Soon after the first presidential debate, we saw markets increase more than three-quarters of a percent. That followed a dip Monday prior to the evening debate. Some headlines told us that these alarm bells came from a possible Donald Trump presidency. Can we expect to see similar trends before and after the next debate on Sunday?
Now it would appear that some believe that Hillary Clinton won that first debate, and that she is well on her way to victory in November. As a result, markets headed upwards. The interesting part of this situation is that Wall Street analysts have become so complacent that I have lost confidence in their ability to do hard work necessary to ascertain when the fundamentals of the economy are getting better. It would seem they have long forgotten what the economic environment is like when prosperity is not isolated to just those at the top.
Could it be that it’s only about growing these analysts’ personal wealth, along with the wealth of their firms? Has it become more important to maintain an environment where government exerts more control and central banks are overly involved in the economy, as they have been for the last eight years?
A Distorted Picture of Prosperity
Forget about the fundamentals of the economy. It’s all about the “positives” of artificially low interest rates and the next move of the central banks. Meanwhile, tens of thousands of people have been forced to invest their life savings in the market to supplement their Social Security income. And all this comes while the global economic environment means nothing because of the lack of true economic growth.
Analysts ignored concerns raised earlier in the week about Germany’s shaky Deutsche Bank. And, what might happen since Chancellor Angela Merkel made it clear that she was not going to intervene to help capitalize the bank. They must trust, if necessary, that she will ultimately bail out the nation’s largest bank.
Do the Deutsch Bank’s concerns remind the markets that a Donald Trump presidency might not be as accommodating to failures in the U.S. banking system as a Hillary Clinton administration might be? Maybe. Has Wall Street quickly come to the conclusion that it would be far better for us to maintain a stagnant 2 percent GDP growth, no real wage increases and attacks on discretionary income—even if it means they’ve got to bear some attacks themselves?
Or do Wall Street, central bankers and the financial sector globally realize that the point of no return has already come? Do they see that they will need an environment that will be about more globalization and radical change in world currencies? That a world government is in order for them and the global economy to survive?
Some have said the biggest concern financiers have about Trump is his lack of knowledge about policy. That is generally the argument of established politicians who have done nothing for 30 or 40 years.
The Certainty of Regulation
While I understand that uncertainty for markets is negative, for some reason, markets can’t seem to grasp that the certainty of a Clinton presidency is more social control, more government intervention, more regulatory burdens, and a higher, anti-growth tax structure—not to mention an ideology of strength through weakness and spending our way to prosperity. Apparently, they prefer that kind of certainty as opposed to the uncertainty and possibility of real organic growth within the economy.
Right now it would appear that the elitism of politicians, political correctness, the “Obama normal” of 2 percent annual growth, and an ideological bent toward socialism is best for the continuation of lining one’s pockets. Forget about less government intervention so we can see companies growing and hiring more people.
Sadly, bringing America back to the Constitution, free market economies and maintaining a land of opportunity seems to be of little concern for those who—at least at one point in our history—used to be the heartbeat of America.