As a resident of a swing state and living not too far from the site of the Republican National Convention in a few months, I’ve been subject to the insanity of the coming election for what seems like an eternity. With the Iowa caucuses last night, the fun officially begins. It’s scary.
I love hearing that the stock market gyrations are caused by the Federal Reserve tightening, China’s economy slowing down, oil crashing, and conflict in the Middle East. All are certainly unsettling issues that cause concern to those who make a living investing. There’s a big elephant in the room that is having a bigger impact on the stock market and on the real economy as well: the presidential election. We’ve had candidates threaten 40% tariffs on Chinese goods. We’ve had candidates use a private email server and receive classified email information. We’ve had candidates propose a 90% marginal tax rate. There’s a chance the US elects an avowed socialist. Are you kidding me? I wonder everyday how this is the best we have to offer as a country.
I know it’s primary season and candidates have to “mobilize their base” and all those other fun buzzwords. Candidates tend to take extreme positions in primaries. We still have a constitution that provides checks and balances (in theory). But it’s very likely one of these knuckleheads will be president. One of my best friends keeps telling me, “I don’t know a lot, but I’m pretty confident the president will not be Donald Trump, Hillary Clinton, or Bernie Sanders.” I hope he’s right but there really aren’t any candidates that excite me currently in the race (although I like a few of them better than any of those 3).
Markets don’t like chaos. Investors don’t like chaos. The uncertainty of this election and the candidates involved is chaotic to put it mildly. Trade wars aren’t good. A leader that’s a compulsive liar isn’t good. The US hasn’t been successful because of socialism. Until there’s more clarity in this election, expect chaos to reign. Markets will gyrate up and down. Economic statistics will be all over the place. It’s going to be a wild ride! (I do have confidence that the good ol’ US of A will pull through in the end. Stay optimistic!)