give the other side respect, if that side is gaslighting your position unless you are the strawman.

If billionaires really have a problem with the wealth tax, then state what happened when the US first instituted the income tax which was “just” for the 1%.

You know the 1% Bernie Sanders has been riffing on for decades. The Senator who had his honeymoon in Moscow and the leader of the Progressive wing in politics 1% has been thrown around since Socialism took root in the USA. Essentially, Bernie is an old vinyl record from the Al Jolson era, still yammering about the 1%, while government ever so softly figured out how to tax the living bejeezus out of everyone else.

No one cares what Mark Cuban will do if they pass it, but they most certainly would it if effects them directly.

We don’t need to see how smart you are Mark.

He could also remind people that once laws are passed and budgets used, the bureaucracy tends to lower the barrier for taxes. So maybe it’s 1 off, but can it really?

Unlike 1913, our federal and state governments tend to have monstruous debt and expenses. So once accomplished, and constitutional, wealth taxes are not going to stop.

Mark Cuban was not arguing effectively but Ro was. And probably why the Mavericks could only muster one championship while he owned it. He had no skin in the game to care that much.

Well, these are my impressions and feelings I had toward their exchange. Maybe I’m wrong. I respect the fact that in the US we try things and make mistakes. But I am most definitely a concerned citizen.

What are you thoughts?

Have a pleasant Saturday,

Eric

PS. I rush out emails with a lot of thought put into them. But I most certainly can make errors. If you spot any please let me know, I’m here to learn and observe just like you.

Tomorrow I’ll share with you some wonderful results from my software development.

My comment was simple: they lost my business and a few individuals felt it was their job to defend the Gray Lady.

But the Wall Street Journal, that’s different. It has helped make a livelihood for me and for that how can I not continue to subscribe?

And it’s not from stock tips, but have some good articles on Line of Credit for businesses. Before COVID, business was horrible for me and I didn’t know if I would be in business the following week as American Express decided not to allow me to have a line of credit with them.

As fate would have it, lo and behold WSJ wrote an article about Kabbage. And it kept me in business before and during COVID (until they shut down and were sold off to American Express).

That is the reporting I’m looking for. Something that impacts my life accurately. It can have an opinion or a voice, but it has to be accurate.

The WSJ real knock is that it has Wall Street in the name, but it helped my Main Street software company when I needed it.

A recent article had a nice list of LoC to choose from:

https://www.wsj.com/buyside/personal-finance/business-loans/best-business-line-of-credit?mod=Searchresults&pos=3&page=1

And you may think it’s easy getting a loan, it’s not. And once you apply, you start getting a stream of spam calls and texts so its very helpful to have a list from a reputed site.

Never turn down a line of credit if offered.

And now 10 years later, I have the chance to build out a once in lifetime software with the help of AI to help people use headlines in their business. And the best way to begin is with the stock market as it is very objective on whether it works or not.

Kind of like IBMs AI machine Watson (pardon me that was Jeopardy champions, according to AI it was DeepBlue) that objectively defeated world champions in chess. You need a little gimmick to get the wheels turning.

It’s in beta mode and you are missing out not giving yourself a chance here amongst the other value I provide.

$5 to subscribe.

Subscribe now

Carpe Diem,

Eric

PS. Have you seen NY Times recently? Have you seen the performance between News Corp (owner of WSJ) and NYtimes?

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And wouldn’t you know it, Moderna shows an extreme and rare case of a multi billion dollar company moving over +100% in one day.

So that means if you shorted $10,000, you would have lost more than your $10,000 trade and would have been stopped out, or your broker took your cash reserves to cover the short position.

Curing cancer or the potential of it will move the goal posts on any investment.

So money management and how to overcome a bad beat is important for your bank account and mental well-being.

But was it short selling that caused these big moves?

Not directly, but through SELLING call options on out of the money Moderna stock. Essentially you are selling insurance to buyers of a policy that you expect not to be paid off.

(If you are not familiar with these statements, I suggest you use ChatGPT, or go to Investopedia, or a Youtube video to get familiar with this.)

When Moderna shot through these options levels, these sellers of insurance had to cover these contracts and force an exaggerated demand of shares to cover their liability.

So if these options writers have been doing it for awhile, they probably gave back years of profits in one day. Kind of like picking up quarters in front of steam roller. It’s fun until you are rolled like pizza dough and tomato sauce all jammed up into one.

But a bad beat doesn’t mean you give up. If your strategy works and you show up each day, it means to just keep going until the rhythm picks up again.

And it will work. Why? Because this huge one day explosion will get MORE people to participate in options and pay premiums that the sellers will profit even MORE from.

When investors missed out, maybe 99%, or the ones that just owned Moderna passively, they are now thinking how to amplify their profits. This is yet another way that Wall Street is going to rub it in your face by sharing details of all the multi-millionaires that were quietly made on this trade.

At least I think so judging from Kalshi, from Crypto, from Gamestop, from Poker, from AI, anything that can make you quick buck or the appearance of it will get interest.

Curing cancer and you can profit from it is probably a good theme.

So now conservative accounts may dabble in options, options writers will now see the “risk”, and be buyers of options, etc.

