Economic Insights - October 2019

Comments Off on Economic Insights - October 2019
Economic Insights - October 2019 LoadingADD TO FAVORITES

Roughly one year out from the 2020 U.S. elections and in the midst of what we’ve called the “Second American Civil War,” equity markets are being buffeted by rampant uncertainty. 

  • That uncertainty is driven by:
  • a dramatic realignment of the American political parties,
  • changing immigration policy,
  • bi-lateral trade wars,
  • the twilight of the European Union,
  • monetary policy hang-over from the Great Financial Crisis,
  • a rapidly evolving regulatory environment,
  • selectively lower taxes, and
  • the implications of the North American Energy Revolution.

All of these themes have been covered in our sister publication Trends, but Business Briefings has not deeply delved into those topics, even though they provide the context in which our business and investment decisions are made.

It is increasingly clear that in this era, stocks are moved by headlines almost as much as by earnings and revenues.  We recently saw that phenomenon in action when it was rumored that the Treasury was considering “delisting Chinese firms traded on U.S. exchanges.”  And before the rumor could be quashed, a brief panic ensued.

With that in mind, we decided to take the unusual step of revealing our “base-case” scenario regarding what’s likely to happen over the next year.  It’s based on history and a plethora of trends.  While we use it to make our own investment decisions, it is not NOT intended as investment advice.

Let’s start with the dramatic realignment of the American political parties.  Today, most people assume the left-right alignment that began with the New Deal and World War II will always be valid.  However, the rise of nationalism and populism around the world is forcing realignments in countries ranging from the UK and the U.S. to Hungary, India, and Brazil.  In the United States, this will enable candidates like Donald Trump and Elizabeth Warren to displace establishment politicians like Mitt Romney and Joe Biden. 

Anyone handicapping the 2020 Presidential race, should begin by acknowledging that only once since 1896 has a party lost control of the Presidency after just 4 years; that was Jimmie Carter in 1980.  Therefore, the simplistic estimate of odds of a Democrat victory...

To continue reading, become a paid subscriber for full access.
Already a Business Briefings subscriber? Login for full access now.

Subscribe for as low as $135/year

  • Get 12 months of Business Briefings that will impact your business and your life
  • Gain access to the entire Business Briefings Research Library
  • Optional Business Briefings monthly CDs in addition to your On-Line access
  • If you do not like what you see, you can cancel anytime and receive a 100% pro-rata refund