Elite under Pressure
Pfäffikon SZ, Switzerland – The denouement of the US election is imminent. The elite in Washington imagined themselves safe, but the course is more unpredictable than expected. Loyalty to the party, experience at government level and even expertise in various areas is skillfully destroyed by the voter. A vote for Trump is a vote against the establishment.
Pricing in
It will be a long time since the American Democrats have felt lonely. For many years, Donald Trump argues against the establishment and seems to be having more success than expected. The people no longer trust the politics and the underlying institutions of which ‘The Donald‘ is making convenient use. Earlier this week, Trump led the polls which triggered nervous behavior on the markets. A possible winning of the elections by Trump is in no way priced into the markets.
Independent
An interesting thought is how independent Janet Yellen of the Fed has operated during the past year. Surely, many market researcher can recall the demand for higher interest rates from the market. Yellen continues to stay firm and maintains her loose monetary policy as a gift to the Democratic election campaign. This delay is coughed up by investors who long haven’t been able to achieve a decent return on their capital.
Meanwhile, the voter has become more than tired, which appears to be a worldwide phenomenon. A vote for Clinton means another four years muddling along at a time that calls for more dynamism. According to the ideas of Kondratieff we live in a kind of financial ice age since mid-2000. A lot of political courage is required to break this period.
It promises to be a historic week. If Clinton wins, it will be the first female president of the United States. Both friend and foe agree that she will fulfill her job with grace and gusto. If Trump wins, this will initially be accompanied by uncertainty; something investors do not like. In general, it is unwise to invest on the basis of political changes as they are totally unpredictable. However, reluctance is recommended during this juncture.
It remains for me to wish you a good weekend.
Jan Dwarshuis is a senior asset manager at Thirteen Asset Management AG, where he is responsible for the Thirteen Diversified Fund. Dwarshuis writes his columns in a personal capacity and is not paid for them. Nor is he paying for his columns to be placed. Professionally, he holds positions in major European, American and Russian stock funds. The information in his columns is not intended as professional investment advice or a recommendation to make certain investments. At the time of writing, he has no position in above mentioned shares and has no intention of doing so in the next 72 hours.