Rinse, Cycle, Repeat

Moderna +100% → headlines about fortunes made → people experience FOMO → more people buy options → option premiums/volatility attract sellers → sellers eventually become comfortable harvesting premium → another extreme event eventually punishes them → repeat.

Unfortunately, there were losers on this and if it created financial problems I’m sorry for the loss. But the market and most people will readily forget this and focus on themselves and this is how the market heals and recovers through

a dose of Greed.

My argument is forget the Greed and stay the course and no the environment you are trading in.

Something that my software beta helps focus you on. Test it out for all paying subscribers this month.

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Carpe Diem

Eric

I have him to thank for sticking with and exploring Moderna's potential when it was taking it on the chin. Moderna, if you are not aware, may have created an amazing drug to fight specific forms of cancer in combination with Keytruda from Merck.

In my last piece, Trading Like Louis Pasteur, I wrote about one of my favorite ideas: “Chance favors the prepared mind,” and featured Moderna.

EricDealMaker

Trading like Louis Pasteur

Hope Sunday is going well…

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4 months ago · 1 like · Dealmaker

I like to be contrarian, but I have realized it is not always profitable. So you need to work on models to avoid that unfortunate plight.

So after digesting Scott for many years, it came as second nature when Moderna, the despised biotech company, was trading very low, but at the same time Larry Ellison gave a speech with Trump present on how AI and Medicine will help cure the incurable. He asked something about imaging writing a unique DNA strand for you specifically that can cure cancer?

I immediately thought about Moderna, and on the podcast that day Scott shared that:

“You may distrust the drug company. You may hate the technology. You may think the odds are lousy.

But if someone you love is dying?

“Just in case” suddenly becomes a pretty powerful argument.”

There are bad players for sure, in biotech, but why prevent the ones actually doing the work to solve life’s deadly plagues?

We have to root for our homegrown biotech and industry and be confident that our body of science and AI will get us to the next level of longevity.

And if you need a good refresher course on logic and mental models to keep you sharp, check out Scott Adams videos on YouTube.

May there be a cure for cancer immediately.

Eric

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focused on finding correlations between headlines and stocks initially, but eventually applicable to almost anything

asked me:

“What do I do if it says sell, but I didn’t own the stock?”

A simple question.

But it made me realize I had made an assumption while building the software.

I assumed that anyone interested in actively trading the market understood that there are two basic directions you can trade.

You can buy a stock because you think the price is going higher.

Or you can trade expecting the price to go lower.

We have words for these things: going long, going short, selling short, covering a short. Wall Street has an entire thesaurus room filled with variations.

But my beta tester’s question exposed something much more important:

A market signal and a trade instruction are not necessarily the same thing.

If my software says “SELL” and you own Apple, the meaning seems obvious: sell your Apple.

But what if you don’t own Apple?

Does SELL mean:

Don’t buy it?

Wait?

Get out if you own it?

Or actually short the stock and try to profit if the price falls?

Those are very different things.

And that last one introduces another problem: risk.

When you buy a stock normally, your theoretical maximum loss is what you invested. If you buy $1,000 worth and the company somehow goes to zero, you can lose $1,000.

Shorting works differently.

In the simplest terms, you sell shares you don’t own

typically shares borrowed through your broker

with the intention of buying them back later at a lower price.

Sell at $100.

Buy it back at $80.

You made $20, before fees and other costs.

But suppose instead it goes to $200.

Now you’re down $100.

Suppose it goes to $500.

You’re down $400.

A stock can only fall to zero. There is no theoretical limit to how high it can rise.

That’s where the phrase “unlimited risk” comes from.

Of course, saying “unlimited risk” makes shorting sound like you’re walking into a casino carrying your mortgage documents.

Most short trades don’t end with someone losing everything. Otherwise the brokers would be on the hook until you pay it back.

There are position sizes, margin requirements, stop losses and other ways traders attempt to control risk.

But the risk is structurally different from simply buying a stock.

So I stopped what I was currently doing to address this issue.

We are now working on giving users different options depending upon what they actually want to do.

Maybe the software shouldn’t simply say:

BUY / SELL

Maybe it needs to distinguish the different user.

Because someone who receives a bearish signal doesn’t necessarily need to short the stock.

They might simply avoid buying it.

They might sell it if they already own it.

Or, if they understand short selling and are comfortable with the additional risks, they might choose to trade the decline.

The user should know which road they’re getting onto before hitting the accelerator.

I always like car examples when talking about trading.

Driving a car can be dangerous. We don’t solve that problem by telling everyone not to drive. We build brakes have speed limits and bright paint to distinguish lanes.

And we teach people what the signs mean like what I do in my posts and in the software.

If most people who drove ended up in the ER, nobody would be crazy enough to do it.

Trading software should probably work the same way.

And then there are motorcycles.

I’m not sure what the accident statistics are on motorcycles, but almost everyone buying one understands that they’re not buying a Volvo.

They know what they’re getting themselves into.

That’s probably the lesson I learned from one beta tester asking what seemed like a very simple question.

I thought I was building software that identified market signals.

