Political Sea Change

You know, we don’t want to get too political here. That’s not our job.

But let’s face facts. There’s a very real chance Donald Trump wins the White House. The Democrats picked the wrong candidate. That’s not to blame them. She was the obvious candidate. Or was she? She’s become an easy target for criticism. There’s little doubt in our minds that Joe Biden or (especially) Elizabeth Warren would have made a mockery out of Donald Trump at last night’s debate.

And let’s just be clear: we’re not advocating either side. If the Republicans had run Paul Ryan, he might well have just waltzed into the Oval Office given Clinton’s recent corruption charges. But the Trump juggernaut was too much. The problem is, he’s alienated so many voters that it’s not clear whether he can win, even amid unprecedented grassroots support. But here’s the thing. Had he not alienated those voters, it’s not entirely clear that he would have gotten the nomination in the first place. Trump is Trump. You either “deal with it,” (to use his own words) or you don’t, but this race by all accounts shouldn’t even be close. But it is. And that speaks to the fractured political system inside the Beltway.

But if today’s market action is any indication of what’s to come, were Trump to triumph in November, we’re in for a rollercoaster. As we said earlier today, it’s not clear to us that Clinton “won” the debate. In fact, it seems pretty clear to us, that under the circumstances (i.e. experience) she lost - miserably. Think about it. This wasn’t Mitt Romney again Barack Obama. This was a (possibly insane) billionaire against one of the most storied stateswomen in American history (notice we said “storied’ not ‘respected’). Say what you will but Joe Biden or Elizabeth Warren would have mopped the proverbial floor with Trump last night. And can you imagine what Bill would have done to him?

They didn’t know it at the time, but the democrats had three possible candidates. They accidentally chose the worst one. Hillary, by her own admission, is good at getting the job done, but pales in comparison to her husband when it comes to campaigning. Frankly, she’s terrible at it. Trump is too. To a degree never before witnessed in American history. But, Trump doesn’t play to be the best campaigner. Trump plays for Trump. And that’s why the polls look like this:

(Chart: Citi)

That is silly to the point of absurdity,

And look, we have no objections to billionaires running for the White House. Michael Bloomberg should have run as an independent.

Hell Mark Cuban should have run.

But we’ve gotten to a point where politics in America is so perverted that Donald Trump has a real chance of beating a Clinton for the White House.

He already trounced a Bush.

But we just want to be clear here. This will not be good for your assets. It just won't. If Trump gets elected you’ll see a dramatic selloff the next day. Will it be 1,000 Dow points? Well, of course not. But we’ve argued time and again, that as an investor you have to be politically agnostic. Period. You go with what defends your portfolio.

And this is a critical moment in political history. If Trump wins in the US, Frauke Petry may become Chancellor of Germany. Then you have a very real problem.

As much as we despise the status quo, this isn’t the “change” you want. This is 1939 all over again. And if you think we’re being hyperbolic, look at AfD’s numbers in Germany.

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  • Ted

    September 27, 2016

    i'm as bearish as they come. but really, whats Citi smoking? go here for REAL statistacal analysis: http://projects.fivethirtyeight.com/2016-election-forecast/?ex_cid=rrpromo

  • marksky

    September 27, 2016

    The market needs to sell off regardless of who takes the reins.... I'd rather see someone who respects law and order...

  • Rodney Emrick

    September 27, 2016

    I will be buying after a trump selloff. Trump owns a Loooot of real estate. He knows how to broker a deal. JMO The brash talk is a setup for those deals. I have thought that the US has gotten into too many bad trade deals.

    And just how are lower taxes bad for the economy?

    I do agree that there would be a lot of uncertainty with a trump president.

  • Donald Groce

    September 27, 2016

    Good to be validated. I was for Bernie Sanders out the gate. Had misgivings about Hillary being a tired brand and carrying too much baggage. Yes I recognize a lot of that baggage is chock full of lies from Trump and his ilk. I too have compared the political climate to 1930's Germany. It never fails. Demogogues come out from under their rock when times get uncertain and fearful. If Trump wins, it will be one more time that my instincts were right when I hoped to be proven wrong. I will vote for Hillary and the whole Democrat slate. The Republican party lost its mind long ago. Now we will see if this country has done likewise. Thankd for the piece.
    Don Groce

  • Michael Wells

    September 29, 2016

    You think it really matters which of these ass-monkeys gets elected. We are screwed no matter what, as the Fed is the real danger here and they are not accountable to anyone, near as I can tell, except the private banking interests. Bernie Sanders. Really? Please show me one example in all of recorded history of Marxism working. And don't give me the "he's a social democrat" line. Every form of fascism starts out looking like that, and ends up a killing machine.