Blain’s Morning Porridge October 31st 2024: What will the World Look Like in 2-Years Time?
“The best way to predict the future is to invent it….”
Today is Halloween, when the lines between this world and others, the past and future, alternative timelines and other realities, cross and oft merge into each other.. at least according to Celtic legend. This morning it just so happens a Morning Porridge from October 2026 has crossed the divide and snuck into my inbox….
Blain’s Morning Porridge October 31st 2026: US MidTerms? Towards some kind of Normality..
Just 3 days till the 2026 Mid Terms, and the Democrats hope to take both the Senate and Congress – but it won’t be a landslide. The bond markets will be hoping the Blues will constrain the burgeoning deficit, blocking further tax cuts, but they won’t be able to undo Trump’s tariffs – either the greatest defensive stroke ever, or worst mistake in economic history, depending on your perspective.
It’s been a mixed two years:
- Rising inflation and higher interest rates slowed the economy, but US consumers and corporates have proved more resilient than expected.
- The US looks headed towards becoming a stable, largely internalised economy as the initial shocks of Trump V2 have worked through.
- America’s global market and influence is significantly smaller, putting pressure on the dollar and Treasury funding.
- The Republicans assure us this is a good thing – reducing foreign manipulation is US affairs – allowing a new America to emerge.
The first 2 years of Trump v2 have been anything but boring. We have not seen the complete and utter destruction of everything. Bond market vigilantes have not destroyed the Treasury market (although it creaks), and the dollar hasn’t disappeared in a puff of logic. But there has been pain. As we warned back in October 2024, Tariffs triggered inflation and renewed supply chain dislocations which were exacerbated by rising rates. While the stock market briefly flatlined, the economy is now picking up some pace. It’s worth reviewing how 2 years of Trump has changed the World.
The early deal with President XI was the first surprise. As Trump described it, it was “the greatest deal ever, the greatest deal in American history.. ever..” as Taiwan was bounced into a deal that guaranteed its future as a Special Administrative Region of China, with its own Basic Law and Autonomy (except in defence and foreign affairs). In return the USA recognised China’s sovereignty, allowing Trump to claim peace in our time, no American lives lost, and defence savings.
The furore over the deal was immense – Trump being accused of surrendering Taiwan’s strategic chip industry to China. However, Trump’s Silicon Valley heavy cabinet, and particularly Treasury secretary Peter Thiel, welcomed it, using it to justify the new stimulus measures which are speeding up the build-up of domestic US chip production, onshoring and addressing a critical economic vulnerability, while initiating the Vigilant Eagle programme; the complete re-imagining of the US Armed Forces by 2032 to fully embrace new warfighting technologies, and re-equipment of all four fighting forces with drone and new technology on a massive scale. While Thiel and his cohort have been accused of creating a new, even more powerful Military Industrial Complex in companies they generally own, its already creating growth and a raft of new jobs across the US.
The Taiwan deal seems to be working. The Chinese have stuck to letter of the agreement, and there are no PLA boots on the ground. Trump has kept China tariffs in place – and the bromance with XI quickly faded. But the US navy steaming East across the Pacific left Taiwan’s leadership and entrepreneurial classes exposed. They’ve thought about it, and concluded they should enthusiastically embrace the China/SE Asia co-prosperity sphere, still the fastest growing economic region, despite China’s ongoing economic flu.
TSMC and other Fabs are once more supplying Chinese firms with the Chips they need – which means they are going straight into the PLA’s Watchful Dragon tech-led military programmes. Despite the “peace”, the price of chips exploded as firms around the globe scrambled to secure orders. Rumours the Chinese may use the new Taiwan laws to slap “strategic sale limitations” on chip exports have proved unfounded, but many US firms are sourcing their chips through middlemen in Thailand and India after their Taiwan partners stared making excuses for late and cancelled deliveries.
Relationships with Europe aren’t great either. Under Trump the USA has become a net energy hoarder, forcing Europe to compromise to secure power supplies. In effect it means Europe buying Gas and Oil that may, or may not have originated in Russia though the Gulf, India and China. It works, and it allows Xi to keep the now ailing Putin under a tight leash.