I’m actually also building the dashboard, warning lights and road signs that explain what someone can do with those signals.

There is a difference.

And sometimes the person who knows less about your product is the person who discovers the assumption you didn’t realize you had made.

If you want to be part of the new generation of traders that use the news like basically every institution and hedge fund already does, subscribe to my premium version.

PS. Today I’m also rolling out daily commentary using the metrics we have talked about the past year

Carpe Diem

Eric

Subscribe now

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I have a beta version of my market software available to subscribers for $5. The idea behind it is simple: headlines aren’t just news. They can be signals about markets, behavior, and where things may be heading.

Today’s post is actually a good example.

Two completely unrelated headlines caught my attention. Neither was about the stock market. Put them together, though, and I think they tell us something interesting about an entire generation.

That’s essentially what I’m trying to do with the software: read the headline, then look for what it might be telling us that isn’t in the headline.

Now, onto energy drinks and sports betting.

I had a draft of an idea from seeing this headline:

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For me, this says that the younger generation needs something more than joy of a Coke, or shot of espresso, or that deep satisfaction of lingering in a diner finishing off a mug of coffee.

They want as much energy as possible, with the worst tasting beverage, and quickly. There is no innate desire to be awake. The objective is to be awake and buzzed artificially.

Then yesterday I saw another headline:

Put the two headlines together.

What does this say to you?

Energy drinks instead of coffee.

Sports betting instead of long-term investing.

Are they are dumb? Far from it.

Consciously or unconsciously, they are cynical about the future and cynical about their parent’s generation. What worked then, won’t work now. They are seeking passive profits that they can feel tangentially.

If you see the headlines and the shocking statements our politicians say then giggle away when they are in a losing position. Or the entire COVID fiasco.

The whole “Do as I say, not as I do” is blown wide open and a real problem.

What happens when the next generation stops believing that waiting will actually be rewarded?

Why wait thirty years for your money when the game settles tonight?

Why slowly drink coffee when you can get 200 milligrams of caffeine in a can?

And if you believe the traditional ways of getting ahead are disappearing, then taking a few more chances today starts looking rational.

The problem is that civilization requires people to wait and be patient. Historically, societies occasionally get reminded of this in unpleasant ways.

Like with depressions, military drafts, or full blown wars.

It may not be as fun, or shlocky as this song, but I hope so. Who wants to be depressed?

Of course, not all is lost.

I see a Gen-Z, giving a mindset on motivating yourself. We need more of this.

He argues that you don’t need catastrophe to discover hardship. You can choose it voluntarily to build something.

Some new concepts the younger generation should try to micro dose like take responsibility for somebody besides yourself and do something where the payoff isn’t tonight but in 30 years.

Maybe that’s the real meaning of Carpe Diem.

Eric

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I have a beta version of my market software available to subscribers. It’s designed to help keep you on the right side of whatever market you’re participating in.

It’s $5.

I highly suggest getting in now because I see only three eventual outcomes:

1. It works extremely well, makes me enough money, and I offer to institutions that can afford it.

2. It works extremely well, proves adaptable to individual needs, and I keep offering it

3. Markets adapt, the model evolves, and the real value becomes the accountability, observation and ability to customize the software around how you participate in markets.

In all three scenarios, I’d rather be the guy who paid $5 to have a seat at the table.

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Now speaking of selling, generally…

A new subscriber who has many many more followers than me and hails from Bangalore, India has asked:

“Hlo sir , I saw in ur bio about $400M in sales. That is great. Can u recommend me few books/resources to understand sales better”

Great question and at this juncture of information overload I would simply quip:

“None.”

Spend that time selling.

The number one way anyone successful or established uses their pedestal is to overwhelm by giving you a list of books to read.

As if those 217 pages will get you that secret sauce to reverse-engineer their success.

That is if we are assuming that they indeed read those books.

You learn to sell by selling what you have to sell.

It’s that simple bro.

So how do you do that?

Here is a nifty checklist for you:

• What are you selling?

• Why is it valuable?

• Would you buy it?

• Why should someone buy it from you?

• Do you like to build relationships?

• How would you describe yourself?

• How would others describe you?

If you can answer these questions in less than 30 seconds you don’t need to know anything else.

Seriously, don’t dither. Sell!

If you need more time, the “secret” is work, gain experience, talk to customers, observe and eventually the passion will lead you to what works for you.

The greatest salesmen I know are all from different backgrounds but if you ask them these questions, they are very quick to respond.

Books are only good after the fact when you are fine tuning your skills. They are more like mental prompts then “secrets.”

This will not only save you a lot of time and money but also piss you off thinking I’m trying to blow off the conversation. But that’s how I see it and everything else is just noise.

Although come to think about it, there is one book, rather a play, you should read:

Death of a Salesman.

Willy Loman spends his life selling but never quite understands what he’s selling, what he’s worth, or how other people actually see him.

Which, if you look back at my checklist, is pretty much the whole lesson.

Maybe the greatest sales book ever written wasn’t a sales book at all.

Later today, we will be reviewing the markets for this week.

Make it a worthwhile Sunday,
Eric

I’m also building my own time-saving software and making it available for readers to try. If you enjoy the way I research and think through things here, a paid subscription is $5 a month and gives you access to the tools I’m building, along with my regular research and writing.

