What So Many People Get Wrong About The White Working Class

Good Morning,

U.S. equities closed slightly lower on Friday, led by health care, as investors digested Federal Reserve officials' remarks on monetary policy and falling oil prices.
Entering Friday's session, the Dow, S&P 500 and Nasdaq composite were all within half a percent of their previous all-time highs. The Dow had reached a record intraday high of 18,934.05 on Monday — on the back of a sharp post-election rally — while the S&P last set a record high of 2,193.81 on Aug. 15.
Fed Chair Janet Yellen's testimony in Congress on Thursday all but assured the central bank would raise interest rates next month. According to the CME Group's FedWatch tool, market expectations for a rate hike in December were above 90 percent Friday morning.

13Fs came out this week and they shed some light on the incredible rotation we have seen post Trump from tech/utilities/REITS/consumer staples into financials and industrials. Why? Consumer staples and tech were the 2 largest sector weightings amongst the top 50 hedge funds. Easy come easy go on the return chasing band wagon….

Last bit about the election I promise. Read a great article this week in the Harvard Business review that outlines what so many people don’t get about the U.S. working class. As a broad theme the white working class (WWC) resents professionals but admires the rich.
Professional people are viewed as suspect and managers are college kids “who don’t know shit about how to do anything but are full of ideas about how I have to do my job”.
The WWC aspires to be independent and give their own orders and not have to take them from anybody else. Owning one’s own business — that’s the goal. That’s another part of Trump’s appeal.
Joan Williams writes that “Hillary Clinton, by contrast, epitomizes the dorky arrogance and smugness of the professional elite. The dorkiness: the pantsuits. The arrogance: the email server. The smugness: the basket of deplorables. Worse, her mere presence rubs it in that even women from her class can treat working-class men with disrespect. Look at how she condescends to Trump as unfit to hold the office of the presidency and dismisses his supporters as racist, sexist, homophobic, or xenophobic.”
Several other key points she makes are:
Understand that working class means middle class, not poor
Understand working-class resentment of the poor
Understand how class divisions have translated into geography
If you want to connect with white working-class voters, place economics at the center
(My favorite) Avoid the temptation to write off blue-collar resentment as racism
Defending this last one is bold yet perhaps one of the biggest risks facing America today is how out of touch the elite is with the rest of the country. This election has placed the spotlight on the gross amount of class cluelessness that exists today. As Joan indicates: “If we don’t take steps to bridge the class culture gap, when Trump proves unable to bring steel back to Youngstown, Ohio, the consequences could turn dangerous.”

Thought of the Week


" The state is nothing but an instrument of oppression of one class by another - no less so in a democratic republic than in a monarchy." -Friedrich Engels

Stories and Ideas of Interest


  • We just don’t want to face the brutal facts. Came across an interesting piece this week in the Guardian highlighting the “fact” that “post-truth” has been named the word of the year by Oxford Dictionaries. This adjective was popularized as both the US election and EU referendum unfolded to describe a situation ‘in which objective facts are less influential than appeals to emotion”. Despite the incredible increase in data are we in fact living in a “post truth” world?


  • But trust your gut. “Gut reactions” — subtle bodily sensations that result from risky behavior — have long been the stuff of financial market lore. Some successful stock market gurus, billionaire George Soros included, have claimed they pay attention to bodily pains and other sensations to gain valuable insight into how they should trade on the markets. A new paper published in Scientific Reports suggests some truth could be lurking behind these stories. Where can we find the delicate balance between reason and emotion?


  • Don’t fear AI. Humans and AI will be inextricably linked in less than a decade. “Symbiotic autonomy” will forever change the decision making process.


  • Short-term gain for long-term pain? That's the view of economists at Goldman Sachs Group Inc., who argue that while some of President-elect Donald Trump's proposals could boost U.S. economic growth in the near future, his other policies would offset those positive impacts over the long-run. Specifically higher inflation and unemployment?


  • Debt crisis? A group of online consumer loans that were packaged into bonds is going bad faster than lenders and bond underwriters had expected, the latest sign that some startups that aimed to revolutionize the banking industry underestimated the risk they were taking.


  • Renewables? A contrarian buying opportunity? Investors have been selling off companies that specialize in producing renewable energy. Bloomberg suggests that fears of a negative impact of Trump are really overblown. We would agree.


All the best for a productive week,

Logos LP