Asymmetric Information, Mimicry, and Appeals to Authority
Actionable Information:
Asymmetric Information
As Big Tech, the Davos crowd, and the global media continue ‘to play Trump out’, the asymmetric information gap regarding the US election has reached an astonishing level, and the market is signaling that this might not hold for much longer. Implied volatility has soared, VIX is low but rising, and gold is starting to catch a bid. In a classic, yet characteristic, appeal to authority, the media continues to double down on their subversion of reality, using the PA Third Circuit ruling against Giuliani to assert that there is no evidence of voter fraud or irregularities. This was entirely expected by those who understand the politicization of the court. What the media won’t cover, is the ongoing power struggle between the legislature and the judiciary, but they won’t be able to hold off much longer. The story is simply getting too big (as you'll read in the next section) and it is about to snowball into public consciousness. Both the media and the market have gotten way ahead of themselves, perhaps intentionally so, but they are now caught between a rock and a hard place, and the uncertainty premium will be realized. Information asymmetry always creates an opportunity.
Narrative Reconstruction:
Mastriano Mimicry
The inability for the Trump administration to build a political infrastructure has plagued them since inception, but that is starting to change. They have finally created an incentive structure to challenge sitting state governors, representatives, and perhaps even senators.
Here’s how it works:
Doug Mastriano, Senator for PA District 33, holds a hearing with the legislature to listen to evidence and testimony from Pennsylvanians who signed affidavits that allege to have observed fraud and irregularities.
Mastriano gives a rousing speech, where he says that it is time for the legislature to assert their power over the judiciary.
After the hearing, he has dinner with the President. On the way there, he calls in to Steve Bannon’s popular War Room show. He becomes an instant folk hero in PA.
Mastriano announces that the legislature will draft a joint resolution to strip the Secretary of State’s power to appoint presidential electors.
He is now a front-runner to overtake PA Democratic Governor Tom Wolf.
It seems likely that the Trump team reached out to Mastriano, and told him that this was his opportunity to make a political move. Realpolitik at its finest. This story was virtually uncovered by the mainstream media. Mastriano's personal Twitter account was promptly banned, but his professional account spiked from only 3k followers to over 35k, and over 100k on Facebook in 24hrs. Whats going to happen next, is that other ambitious and opportunistic politicians in WI, MI, GA, AZ, etc, are going to see the rise in Mastriano’s stock and look to mimic the model. It remains to be seen if these joint resolutions will actually pass, as there are complications in PA, but the strategy is clear, apply pressure on the legislatures through incentivizing local political opportunism from the ground up. It is these types of local, resilient, bottom up strategies that are most effective in nature. I recommend following @PereGrimmer to parse the lawsuits and judicial process.
Appeal to Authority
As hyper-politicization continues to accelerate, the classic appeal to authority will be leaned on increasingly to defend the narrative, and as the institutions continue to discredit themselves to defend the narrative at all costs, the appeal to authority will hold less weight as they expose themselves over time. In economics this concept is called a 'vicious circle'. By definition, a 'vicious circle' is a sequence of reciprocal cause and effect in which two or more elements intensify and aggravate each other, leading inexorably to a worsening of the situation.
Regards,
J.