Subscribe and try the software for yourself.

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Now, back to Mario Puzo.

There’s an old saying I used in my essay to get into NYU, and I’ve never forgotten it:

“If it ain’t on the page, it ain’t on the stage.”

Remember that whenever you consume anything creative.

Before Brando could become Don Corleone, somebody had to create Don Corleone.

Before Pacino could close that door on Kay, somebody had to decide that the door should close.

Before Coppola could point the camera anywhere, somebody had to build the world worth pointing it at.

And yet, somehow, we tend to forget the writers.

Did you know Mario Puzo wrote The Godfather and also worked on Superman?

Think about that resume.

Puzo created Vito Corleone and Michael Corleone then he co-wrote the screenplay with Francis Ford Coppola.

They won an Oscar.

Then they co-wrote The Godfather Part II.

They won another Oscar.

And Puzo later received story and screenplay credit on Richard Donner’s Superman.

The Mafia epic and the superhero blockbuster.

Not bad.

But when we remember these movies, most of the fame goes to Francis Ford Coppola, Marlon Brando, Al Pacino and Christopher Reeve rather than the guy who first had to put these worlds on the page.

So I tried an experiment.

A number of people I spoke with had never read The Godfather. Others had read it decades ago. And realistically, most people aren’t going to stop what they’re doing this weekend to read a 400-plus-page novel just because I became temporarily obsessed with Mario Puzo.

So I put the original novel and the screenplay into NotebookLM and asked it to compare them.

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What Stayed?

Essentially everything. The story was meant for an epic and so it was made thus. Anything essential that was missing was added in the 2nd film.

Which is why Coppola’s imprint was on the third film, but not Puzo. I italicized the probable logic of why the film made the choices it did.

The Wedding

Both versions begin at Connie Corleone’s wedding.

And we discover that favors—not money alone—are the currency of his world.

Hollywood and the Horse

Tom Hagen travels to Hollywood to persuade producer Jack Woltz to give Johnny Fontane a role.

You don’t exactly need another 40 pages explaining the Corleone negotiating strategy after that.

Sollozzo, the Hospital and Michael’s Transformation

Michael, previously the son determined to remain outside the family business, finds himself protecting his father at the hospital.

Michael walks into the restaurant as Vito Corleone’s son.

Sicily and Sonny

Michael flees to Sicily, marries Apollonia and loses her to a car bomb intended for him. Meanwhile, Sonny’s temper finally destroys him at the tollbooth.

These aren’t side adventures.

They are the machinery pushing Michael toward the man he will eventually become.

The Baptism

And then comes one of the greatest endings in American cinema.

Then the door closes.

The transformation is complete.

All Puzo with the 1970s directorial flair

What was Cut?

This is where the comparison becomes useful.

1. Young Vito Corleone

The novel contains substantial material about Vito’s rise: Clemenza, Tessio, Don Fanucci and the development of Vito’s neighborhood power.

It wasn’t bad material. It was material for another movie. So it disappears from the first movie.

2. Lucy Mancini

NotebookLM didn’t pick up precisely on this character at first but I asked it after Uncle Rico mentioned his favorite scene in the movie

The novel actually had a large subplot for Lucy as she was there to help segue into Las Vegas.

But it didn’t help to focus on Michael’s transformation

3. Johnny Fontane and Nino Valenti

Johnny has a much larger life in the novel.

His story continues beyond getting the Hollywood role. His voice problems are explored, his career develops further, and Nino Valenti gets his own tragic storyline.

Necessary to Michael Corleone becoming Don Corleone?

Gone.

4. Albert Neri

The novel gives Neri an extensive history as a former policeman and explains why this particular man becomes so fiercely loyal to Michael.

Because sometimes behavior is enough.

5. Luca Brasi

The novel makes Luca considerably more horrifying.

His backstory contains material so dark that leaving it out arguably makes the character more mysterious and perhaps even more effective on screen.

This raises another interesting lesson:

More information doesn’t always produce more power.

Sometimes what the audience imagines is stronger than what you tell them.

6. Fabrizio

The novel eventually gives us greater closure regarding Fabrizio, the man who betrays Michael in Sicily.

The screenplay doesn’t need that closure.

What I Learned From Puzo

Puzo created an enormous world. Hollywood didn’t make that world better by cramming all of it onto the screen like many boring 3 hour films.

He did it by figuring out what the story was actually about.

And probably investing.

We become attached to things because they’re interesting.

But interesting and necessary aren’t the same thing. If the story we’re telling right now is Michael Corleone’s transformation, everything has to compete against one question:

Does this move Michael’s story forward?

If not, perhaps it belongs somewhere else.

Which brings me back to that line I wrote in an NYU application years ago:

“If it ain’t on the page, it ain’t on the stage.”

Let’s add a sequel to it, shall we?

Once you put it on the page, you have to be smart enough to know what to take off.

May you to have this insight on a lovely Saturday, and if you don’t, let AI give you a boost!

Eric

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PS. If you have 20 minutes, this is a great interview between Charlie Kirk and Mario Puzo

Price — what the stock is doing.

