I have recently reread the best financial book ever and I have read most of them. It is The Ascent of Money: a Financial History of the World by Harvard professor Niall Ferguson. It gives you a great explanation of how the broad sweep of history delivered us to where we are today.

Ferguson starts with an ancient accounting system written on clay tablets in Mesopotamia 5,000 years ago, and then takes us through the economic dominance of Greece and Rome.

We learn about a medieval Italian diplomat named Fibonacci, who imported advanced mathematical concepts from the Middle East, which we still trade around today. He plots the rise of the great banking dynasties, such as the Medicis and the Rothschilds (Jacob was my neighbor in London).

It is also a pot boiling narrative of the great financial scandals, starting with the Mississippi bubble which wrecked the government of France, the South Sea bubble, where Sir Isaac Newton lost his shirt, to the Ponzi schemes of the 20^th century.

The story tells us how the financial center of the world has migrated from Babylon to Cairo, Rome, Venice, Amsterdam, London, and eventually ending up in a hedge fund dominated New York.

Ferguson is particularly astute in explaining in layman?s terms the borrowing binge and the exotic, super leveraged derivatives that lead to the crash of 2008.

The author finishes with an explanation of how American overconsumption is financed by Chinese saving and why this can?t last.? If you are looking for a single tome which ties it all together, this is it.

To purchase? this book on Amazon, please click here.

A campaign to recount the electoral votes is underway in three states, Pennsylvania (20), Wisconsin (10), and Michigan (16).

If successful, it could overturn the presidential election in favor of Hillary Clinton.

If that occurs, the consequences for financial markets would be extreme.

Volatility across all asset classes would explode. The Dow Average ($INDU) would open down 1,000 points.

Domestic US ?New World Order? stocks would instantly give up their recent 20%-25% gains. US Treasury bonds (TLT) would rocket by ten points.

The US dollar would utterly collapse against the Euro (FXE) and the Japanese yen (FXY). Gold (GLD) would soar by hundreds of dollars.

Have I got you interested now?

Personally, I give this less than a 1% chance of taking place.

But, after a year when Britain voted itself out of the European Community, Donald Trump won the presidential election, and the Chicago Cubs took the World?s Series, I have learned to never say never the hard way.

Russia has been interfering with the US presidential election since it started a year ago. A steady drip, drip, drip of hacked Democratic emails appeared in the media daily.

Some 225 million pro Trump fake news posts sent by Eastern European sources were opened by American voters.

This and other inconsistencies has prompted the Green Party to petition for recount votes in Wisconsin.

Trump won by a wafer thin 73,703 vote margin out of 2,700,822 votes cast in the Badger State. A hack of a single county could change the results. The Green Party is paying the $5 million cost of a physical recount.

Similar efforts are underway in Michigan, where Trump won by a miniscule 11,612 votes out of 4,547,998 cast, and Pennsylvania, were he was ahead by a scant 57,588 votes from 5,745,002 cast.

State officials will be working double time to assure that accurate results are available by the time the Electoral College votes on December 19.

If there IS a correction in these three states of only 142,903 votes, Clinton would win the Electoral college by 278 votes to 262.

And that is 142,903 votes out of a total of 126,394,468 cast nationally.

This is not that unlikely, given the thin margin.

There is still another path open to a Clinton presidential win.

The founding fathers, largely members of an elite landed aristocracy, feared the possibility of an uneducated rabble using democracy to take over the government in a future election.

So they created the Electoral College, which requires electors to only vote for ?reasonable? men. Electors may view the popular votes as advisory only, and may vote for anyone they want. This was further reaffirmed by a 1952 Supreme Court Ruling.

These are known as ?faithless? electors.

In 22 elections in American history, some 179 faithless electors voted for candidates against their party?s wishes.

During the 1836 election, all 23 of Virginia?s electors refused to vote because their party?s candidate, Richard M. Johnson, was romantically involved with one of his black slaves.

During modern times, one faithless elector turns up in every election, usually as a protest vote.

In the 2004 election, a Minnesota elector pledged to John Kerry voted for the wrong candidate.

In 2000, a Washington DC Al Gore elector refused to vote at all.

In 1968, a North Carolina elector pledged to Richard Nixon voted for American Independent Party segregationist George Wallace.

Electors are career party loyalists chosen for their reliability. Going against voters? wishes results in a lifetime party ban. So it?s rare that we see more than one per election. Electors very rarely give up power and influence over principals.

However, this year is different.

With virtually the entire Republican Party establishment opposed to Donald Trump, and with the president elect already turning over century long Republican policies, we may see more than the usual number of faithless electors.

And it would not be a stretch for some Republican electors in all 50 states to view Trump as not a ?reasonable? man, especially women and minorities.

They already have their excuse. Hillary Clinton is now winning the popular vote by over 2 million votes.

