The Associated Press has put out a historic announcement—Hillary Clinton has officially secured enough delegate votes to have earned the Democratic party’s nomination for president. The AP declared the victory after conducting a survey amongst those who are given votes towards the nomination. The path to securing the delegates was much more difficult than many predicted despite Clinton’s well-known status and heavy fundraising advantage. She was dogged persistently by Bernie Sanders. The securing of the delegates means that Clinton will become the first woman to ever win a major party’s presidential nomination in the United States. Mr. Sanders partly has spoken out harshly regarding the declaration of victory by the AP.
FINSUM: This does seem to be jumping the gun a bit but the AP must be very certain if they are putting their name behind this.
Source: Financial Times
Make no mistake, the election of Donald Trump as president would lead to the devastating destruction of the global economy, at least according to this piece in the Financial Times written by Larry Summers. The piece starts by pointing out that markets are curiously much more sensitive to “Brexit risk” than “Trump risk” despite the similarities between the two possible outcomes. Summers forecasts that if Trump is elected, the US will begin a protracted recession within 18 months on the back of tax cut-induced fiscal instability as well as the possibility of a renegotiated national debt and other erratic policy measures. Another risk is Trump’s plan to repeal trade agreements, which does not require congressional approval and could devastate the US’ exports.
FINSUM: This is a well-reasoned and engaging article that does the best job of outlining “Trump risk” that we have yet seen. Definitely a must read for any investor.
Source: Financial Times
Throughout the Donald Trump campaign saga there has been relatively little mentioned about the potential conflicts of interest he would have as President. There is little precedent for a US president with the kind of active business interests Donald Trump has, and this piece addresses the fact that there are no formal conflict of interest rules governing the office of the President. These do exist for other officials, but were officially never put in place as a long-ago Congress did not want to deter business people from holding office. However, over the last several decades almost every president (Obama is an exclusion) has abided by a “blind trust” rule where a president’s assets are set up in a trust entirely controlled by third party manager while they are in office. Trump has business interests all over the world, including in the Middle East and China, so both his domestic and international affairs could be heavily impacted by his own interests.
FINSUM: Conflicts of interest are a very important factor for voters to weigh when choosing the country’s next president. However, we have a hard time believing that Trump supports will care.
Barron’s has run a piece which weighs whether an election victory by Donald Trump would spark a bear market. Barron’s believes that a Clinton victory would be much better for markets, but this piece says that some high profile investors believe Trump would spell doom. Mark Cuban in particular believes Trump would be very bad for markets, and he thinks his election would send prices down 20% or more. Cuban believes Trump’s flip-flopping would undercut stocks. However, another market and political commentator is doubtful about Trump’s impact, saying that US presidents only have limited impact because of the balance of power in the US political system. Though, this latter view may be underestimating Trump’s ability to work with Republicans in Congress to pass new legislation, like tax cuts.
FINSUM: Interesting piece, and we do agree that a Trump election would be worrying, mostly because investors could never be sure where he stands on any particular.
Throughout the election, there has been a great deal of speculation about Donald Trump’s wealth and income. So far, he has not released his tax returns for public view, though there is increasing pressure on him to do so, as presidential candidates for the last 40 years have made their returns public. After recently saying he would not do so, he has since backtracked and said he will release them. This article is written by a journalist who has seen Trump’s tax returns but who is unable to write in detail about them because of a court order. The author says that Trump’s returns being made pubic will shed light on the following areas: Trump’s income, which he is claimed to have overstated, his business activities, such as the size of his business, the size of his charitable donations, which he claims are significant, the type of tax planning he does, which will be interesting in light of the panama papers, and his potential conflicts of interest as president.
FINSUM: This is an interesting article made more so by the fact that the author has actually seen some of Trump’s older tax returns. We suspect that when these are released there will be a big reaction.
The Financial Times has published a useful article examining how the upcoming election will impact markets. The piece looks at how the presidency of either Trump or Clinton would impact certain asset classes, and it discusses how it might impact those asset classes along the way. Firstly, on the Dollar, Trump has been inconsistent, saying he loves the idea of a strong Dollar, but recognizes the importance of a weaker one. Clinton has so far avoided discussion on the topic, but she is generally seen as less threatening to the status quo, as she has not threatened to remove Fed chief Yellen, as Trump has. On stocks, again, Hillary is likely to be safer, while Trump could induce volatility and losses. As far as sectors, defense and infrastructure look likely to be a major winner with either candidate, while biotech would probably be very wounded by Clinton. US-based manufacturers may also be hurt if Trump is elected as he wants to redraw trade pacts. Both candidates have said they want to overhaul commodities markets, with Clinton saying she would greatly limit fracking. Finally, on government bonds, Trump looks like the biggest threat given his recent troubling comments about renegotiating the national debt.
FINSUM: This is a good article which gives an overview of how each candidate might impact major asset classes and sectors. Election-related investment considerations are going to become increasingly important from here.
Source: Financial Times