Fundamentals — what the underlying business is doing.

We have endless tools for both: charts, moving averages, earnings estimates, balance sheets, valuation models.

But there’s another piece of information investors consume every day:

Headlines.

And most of us still process them almost entirely by instinct.

Good headline. Bad headline. Important. Irrelevant. Already priced in. Maybe it matters tomorrow. Maybe everyone forgets about it by lunch.

I wanted to see if there was a more objective way to use headlines as part of the investing process.

So I built one.

The question I’ve been testing is simple:

Can headlines be classified in a way that actually helps make investment decisions?

Apple has been my primary test case so far, although we’re already testing other stocks, and other markets.

And after a year, I finally have enough results that I think they’re worth sharing.

The six-month number might actually be my favorite result.

Why?

Because we lost.

Buy and hold returned 15.67%. The strategy returned 14.86%.

That’s what testing something is supposed to look like.

I’m not interested in building a back test that magically wins every period. I’m interested in finding out whether headlines contain useful information, when that information matters, and how quickly its usefulness disappears.

Sometimes the answer may simply be:

You should have owned the stock and gone to lunch.

That’s useful information too.

Now I Want Other People to Test It

I’m opening the beta to subscribers.

If you’re already a subscriber, beta access is included at no additional charge.

(Just DM me)

The subscription is $5 a month.

I’m not promising a magic trading system because that’s not the goal.

I’m trying to answer a question:

Can we measure demand through headlines?

That’s what I’m building.

And if the results continue to be interesting, we’ll keep going.

If they don’t, we’ll learn something from that too.

And if it works way too well, I reserve the right to shut down the beta, move to an undisclosed location, and deny that any of this ever existed.

Come test it with me.

Have a great Friday,

Eric

A blog I have been reading for awhile tends to have perspectives that are strong and acute and not mainstream, normally contrarian and anti-regulation.

He wrote a great article on the Chinese dominance of car sales in Europe and the total destruction of European productivity might.

Very scary stuff.

https://www.armstrongeconomics.com/international-news/europes-current-economy/europe-destroyed-its-auto-industry-china-did-not/

Martin Armstrong’s core argument: Europe didn’t lose its auto industry to Chinese “dumping,” it engineered its own collapse through regulation and energy policy, and China simply built a better, cheaper product.

See the twist? Europe created its own mess and China is there to fill the void.

The problem for me is I am busy and I’m trying to still participate in the conversation so AI helps me digest what I would normally do by going for a walk or thinking things more thoroughly.

What AI helped me list first:

• The numbers: Chinese brands sold 171,800 battery-electric vehicles across the 18 largest Western European markets in the first five months of 2026, raising their market share from 9.4% to 14.2% in one year — despite EU tariffs stacking up to 35.3% on top of the standard 10%.

• Cost gap is structural, not just subsidy: the IEA finds EV production in China costs over 30% less than in advanced economies, and Rhodium Group estimates a small EV costs China nearly $10,000 less to build than the equivalent car made in Germany. China also dominates the supply chain — manufacturing 70% of the world’s EVs and over 80% of battery cells in 2025, plus roughly 85% of cathode material and over 90% of anode material.

• Battery chemistry bet: China leaned into cheaper, safer LFP batteries — which needed no nickel or cobalt — until LFP became over 55% of global EV battery deployment in 2025, while Western makers stuck with pricier nickel-based chemistry.

• Pricing/model gap: Chinese automakers offered 120+ EV models in Europe in early 2026 versus roughly 100 European models, and about 30% of Chinese BEVs sold under $20,000 in 2025 versus fewer than 10% of European BEVs under $30,000.

• His energy argument: Europe gave up cheap Russian gas, shut nuclear plants, and taxed carbon while China kept expanding coal, nuclear, and industrial capacity — so Europe is lecturing on emissions while importing the products of the energy mix it banned domestically.

• His conclusion: tariffs (17% BYD, 18.8% Geely, 35.3% SAIC) don’t fix Europe’s cost structure, and BYD building in Hungary will just move the same efficient supply chain inside EU borders.

  Armstrong frames it as consumers rationally buying value, not “betraying” Europe — Brussels created the vacuum.

But I also want to train my mind to know how he structures his argument. Sometimes I miss the forest (frame of reference) for the trees (facts)

“AI, Is this a well written article and argument?”

Reasonably well-constructed as persuasive writing, less so as balanced analysis. Breaking it down:

What works

• Clear thesis, hammered consistently: every paragraph reinforces “self-inflicted, not stolen.” No wandering.

• Evidence-first structure: leads with hard numbers (market share, tariff rates) before opinion, which gives the piece more credibility than a typical Armstrong op-ed.

• Good use of contrast: pairing “China subsidized X” with “but Europe subsidizes Y too” is a legitimate rhetorical move that actually complicates the simple “China cheats” narrative rather than just asserting it.

• Concrete, checkable figures: IEA’s 30% cost gap, Rhodium’s $10,000 figure, the LFP battery share — these are attributed to real sources, which is more rigorous than Armstrong’s usual style.