If Clinton wins two out of three of the states above, and picks up a handful of faithless electors, she could still win, by 271 votes to 269. A 270-270 tie goes straight to the new Republican House of Representatives, which would certainly elect Trump.

This is a highly unlikely outcome, but not impossible. If Trump needed an inside straight to win the election, Hillary needs two inside straights back to back to pull this off.

But it is one reason I plan to run a long volatility position going into the Electoral College vote, and expect to be 100% in cash before the actual date.

It could also be why the Volatility Index (VIX) was modestly ticking up last week when the recount story started gaining traction, even though stocks were still rising.

It's been one of the crazy years. Why change now?

Just ask the Cleveland Indians.

Still Up In the Air

The investment world is horribly out of position.

That is my harsh conclusion after speaking to dozens of portfolio managers, financial advisors, and hedge fund traders around the world.

Virtually ALL are overweight bonds, or fixed income instruments of endless description.

American high net worth individuals are up to their ears in tax free municipal bonds. Many loaded the boat expecting a Clinton win which would lead to higher tax rates and boost the value of tax free investments.

Instead, we got a Trump win. This dramatically chops the value of any tax free instrument, especially muni bonds. If you don?t believe me, look at the chart below showing the sharpest selloff since the Great Crash.

The last time muni bonds fell this fast, analyst Meredith Whitney predicted that the number of local government defaults would explode to 2,000. In the end, I think, we only got two defaults, both in California.

I have spent the last half century watching professional money managers overweight market tops and underweight the bottoms. And you wonder why I manage my own money.

This is why global bond market losses since the November 8th presidential election now exceed $2 trillion. Next year they will grow exponentially.

So when the Trump euphoria runs out of gas, or at least takes a break, ten-year Treasury bonds (TLT) should rally five points. When that happens, sell the daylights out of them. It may be your last chance to do so with yields at the 2% handle.

Trump is certainly living up to his reputation as The Great Debt Destroyer right out of the gate.

And here is the big question for 2017.

Trump?s gargantuan tax cuts and monster spending increases should boost the Federal budget deficit from $400 billion this year to $1.0-$1.5 trillion next year.

How is Trump going to launch a trade war against China when he needs them to buy up to $750 billion of our new government debt?

This dilemma should certainly put his much vaunted negotiating skills to the test.

Less than three weeks after the election, Trump is already adopting Hillary Clinton?s business, trade, foreign policy, and trade strategies, one by one. He is, in effect, turning into Hillary Clinton.

But Wait! It gets worse.

Not only do investors lack adequate weightings in equities, they own the wrong ones.

They are loaded to the gills with high growth technology stocks, and almost completely lacking the shares of companies that were pariahs only three weeks ago, like financials, health care, construction, commodities, energy, and defense.

Call it the double underweight.

It will take many months, if not years, for institutions to rebalance their portfolios into the right asset classes and industry selections.

The good news is that the net push on the major stock indexes will be to the upside. That?s because managers will be selling stocks at seven-year tops and replacing them with those at five-year bottoms.

Technology is not dead for good. It is just resting. It will come roaring back after a long overdue three-six month correction.

Don?t throw away stocks today that you may have to buy back ten times higher in a decade.

Having said all that, all asset classes are now sitting on top of extreme moves, both to the upside and the downside, and are far overdue for corrections.

While stocks have been rising, so has the Volatility Index (VIX), (VXX) for the past two days which is never a good sign.

As they used to say on the eighties TV show, Hill Street Blues, ?Be careful out there.?

As for the week?s data releases:

Monday, November 28th at 10:30 AM EST, we get the Dallas Fed Manufacturing Survey.

On Tuesday, November 29th at 10:00 AM EST, we get a new update on the Q3 GDP Growth. We?ll see if the previously reported hot 2.9% annual rate can be sustained. November Consumer Confidence follows at 10:00 AM.

On Wednesday, November 30th at 2:00 PM, the Fed releases its Beige Book, the most current look at the state of the US economy. The three Fed speakers on Wednesday should all tilt hawkish.

It is also month end, so the window dressers will be out in full force, probably taking markets up to higher all time highs.

Thursday, December 1st, we learn the Weekly Jobless Claims at 8:30 AM EST. The PMI Manufacturing Index follows at 9:45 AM EST.

On Friday, December 2nd, we get the big number of the week, the November Non Farm Payroll Report. This month will be especially important, as it may give the first hint of real post election business activity. This could be our one shot at volatility for the week.

At 1:00 PM we get the Baker Hughes Rig Count. We?ll see if falling oil production puts a dent in US oil production.

Keep in mind that virtually all economic indicators will be useless for the next two months because they will only reflect spending and investment conditions prior to the November 8th presidential election, and will be for a world that no longer exists.

Will the economy improve, reflecting a new optimism for the pro-business administration?

Or will it get worse, showing the rise of uncertainty pending a 180-degree change in US economic policies and a massive expansion of the national debt?

We shall see.