After Trump pulled US forces from Nato – but continued to insist US generals remained in charge in Brussels – Brussels was forced to act. The 2025 Ukraine/Russia cease fire means the new European Self Defence Forces now patrol the Line of Control, effectively the Front Line. While Putin rages in the Kremlin about how Europe intends to invade, the Russians on the front seem happy with European soldiers protecting them from the wrathful and now very well armed, Ukrainians – who are fully fledged members of the ESDF.
While rising inflation and higher rates precipitated recession in Europe and the US, the internal rebuild of the US economy around new Tech Themes is happening at pace. Although the rate of corporate defaults and personal bankruptcies soared over the last 24 months as rates hit 8%, US consumers and corporates have proved remarkably resilient to the higher rates, supported by almost zero-wage inflation. Thiel has kept the Fed under a tight rein – and largely kept Trump out the equation. The Fed is talking about swiftly easing US rates back to the normalised 5% range as soon as conditions allow.
The reclusive President Trump appears quite uninterested in the Mid-Terms – happy to have pardoned himself and his supporters – his main concern appears to be which of his kids will inherit the MAGA mantle and crown. He’s happy with his weekly rants on Trump TV. Melania got Mar al Lago and Barron following the divorce – a first for a sitting president – but Trump was unbothered. He no longer saw the need for a trophy wife, and is happy enough with the new fortune he’s amassed following Truth Social’s acquisition of X last year, and his other blind-trust “investments”, (about which he knows “nothing” as Eric and Don Jr handle them and never discusses them in their daily meetings with Dad). Ivanka’s return to the fold raises the prospect the US may yet get its first female President in this decade. In his dotage, Trump has proved he’s finally developed some business savvy in his investments.
Trump’s demands that Electoral College votes were re-allocated from Dem to Rep states – justified by the immense voting fraud and illegal immigrant votes in these States alleged by Trump’s January 6th Truth Commission – and the denial of statehood for Puerto Rico and DC, means the electoral balance, plus the heavily right-wing skewed US Judiciary, now permanently favours the New Republicans, the de-facto Trump family party.
Trump’s profits from well-timed dealings in and out of Bitcoin and Doge, boosted by his carefully timed comments supporting crypto, have been pivotal to his co-investments into Peter Thiel’s new defence businesses and Musk’s SpaceX-Boeing.
VP JD Vance deserves more credit than Trump has allowed him. He’s steered a clever course – aided by Thiel and his Silicon Valley Founders powerbase. They’ve been able to water down many of more excessive Project 25 demands that threatened to turn the US into a fundamentalist Christian state – but it’s clear Trump will not allow a non-family member to wear the MAGA Crown in 2028. Thiel seems content with that – rumours are Vance will remain the VP candidate, effectively Shogun of the New American republic’s dynasty.
Musk’s role as DOGE (heading the Department of Government Efficiency) might have been short-lived and chaotic, but slashing government budgets and jobs created a labour pool of former govt employees who are now building or working in the next generation of US high-tech production facilities, re-establishing a degree of US equivalency with China’s Taiwan fabs, or else they’re on border guard duty. Thiel and Vance stropped the defenestration of the Education Dept, arguing the new America needs a highly skilled workforce.
Vance’s smart move was to convince Musk to sell Trump Twitter-X, in return for the opportunity to buy Boeing in March 2025, merging it into SpaceX. The US Blue Water Fleet may now be rusting in docks on the East and West Coast, but Space X’s new Space Cruisers, based on the Starship design, have control of the Earth’s High Orbitals. It’s believed they carry Anduril’s latest orbital munitions, which remain top secret, but could threaten any target on Earth with immediate strike capabilities.
The two-year hiatus in Boeing’s airliner production has given Musk time to retool, retrain and reinvigorate the current Boeing range, which will be followed by the new SX1 Single Aisle and SX2 Twin Aisle Lifting Bodies Designs due to enter US airline service in the mid 2030s. Musk’s confident he’ll win the bulk of the 15000 new aircraft orders US, European and Australian carriers will require over the next 25 years. Airbus has been tariffed out of North America, and is struggling to deliver its own counter designs, but given it has access to the Asian, African and LatAm markets, and its new partnership with China’s Comac, it has a far larger market of some 40,000 orders to aim for.
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Out of time, back in my own timeline, and time to do the day-job..
Bill Blain
Author of the Morning Porridge, founder of Wind Shift Capital
