Blain’s Morning Porridge August 11th 2025: Trump’s Catch 22 Economy
“What’s good for Milo Minderbinder is good for the economy.”
I am notionally on holiday this week, but it struck me Trump’s latest succession of “flooding the space” announcements is just flow in the on-going madness of markets and politics. I’ve loaded Catch-22 into my kindle to re-read in search of insights on what might come next.
I did say the Porridge was going to be “intermittent” through the next few weeks as She-who-is-Mrs-Blain, our lovely dog Dinner Jacket, and I, are coasting our sailing boat round the English South Coast.
This morning is one of these days that calls for some thinking… To rationalise the current economic environment into something investible, we really do need a completely different approach and mindset, or maybe stronger pharmaceuticals. Or, even better, re-read Joseph Heller’s excellent Catch 22. Maybe the brilliance underlying the success of M&M Enterprises can explain how this all works?
My confusion is based in simple logic: how much longer can supposedly rational markets remain blithely indifferent to the sturm et drang out the White House? I’m struggling to figure out how to address the latest “flood the space” announcements from President Trump, while watching markets “not give a damn”.
Yet again, he looks likely to split the West by announcing a peace deal for Ukraine – which looks set to grant Russia its war-aims, but doesn’t involve Ukraine or Europe. Distrust is no way to build a sustainable future for capitalism. My American Republican chums will justify it as any settlement is better than no settlement, ignoring the reality that the USA could crush Russia through sanctions in a heartbeat. Maybe that’s the plan – Trump set to make himself loved in Europe by treating Putin to a full-on rant in Alaska next week. Unlikely.
Markets wobbled when the April 2nd Liberation Day tariffs were announced, but when the sky did not immediately fall in… in the form of sudden massive inflation, redundancies and the end of everything… they started buying, and buying again. A succession of Q2 earnings beats has boosted the mood further – even though expectations had been set low. Now economists and analysts are warning how the effects of tariff dislocations are only slowly working their way through the economy. That will be seen in rising inflation and declining job creation. The response from the administration was to sack the head of the statistical bureau producing such unhelpful data. What problem? If there is no data.. then how can it be bad?
One of the key factors in successful investment is certainty and having the confidence to invest. Certainty and confidence are good indicators of future growth and rising profits. But how do you invest when the rules keep changing, are remade apparently on whim, or thrown into the incinerator?
This morning its Nvidia and AMD accepting they will pay Trump’s government a 15% tariff to export their chips to China. Tariffing exports is new. Usually, nations put bans on the export of strategic technologies to stop rivals and potential enemies acquiring them. 2 days after meeting Nvidia’s CEO, and discussing export licences to China (one of Nvidia’s largest markets), these were granted with the kickback to Govt. How the Chinese will react to paying the US government to buy chips is yet to be seen – but I bet it’s something along the lines of “we need strategic certainty and security of supply. Let’s make our own better tech.”
For US investors, Trump’s transactional impulses highlight increasing uncertainty over government interventions into the market. Last week it was Trump who was happy to announce that Apple would be investing an addition $100 bln into the US economy. Where was Tim Cooke? And then he demands Intel’s CEO, Lip-Bu Tan, resigns for the heinous crime of Chinese DNA (he’s Malaysian-Chinese). I wonder how he will fare at his meeting with Trump today? Perhaps giving a 50% stake in the firm to Trump Enterprises LLC?
Trump is redefining the art of transactions – pay us enough and we’ll let you have the tech. If it’s good for the budget deficit its good for America is the kindest way to put that, but may be it should read… If it’s good for Trump, then it’s good for America.
There is a scene in Catch 22 when entrepreneur Milo Minderbinder does a deal to secure cheap eggs for the mess, which he does by paying the Germans to bomb the airfield… Perhaps, that’s one way to understand what’s really going on… You buy eggs in Malta for 7 cents and sell then for 5 cents in Egypt to make a profit.(Apologies if you haven’t read Catch 22. You really should.)
From a broader perspective, you have to wonder what happens to competition as America becomes a state where and unconstrained president is making policy decisions on the hoof. Capitalism is flailing because economies all grow tired and stale – increasingly over-regulated, riven by bureaucracy and moribund political incumbency. Thow in uncertainty, flattery, and denial of common sense won’t make them better. Ask how well these worked for the economies of Nazi Germany or the USSR.
Or maybe we should just stop worrying about it…
Meanwhile, despite notionally being on holiday, I was doing my now regular Friday Morning spot for IG Live on Friday morning with wonderful Angeline Ong. (Links are on the Morning Porridge website.) We’d been chatting about a range of market events, issues and potential directions, when she dropped the question on me: What do I think of Palantir? The consensus is it’s possibly the most overpriced stock in an overpriced market with a PE measured in quadruple digits!
Yet, Palantir is an interesting stock. It’s been a slow burn, but now it’s taken off. I am normally at my most uber-bearish when it comes to over-priced tech stocks. The stock market has a tendency to over-estimate the potential future value of incremental tech developments. The value is in paradigm shifts.
For instance, Tesla’s period of value innovation was the commercialisation of Electric Vehicle – making possible a whole new personal transportation sector. That’s when I was invested. I lost heart in Musk and disinvested when the noise became about the potential upside from autonomous self-driving and the second derivative of robotaxis. Naturally, as a bad trader I’d misjudged the market – that’s when the money started to pile into Tesla, attracted by the noise, Musk and the increasing hype.
With Palantir, the course has been different. I call it slow-burn because for years it was just seen as a data company – it’s only in the last 18 months, triggered by the realisations of what AI might achieve and the hype around that, it’s gone stratospheric. That’s been boosted by doubling revenues and some critical US defence and government contracts. Palantir’s paradigm shift is now happening – it’s potentially the leading firm actually showing what AI can do to make Data critical to change and growth.
There are a host of problems to be solved and in data lie the solutions. If you aren’t already invested in Palantir, the question is when? Wait for a correction? Hmm.
Finally, this morning’s Porridge comes from sunny Dartmouth in Devon, which is only about half as far down the English South Coast as we intended to be. We’re having a fantastic time. Our little dog, Dinner Jacket, spent all day yesterday watching for the dolphins as we crossed Lyme Bay. They seem to be fascinated by yachts, speeding towards us, jumping right out the water and splashing in our bow wave. Its all rather magical – and a guaranteed cure to the sheer perplexing misery of trying to understand markets.
Out of time.. and off to breakfast.. and then a proper lunch..
Bill Blain
CEO – Windshift Capital
Author – The Morning Porridge
Partner – Shard Capital
