Peter McGahan examines the impact the US election will have on jobs and money!
Today is the day of the US elections. Here, Peter McGahan, the owner of Worldwide Financial Planning, a company of independent financial advisers with offices in Kesh, Truro and Southampton, cuts through the nonsense and tells it straight as to what the impact will be on your money and your jobs!
So the day has arrived of the USA election and what might it bring for your hard earned pension funds, your Isas, your family’s day-to-day happiness or the future of the world?
Firstly, why should you be interested? The USA is a powerhouse of trade and a bellwether for the economy globally. Secondly the foreign policies, or antics of this colossal spending machine make the world tick. In a time of spiraling tension between them and many foreign countries, this election may prove to be the biggest and most important move ever.
How have we ended up with these two? It is hard to imagine for the impartial individual that we have two people of the ‘calibre’ of Donald Trump, or ‘Drumpf’ as his family name was, versus another of the two people I would least allow to baby-sit my children – Hilary Clinton as the two candidates from 320 million available options.
You might think that something pretty bad has gone wrong. Perhaps.
Indeed. It is the ultimate in this world of offering binary choices for the masses, sprinkle fear and lies, and hey presto, you have a simple duality for people to choose from dark versus night, good versus evil, Brexit versus non Brexit.
In a world full of mindless dualities, no-one asks “do I have anything palatable as an option?”
A bit like Brexit – its déjà vu all over again.
Its hard to ignore Roosevelt’s comments from years back when he stated ‘presidents are selected, not elected’.
Hillary Clinton has survived everything thrown at her so far and Trump’s view that the FBI couldn’t have viewed 650,000 emails in eight days seems a fair point. Her lawyer’s aid deleted 33,000 emails using a software called bleachbit after a subpoena, which left her open to a half true attack from Trump.
Similarly, when John Pilger’s interview announced last week that Hillary Clinton’s foundation had the same funders as ISIS and ISIL, we might have expected the press to go to town – nothing. Indeed her comments on nuclear action against other countries leave me cold.
Trump has made it easy – almost effortlessly – for the world to loathe him, but a void has been created which he has filled. In a world where many are disenfranchised, fascists ‘movements’ do not seek to involve the politically active, rather it is the opposite – those who are apathetic, distanced and made, through a perceived elite system to be surplus to requirements.
As was seen in Brexit, these people, who are made to feel as ‘losers’ in a neoliberal society, are offered a voice and, having been kept on the side, respond not to lengthy analysis, but to ‘memes, sensational ‘headlines’, slogans, flags and one liners.
In a distracted ‘x factor’ society, many do not have the time nor energy, and, to be fair to them, the intellectual capacity to filter through the blatant noise.
Hitler’s right hand man Groebbel’s stated that if you tell a lie big enough (a lie so preposterous that no-one could think it made up) and keep repeating it, people will eventually come to believe it.
Well history doesn’t repeat itself but it often rhymes and this is no rhyme to sing along to, for nothing fills me with more horror than the anticipation of this result – either way.
And so what are the chances of success of either individual?
It’s hard to see why anyone might be considering Trump but he isn’t the problem. It’s Clinton. Nearly 70 per cent of all voters think she is untrustworthy or dishonest. One minute against gay weddings then stating she’s fully for them. Telling people she was under sniper fire on a plane then being shown the video and saying ‘I made a mistake’. There are never ending lies for her to disentangle. She has indeed made a mess of it.
Many will see Trump as the last chance to shake this up a bit.
As much as I don’t watch mainstream press and its sponsored noise, I have observed it to see what the mainstream sponsored press noise is. Virtually everywhere I look its either ‘close’ varying up to an outright victory for Clinton.
A Wallstreet journal (WSJ) NBC poll has Clinton ahead by 11 and Fox has Clinton ahead by seven. Now, with a world of ‘spaghettified’ noise you believe it or you don’t.
Rupert Murdoch, who according to sources inside, wanted to take down Donald Trump, owns both of the above organisations and the subsequent interviews that followed surely pointed that way.
Allegedly Mr Murdoch is now supporting Donald Trump in a bizarre flip flop, and the Fox anchor’s comment of “make sure we don’t go after trump” may be more to do with the fact that ratings dip on Fox every time they attack him.
So we might need to look closer at the data. And that’s where it gets interesting. The book ‘Slander’ shows how media use polls to push agendas. The intention is to encourage people not to vote, make it not worth their while, or by making it a foregone conclusion. The example is Jimmy Carter leading Reagan 47-39 only to find two weeks later Reagan winning in a landslide.
Is this to be another? Well. The WSJ/NBC poll above was actually created by a Clinton SuperPAC (political organization committee). The Monmouth university poll with its political weightings also had Clinton at a 43-39 win in Ohio.
However, in closer inspection we can see that Patrick Murray at Monmouth changed the data through ‘weighting’ (trying to reflect assumptions the pollster puts into the anticipated turnout of the election). In the unweighted sample of this data Trump leads 41-39. The same is true of the aforementioned polls.