• Strong closing line (”China did not steal Europe’s automobile industry...”) — a punchy, quotable thesis restatement, which is good persuasive craft even if you don’t buy the argument.

Where it’s weaker as argument

• One-sided by design: no space given to counterarguments — e.g., environmental/safety regulations aren’t purely bureaucratic overhead, they often reflect real externalities (emissions, worker safety) that Armstrong frames only as cost centers. A more rigorous piece would at least acknowledge the tradeoff.

• “Dumping” dismissed too quickly: the EU’s dumping case isn’t just “Beijing supported its industry” — it rests on specific findings about below-cost pricing and non-market financing. Armstrong waves this off in one sentence without engaging the actual WTO-style dumping methodology, which is the crux of the EU’s legal position.

• Causal overreach: energy policy, regulation, and subsidy structure are all blamed for the outcome, but the piece doesn’t really disentangle how much each factor contributes versus just China’s decade-plus head start in battery R&D and manufacturing scale (which predates a lot of the EU decisions cited).

• Loaded language throughout (”arrogance,” “delusion,” “betrayed”) — effective for persuasion, but it signals opinion journalism, not analysis, and it’s doing some work that the evidence alone doesn’t fully support.

• Cherry-picked comparators: German EV costs vs. Chinese EV costs is the most damning comparison available; using average European costs might narrow the gap somewhat.

The bottom line …

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The full testing results are for subscribers. You’d spend more than $5/month on AI credits alone trying to do this yourself.

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It is funny, but it is also a pretty good idea. And I want to share to all readers today.

We keep almost everything on our phones now. Photographs, books, correspondence, news stories, family history. The problem is that a phone remembers whatever happens to be on the screen today and then it gets filed away. It’s not physically there. It’s not in 3-D. What’s that saying? “Out of sight, out of mind”

Maybe we should have more history littered around the house.

Not museum pieces but mementos like an old newspaper, a worthless currency note, your grandfather’s watch. Maybe a menu from a restaurant that no longer exists (I used to collect the ticket stubs of the movies I watched) Do you remember a time that there were photographs with the names written on the back.

In summary have something physical that forces you to ask: What happened here?

Which brings me to Christopher Nolan (if you didn’t get the title for today’s piece) and his first movie Memento.

Before Oppenheimer, The Dark Knight, and the billion-dollar movies, Nolan made Memento, a film about a man who cannot form new memories. Leonard, the main character, has to construct an external memory for himself. He uses Polaroids, handwritten notes, and tattoos because he knows that his own mind cannot reliably tell him who he is or what happened.

There is something increasingly relevant about that.

Do we know who we are if all of our memories are being rewritten, removed, updated, corrected, digitized, or simply forgotten?

History has always been edited, of course. Stalin became rather famous for doing it literally. People who fell out of favor had an unfortunate habit of falling out of photographs too. One day they were standing beside the great leader. The next day there was some additional waterfront.

That is the sinister version of Memento.

Leonard, the character in Memento, leaves himself evidence because he cannot trust his memory. A regime alters the evidence because it wants everyone else to distrust theirs.

Most of us live somewhere much less dramatic between those two extremes. But the principle is useful.

So perhaps Ted Gioia has the right idea.

Go on eBay and buy some history.

Buy the hundred-trillion-dollar Zimbabwe note and put it in a Romance novel. A child who finds it twenty years from now may ask how a country managed to print a banknote with that many zeroes on it. Buy an old newspaper from a day everyone once thought would change the world, or didn’t. Keep a few photographs outside the cloud. Save something from your parents and grandparents and, more importantly, write down what it means.

Don’t merely collect old stuff. Give yourself evidence.

Investors should probably do this too. Markets have a remarkable ability to make the current environment feel permanent. During every mania there are intelligent explanations for why prices must keep rising. During every panic there are intelligent explanations for why they can never recover. An old stock certificate, failed currency, annual report, newspaper headline, or piece of obsolete technology is a useful reminder that people before us were just as certain about their present as we are about ours.

The point isn’t nostalgia.

Those who don’t know history may be doomed to repeat it. And for those who do know it aren’t guaranteed anything either, but perhaps they can recognize the disaster a little earlier.

And there is another reason to do it.

One day your children or grandchildren may wonder what the world looked like while you were here. Don’t make them depend entirely upon an algorithm to tell them.

Leave a few clues around the house. B

READCRUMBS!

Not just on your phone but honest to God mementos of family, life, culture and history.

Don’t take my word from it but Academy Award winning Christopher Nolan whose first film was where a man has mementos to know who he is.

Make it a Wonderful Wednesday,

Eric

PS. For subscribers, we will review an opportunity I see later in the day.

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“Fun Fun Fun till your daddy takes the t bird away”

Which brings me to Six Flags. The ticker is FUN, but the chart is not.

I have a soft spot for the company. My grandparents met at Cedar Point, which means without amusement parks I might not exist. Depending on how you feel about my thoughts, Six Flags deserves either your gratitude or your blame.

I showed a simple trendline strategy on FUN before, and despite what I want to happen, the trendlines have helped you stay on the right side of the market.

A trendline isn't a prediction of the future. It's an indication of demand right now.

