Don’t Underestimate Donald Trump
52% to 48%.
That’s my prediction.
Black Bear Value Fund update for the month ended November 30, 2022. Q3 2022 hedge fund letters, conferences and more Dear Partners and Friends, Black Bear . . . SORRY! This content is exclusively for paying members. SIGN UP HERE If you are subscribed and having an account error please clear cache and cookies if Read More
For the 2016 presidential election in November.
And the winner will be:
Donald J. Trump.
I even shock myself writing that. For I am not a Trump supporter. (This dispatch, I promise, will not be a screed against him.) Nor am I a Hillary supporter. (Though I will not rant against her, either.)
But having watched Trump’s Republican nomination acceptance speech last Thursday night, I completely understand his appeal. I see why certain segments of the American population gravitate toward him as savior of all that they hold to be right and true with America. (And, separately, I know exactly why certain segments of the American population will never stand behind Hillary.)
When I finally changed the channel to watch reruns of The Big Bang Theory, I knew I’d just seen the first major speech from the next president of the United States.
I’m not saying that’s a good thing. I’m just saying it is what it is … and what it is will have significant ramifications on the U.S. and global economies, and, thus, on the stocks and bonds in your portfolio.
Donald Trump – Giving Voice to Workaday Americans
Lots of media commentators defined Trump’s speech as dark, dystopian and desperate. Unlike Reagan’s Pollyannaish bright and hopeful “Morning in America” speech, they said Trump’s was packed with rage and despair.
I won’t argue the accuracy; perception is a function of personal views. I can only tell you that I watched the entire 75-minute speech and never once did I think “this is dark.”
Don’t get me wrong. I am not saying Trump is the second coming of Hitler in any fashion, and I’m not trying to compare the two men. What I’m saying is that all the talk of “law and order,” the speaking tones that modulated between caring friend and booming authoritarian, the dramatic pauses and poses after making dictatorial statements about American strength and what he will and won’t do when it comes to dealing with foreign nations … it all harkened to newsreel footage I’ve seen of Hitler’s speeches as he was coming to power in a Germany that, in many ways, resembles America today in terms of average people feeling oppressed and put upon by outsiders.
For 1930s-era Germans, it was the feeling of injustice imposed on the country by the harsh terms of the Versailles peace treaty that ended World War I. Those feelings gave rise to nationalist fervor among workaday Germans who wanted their once-strong and powerful Fatherland to be strong and powerful again and who, in that quest, carried to power an authority figure who promised he would restore Germany’s rightful place in Europe and the world.
Here at home today, workaday Americans rebel against injustices that, while different in fact, are identical in sentiment. They feel international trade agreements are the reason jobs have left the country and why our middle class is hollowing out. (It’s not so simple; the Federal Reserve, the federal government and technology all play a larger role.) They feel immigrants are stealing jobs and running amok (again, not that simple and not necessarily so accurate). They feel Islamic extremists are the greatest existential threat to the American way of life, and that the current government has done too little to express America’s strength in winning/ending that fight.
They feel, in short, that the world no longer respects America, that America is perceived as weak, and they demand a change to that perception.
For them, Donald Trump is their voice. He is their “hand of justice.” He alone, they suppose, is the authority figure who will make America great again … safe again … rich again … respected again.
Again, I am not comparing Trump to Hitler. I simply see that Trump’s acceptance speech reflected what, as a Southerner in one of the “fly-over states,” I know is the true sentiment percolating through the ranks of so many workaday Americans.
A New Vision for the Frustrated Masses
In an odd way, his speech was a contemporary version of “Morning in America.” In an odd way, he did present a vision of hope. You just have to see that vision and that hope through the eyes of those workaday Americans who feel hopeless and for whom Trump’s words served as a manifesto for a brighter, better, wealthier, safer tomorrow. There is, from a certain perspective, hope in that. It’s a vision of a new morning in America, one in which the day’s sunny rays will wipe away the nightmare so many Americans feel that they are living through right now.
I completely get it. In some ways, it’s no different than the visions I bring to bear when I write about all the sundry ways the tin-eared American government continually screws things up for the middle class and the economy.
It’s that odd perspective on hope that, I think, will propel Trump into the White House.
It’s an American reflection of the same sentiment that, a few weeks ago, saw Britons pull themselves out of the European Union in the Brexit vote. Few people expected the “leave” camp would carry the day. Certainly, global Wall Street did not.
I, however, said Brexit would likely succeed … and I recommended put options as protection against market volatility that would ensue.
I did so because I saw that the world was misreading the legal wagering that was happening in the U.K. tied to the Brexit referendum. More dollars were flowing into “stay,” leading people to believe the U.K. would remain an EU member. What I saw was that the “stay” wagers at the gambling centers represented a fewer number of people betting larger sums of money.
The “leave” side, in contrast, had placed many, many more wagers, but at a much lower dollar (well, pound) amount. It told me that the wealthy in London and other key cities were placing larger bets because they could afford to … but that the workaday Britons — those who felt most oppressed by the European Union’s often capricious dictates — were placing a larger number of bets. In such a contest, a quantity of votes always beats a quantity of cash.
It will be the same in America on November 8.
The world will gasp when it learns that an authoritarian with strident plans to alter America’s role in the world has won the White House. And just as Brexit will, ultimately, impose a cost on Britain, so, too, will a Trump victory impose its own costs.
Donald Trump – Financial Catastrophe
I won’t chronicle the flawed rationales backing many of Donald Trump’s economic policies and plans. I will only tell you — I will assure you — that they will have grave ramifications in the U.S. economy, on the global economy, on the stock and bond markets at home and abroad, and on the U.S. dollar. They are precursors to sharply higher unemployment, high inflation, radically expanding federal debt, increasingly large annual deficits, an ever-weakening fiscal position for D.C. to struggle with and a U.S. dollar in decline.
America simply cannot disengage the way Trump has laid out. Nor can America simply renege on trade deals if Trump doesn’t win the preferential treatment he seeks on behalf of the put-upon Americans for whom he has vowed to fight. Actions have reactions, and the reactions to certain economic ideas and beliefs, if implemented, will be catastrophic.
So while I tell you now that Trump will be the 45th president of the United States of America, I tell you only as a warning. A Trump victory will be one of those truly rare events that is bigger than the moment itself. It will force global Wall Street to rethink long-held assumptions about the economy of tomorrow that undergirds investment strategies and beliefs. It’s an event for which gold will be a primary beneficiary, particularly as Trump begins to implement his economic agenda.
I completely understand why so many Americans view Trump as their savior. And I see exactly why his path to Pennsylvania Avenue is clearer than many in the media wish to believe. I just wonder if those Americans truly understand the economic consequences of hiring this particular savior to run the country…
Until next time, good trading…