Both show they were skewed towards democrats. At a high level the FOX poll consists of 43 Dems to 36 Reps to 21 Other while the NBC poll shows 44 Dems to 37 Reps to 19 Other. These polls are designed to provide a Democratic result.
And now for the important part: Experts analyzed the data but used an equal split of Democrats and Republicans rather than skewing anything, and on both the above Polls….Trump comes in first.
Personally much will depend on that disenfranchised voter. The campaigners have been repeating that, on their campaign, they have visited many immigrants who don’t even know how to poll or where to go to. Many have not stated where they will vote except that it will be ‘against’ one person rather than for another. My view is that this would be a move against Trump. We will see.
Secondly I cannot see him winning the 29 Florida states and if he doesn’t – goodnight.
A Trump victory will have worldwide ramifications as of course would Clinton’s victory. I’ll come to the impact on markets in a second. It seems we may be blasted either way.
Trump has stated the elections are rigged, possibly citing the documentary ‘uncounted’ where indeed it was shown how easy it was to rig elections. More worryingly the misguided may have a view. Trump’s adviser Roger Stone has said there will be chaos following a rigged election and that it would amount to a bloodbath.
He states that if there is voter fraud the election would be illegitimate, the winner would be illegitimate and a constitutional crisis would follow along with civil disobedience and ‘the government would no longer be the government’.
None of that bodes well.
Impact on your money:
So in the short term (first few days) for sure a Clinton victory would be good for markets after all she is the cog in that establishment.
Trump has virtually every establishment on the wrong foot so undoubtedly the response would be positive indeed. The dollar would rise which in turn would drive the FTSE100 higher due to the earnings from much of the FTSE coming from overseas and in turn being repatriated into a weaker sterling.
In the longer term, the backlash from Trump’s disaffected supporters may not be healthy. Having a look at Forums/USA comments from Trump supporters, Matt Dallek, associate professor of political management at George Washington University’s point is worth looking at.
“I think it is coming to a crescendo. Violence is not a forgone conclusion”, he said, “but in a country with more guns than people, all it takes is an armed, angry lone wolf Trump supporter for tragedy to occur”.
One thing this has shown to be true: There is a fault line of divide in America that this election could cause the earthquake from. That would again have a large destabilizing effect on markets.
A Trump victory?
This would be a shock to the system and to the ‘route planned’. Is it a shock the world economy could deal with now?
There is considerable fragility in world markets. The International Monetary Funds (IMF) October outlook points to gloom in Europe. Italy is the 3rd largest economy in the Eurozone and continues to grow at 1% per year. A neo liberal view may be – tough, that’s competition, that’s capitalism – but that’s not actually how cogs in a watch work.
Simon Johnson a former chief economist at the IMF points to the worry of the banks and their failure to recover from earlier losses. With equity capital levels there low in comparison to their international competitors and for what an investor would be comfortable with banks are a big concern.
Currently, there is no agreement on how to share bank losses across countries and the decisions would be made on a country-by-country basis.
China has a growing reserve issue. Jens Nordvig from the specialist currency boutique Exante Data shows that reserves are down to $3.17 trillion from a peak of $4 trillion. The orderly depreciation has come about only by the Chinese central banks intervention but the cracks will make their way to the surface.
The International Monetary Fund in its most recent Article IV report “Buffers, while still adequate, are shrinking fast, calling for urgent action to address rising risks,”
Nordvig is expecting a further drop in reserves of around $80bn and it is clear that markets are not prepared for this. Moreover the Chinese authorities have repeated the error they made in 2015 with a state sponsored stock bubble with a very poor outcome. Indeed the ballooning central government deficit along with the aforementioned issues lead to a cauldron of toxic ingredients.
Growth in middle income emerging economies isn’t strong which is reflected in lower projected imports and commodity prices which of course has an impact on countries that export raw materials and as an example Nigeria’s economy expects to contract by 1.7 per cent this year.
And this becomes the crux. Trump may not be as daft as he appears with his intermittent wild remarks but he has detailed his intention to curtail imports everywhere he can and he wont need congressional approval to do this as president. When Trump stood in Michigan in front of the Ford garage he threatened them with a 35 per cent tax on car imports to the USA if they moved their factory to Mexico. He stated he would also force Apple to make their iPhones in the states.
Many of his ideas like most politicians aren’t fully thought through but this action would force Europe headlong into a full-blown recession also creating the tipping point of the banking crisis above. The impact across the world on emerging markets and lower income countries would also be catastrophic.
Markets are aware of this and the hedge funds and vultures would take the opportunity to sell short anything they could, causing widespread panic.
The calm after the storm would of course be to pick up the strong value stocks that have been bashed unnecessarily.
Should we need to be in this position? It is proof that a two party system is indeed nonsense and the two candidates are proof of that and what it serves.
Is this the American dream everyone signed up to?
- For interview requests of requests for comments pieces please contact Eleanor McGillie at MGMPR LTD on 028 3756 9569. Brand Journalism experts based in Northern Ireland, UK and Ireland.