And it does something else people overlook: it helps you manage time.

You don’t have to wake up every morning and invent a new opinion about Six Flags. If nothing has changed, there may be nothing to do.

A strategy that doesn’t require you to participate every day leaves you more time for the things that actually matter.

From time to time, I share charts like this to help tell us when we need to pay attention.

I enjoy sharing anything that gives me another way of looking at markets.

You can subscribe for more unfiltered perspectives below.

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What are your thoughts?

Love to hear.

Eric

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Like you, he’s going to do it his way whether I give him an idea or two, but as anyone who knows business, it’s sometimes smart to have another opinion or someone who likes to observe and participate. He’s not going to short $100 of it, so maybe it’s worth seeing if there is another opinion out there that confirms or disproves his hunch.

My first reaction was the only time this restaurant was a good short was during the Atkins Diet fad and the documentary Super Size Me.

It looked like one during the Biden administration, but when Trump went to McDonald's to work there for a day while campaigning (around $300), you wouldn’t think the stock would be trading now at, aghast, $275.

I have to say that this is the first time in 10 years that it is trading below its trend. During COVID, it crept down but bounced right back up. The chart displays this clearly.

Let’s compare it to an ETF of a selection of a variety of food and restaurants that has done very well, but this ETF holdings don’t have one big expense for McDonald’s…meat

Live Cattle, and anything related, has hit record highs, and consumers' purchasing power has not.

But it also seems that Gasoline prices are also a key factor, as the top was around the beginning of the Iran war.

So the trend is your friend with McDonald's, but if Cattle and oil start to reverse their strong price increase, and consumers' purchasing power comes back, then McDonald's may not stay down for long.

Since the stock is expensive and options tend to be cheaper on blue-chip, dividend-yielding stocks, there are probably a few ways to create a strategy to participate in weakness in this famed name.

For subscribers, I share one today.

Make it a profitable Monday

Eric

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More cowbell.

It’s funny because the solution is absurdly simple and he becomes completely obsessed with it.

But there might actually be a life lesson buried in there.

We’re constantly looking for more answers.

More information.
More data.
More advice.
More experts.
And now, more AI.

Maybe what we need is more cowbell. Or rather, better questions.

Quite possibly we are leaping from subject to subject because we still haven’t found what we are looking for.

Except the cowbell is better questions.

Here are 10 questions from some legendary figures for you to consider:

I’ll share with you more overtime, but the answers, like life have all been answered.

It’s the questions asked that have been studied less and require more of your time to navigate this new era we are living in.

For subscribers, I share with you 20 questions that should be relevant as we navigate some interesting for AI development and for investing.

Make it a wonderful Sunday folks,

Eric

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Arms dealer, Francis Bannerman, was told to remove all of his explosive arsenal from New York so he bought an island and built an authentic Scottish castle (a real flex if you ask me) and stashed it there until it was fourth of July all over again.

It was an amusing story I read today but thought maybe there is something to share to readers. Apparently something of interest.

So who is this arms dealer? Was he like Nicholas Cage in Lord of War?

Francis Bannerman made his fortune doing something that sounds remarkably familiar to anyone who has ever bought at a flea sale, a garage sale to a beaten-down stock, a bankrupt company’s assets, or…

a warehouse full of merchandise nobody else wanted, military equipment and weapons.

Among his earlier ventures, was in 1898 after the Spanish-American War ended, he went to Havana and bought almost all the captured Spanish arms and ammunition.

The question and a very important one for any businessman:

Does the seller’s desperation have anything to do with the actual value of what was being sold?

(On X, I asked this after a mortgage company had a devastating 35% stock price crash)

With governments they tend to have huge inventory after a war and if there is no use it’s best to sell it.

After a NY Times article many years ago, I tried, myself, to buy all types of war scraps in Iraq that we had lying around but to no success. I attribute it completely to no system or discipline on my part that tends to be revealed very quickly when attempting this.

Which is why when I saw this tweet on X, I am there bro. I have the right tools now to do but not youthfulness.

Back to Bannerman.

When there is a surplus, most individuals don’t want to be involved as there is now way to tell when things will turn around which is why the opportunity exists.

Surplus must always be seen as inventory. He understood that concept and made him rich.

And now with inventory, the question is who do you sell it to?

One account describes him as recognizing that goods being disposed of at scrap prices could have considerably greater market value.

I noticed that scrap yards themselves have done this very well, taking some of what they purchased at scrap prices and selling at a discounted retail price.

Copart is famous for this.

Bannerman eventually turned these surpluses into a massive retail operation. He published catalogs and sold nationally, an early direct-to-consumer business. His Manhattan storefront became the showroom while the island served as the back-end warehouse. In modern terms, he was TJ Max and Big Lots wrapped up into one with the added section next to the Men’s pants, explosives and artillery. Fun fact: his Broadway location opened in 1905 and stayed a mecca for collectors and sportsmen for 54 years.

He was very wealthy and before his death, and during WWI, he gifted 1,000 uniforms and rifles to the Lord Mayor of London in 1914, and in 1918 gave cannons to the US military along with tens of thousands of garments for Belgian relief, with his total wartime contributions exceeding $100,000.

