The algorithm is now keenly aware of my obsession with the worst hedge fund manager turned Treasury Secretary so I’m a little biased when it comes to my coverage of Scott Bessent. When he was originally appointed I remember remarking that this appeared to be the lone “adult” voice in the administration who might be capable of steering the finances of the ship away from Trump’s worst tendencies. I was decidedly incorrect.
The reason I continue to focus on Bessent is because of the deepening financial crisis on Main Street and the looming catastrophe in the debt market that threatens to undermine the entire global capital order. The one thing I was right on is that Bessent has been handed the keys to the entire economy and he’s literally everywhere. He’s been tasked with finding the new Fed chair. There is speculation that if it’s Kevin Hassett then they’ll roll up his current responsibilities as director of the National Economic Council into Bessent’s role as well.
Bessent is the one at the head of the table in all of the “trade negotiations” which aren’t really trade negotiations, of course. They’re just bully sessions where we continually don’t get our way and that’s why we have one-sided tariffs and no real movement on anything that can be considered a trade agreement. He’s also become the most visible media figure in the administration, trusted to make the rounds on any and every mainstream media outlet possible. He is nothing if not indefatiguable.
So Bessent’s fingerprints are all over the economy. We’ve had influential Treasury Secretaries before, particularly those in times of crisis, but you’d have to go back quite a ways to find one who presides over so many aspects of economic policy. I’m talking Henry Morgenthau, Jr., under FDR.
But never has a TS been so disgustingly partisan. In every interview he takes swipes at the Biden administration like a child. He has this habit of addressing the interviewer by their first name before launching into a critique of their line of questioning. It’s the most patronizing thing ever. He stammers and stumbles every time he’s put on his heels by a position he has reversed course on (tariffs, interest rates) and gets defensive at the suggestion that there’s anything wrong with this economy.
One of the funniest moments came in a recent Face the Nation interview when he quotes an index called the “Common Man CPI” as evidence that inflation is under control and it’s the media that is blowing things out of proportion. It’s the “don’t believe your lying eyes” bullshit he always pulls but this one caught my attention because it’s certainly not an index that I had ever heard of.
So I looked it up.
The Common Man CPI is the product of a research firm and asset management company called Strategas. The CEO Jason Trennert appears regularly on the financial news channels and was even nominated earlier in the year to be an Assistant Secretary of the Treasury, before withdrawing his name for health reasons. Trennert is a GOP stalwart and Trump promoter who unabashedly slams anything Democratic and built the “Common Man CPI” ostensibly to shit on the Biden economy.
Firms like Strategas make money in a couple of ways. One, from selling proprietary research to other firms on Wall Street and investors. Two, by managing assets through managed accounts and strategies that investment advisors can allocate client money to. The ability to publicize a proprietary index like the Common Man CPI is a big deal if it catches fire. Think of how much economists rely on ISM data or the Challenger Gray & Christmas labor data, for example. It allows firms to punch above their weight and keep their names in the media.
So when Bessent used the Common Man CPI in his Face the Nation interview to prove that inflation was under control, I couldn’t resist. Full disclosure, I refuse to sign up for their research and they don’t make their current information publicly available so the only ones we can see are from 2024. The CMCPI is actually a smart index on the surface. It measures food, energy, shelter, clothing, utilities and insurance. Things that impact, well, the common man person.
I’ll assume for argument’s sake that the new CMCPI shows inflation coming down more than the inflation data that we typically look at. This excludes healthcare, services, automobiles and other measures that aren’t accessed routinely so I think it’s a fair idea. But there’s no mention of data sources or methodology so it’s hard to test the veracity of the index, especially considering the hyper partisan nature of the firm itself. So I decided to look at how good they are as asset managers and you won’t believe what I found!
They suck.
Every managed strategy performs below their benchmark. Every. Single. One. The firm boasts about $500 million in assets under management (AUM) which is a rounding error in the world of finance and their directly managed strategies are lackluster at best. Take for example their “Blue Chip Opportunities” strategy. Over the past three years if you invested in this strategy the return was 13.9% net of fees. Not bad, huh? Not bad until you realize that their benchmark (the index THEY chose as their main competitor) is the S&P 500, which returned 24.9% over the same time period.
Pick a strategy, it’s all the same.
So the failed hedge fund manager in charge of the Treasury, all of our trade deals and selecting the next Fed Chair is going around promoting an index compiled by a Trump supporting asset manager who got smoked by the most prominent and obvious stock market index in the world.
Am I being petty? You bet I am. Because these are big jobs meant for serious people. And I’ve never seen a more unserious group of people who think they’re smarter than everyone else. Stupidity and hubris are a bad combination.