That’s not small money for 1918

But when you buy at the right price, you can afford setbacks and create lasting value. So an explosion or two won’t set back the venturesome type like Bannerman.

To learn more about this character who would probably make a great movie character, visit HERE

This is what I try to do here.

Find overlooked stories, strange businesses and beaten-down assets—and ask whether the market is confusing unwanted with worthless.

If that way of looking at markets interests you, become a paid subscriber. I’ll be doing more deep dives into companies, industries and situations where the seller may be telling us more than the price does.

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There are many ways to manage a business and keep improving and maximizing the resources you have, but I have tried really hard to be focused and not overwhelmed and hist quotes have helped.

He started as a catcher but wound up taking all of his experience and observations and kept growing his life skills as life progressed.

So when I saw this note by Emily and saw many newsletters I subscribed to I found it interesting how bigger teams than mine are reading them but expensing it. It’s definitely smart.

But is it wise?

What would Yogi think?

If you run it through Berra’s logic you get three real answers:

“Nobody goes there anymore, it’s too crowded.”

If everyone is using it then it’s most definitely best in class, or is it the easiest?

The moment a strategy is popular enough to be a top ten startup expense, it stops functioning as an edge. A playbook that’s public isn’t a playbook.

“You can observe a lot by just watching.”

This is the catcher’s whole job, distilled. You watch and sense the rhythm of the game and know exactly the situation on the ground.

Outsource the watching, and you’ve outsourced the only real advantage you had.

There are ways to mitigate this risk but are they?

“It ain’t over till it’s over.”

If it’s written down you are going to assume it’s the written testament but it’s not. Its a guide. Nothing is written in stone so…

Be OPTIMISTIC

“You can observe a lot by just watching”

Then I flipped the purpose of what Brex is saying and thought of something.

If you sell services into these industries, this data is gold. It’s a list of companies with budget allocated and a decision maker willing to sign off on outside expertise.

We now know what things worth watching is who’s already paying for exactly the kind of help you provide. That’s not commentary but free sales generation.

Ten championships weren’t won by reading someone else’s playbook. They were won by a catcher who watched closer than everyone else in the ballpark.

There is a reason they were called the Damn Yankees they were that good.

Eric

Google AI states the obvious when i queried it:

“In the 1990s and early 2000s, the internet promised a utopian digital democracy. It was supposed to connect all people, end censorship, make all human knowledge free and easy to find, and level the playing field for everyone.”

Well has it?

I use it for everything in business but I don’t see the days getting shorter even after my attempt to automate things.

For some reason, once I spend inordinate time to automate or develop automation tools, my mind seems to turn off and not be as in touch with customers anymore…

or with people that I care about.

One of the “better” films Adam Sandler did was the concept of using a remote not just to flip through the TV, but scenes in your life that you care not to experience and only realizing that’s the point.

So take it from me, use automation but it’s not the holy grail.

The main reason you are in business is to make a little corner for yourself in the world and try to make sense of it all.

You won’t if you keep your head down.

My friend recently said, a very succesful one, “I’m a bit bored with everything. It’s all the same routine.”

It only is if you auto-pilot. Push the issue.

I don’t know about you, but some things I’m reading in the news is most certainly not to my liking, so get out of your comfort zone and participate.

Automation is only useful is if it helps you in appreciating the day a little bit more than previously.

That is the only way I can reason as to why the more automation the less is done.

And if another tech wizard pitches you something, all that glitters isn’t gold.

For subscribers, I’m going to review some opportunities using the strategies I have shared.

Make it a wonderful Thursday

Eric

Jobs seem to be picking up and also manufacturing. I have also heard bottlenecks are an issue as a result of the surprising demand. Bottlenecks from demand, not war, should be a good thing overtime in a capitalist economy one would think.

It may not match the media’s narrative but overtime it should trickle down to all tax paying citizens of the US. One way to see if it’s real is if folks are buying a real durable good that’s not easily replaced, furniture.

Proof du jour?

If these stocks had been down 6% today, someone on television would have explained, very confidently, that consumers remain cautious, discretionary spending is under pressure, and the furniture cycle has further to fall.

Instead they’re up. Did you hear anyone mention it?

Nope, just that they beat earnings.

It’s one of those industries where you need to read less and go out more. These are the businesses you can visit the stores and see the demand.

Nobody impulse-buys a sectional. Nobody wakes up Tuesday morning and says, “Honey, let’s finance a $4,700 couch because inflation feels transitory.”

This type of observation is best in person.

So how would you define furniture?

For me, furniture is delayed optimism. People spend months talking themselves into it. Which means by the time the sale shows up in the earnings report, confidence probably showed up months earlier.

The stock isn’t telling you about sofas. It’s telling you what’s happening inside people’s heads.

Why do you think sophisticated investors observe copper, railroads, and insurance?

Every industry eventually becomes an accidental economist. The market doesn’t care what business you’re in. It cares what your customers were thinking five minutes before they pulled out their credit card.

What do you think?

Love to hear,

Eric

For $5 I save subscribers time by providing a list of furniture companies I’m looking at.

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