It’s now only a matter of days, not weeks, until we’ll know whether the Free World is to be ruled by a second President Clinton or a first Donald Trump.
That this is going to have a profound effect on markets has never been in doubt. The Dow and the FTSE have both been moving on poll numbers, with markets generally buying on Clinton upticks and selling when Trump moves up.
Of course, this is not necessarily a bad indicator for Trump in terms of what his campaign is trying to do.
There is, he implies, a kind of ongoing collusion between an establishment that comprises Wall Street, the big banks, politicians and government technocrats. Thus, the markets – in essence the freest expression of the interests of all of those groups – are bound to favour Clinton, which in turn proves Trump’s point that it’s all some kind of cabal.
Still, not all indices or products move in the same direction even when there is a discernible trend. Thus a recent advertising campaign for financial products runs thus: “Whoever wins, play the opportunity,” and thus gold is moving back up again after a short-term dip over the past few weeks.
Miners, especially UK-domiciled ones, tend to like a strong dollar, since that is the currency metals are priced in. And the dollar will likely rise under a Clinton presidency as the recovery from the Global Financial Crisis that began under Obama, or to be strictly non-partisan, under Bush, gathers its slow momentum.
Whether the dollar will be stronger under Trump is an open question. One argument might be that the improving American economy will shrug off a Trump victory and carry on in spite of all the uncertainty, and thus allowing Trump to continue to ride his luck. But after all, you wouldn’t want an unlucky President, would you?
In this context the example of Brexit might be cited, at least obliquely. The British electorate went against the wishes and the expectations of the markets and voted to leave Europe, but still the economy continues to improve. The jury’s out though, on how long that will remain the case.
The really intriguing question is whether President Trump will be as adroit in deciding complex policy matters as he has been in goading, manipulating and, let’s face it, generally just appealing to large parts of the electorate. Because that’s not easy – Mitt Romney couldn’t do it, Senator McCain couldn’t do it, even Al Gore with his consummate liberal credentials and track record of experience couldn’t do it.
There needs to be a certain cleverness on any election ticket, even to allow a campaign to get off the ground. Whether the cleverness in the Trump camp can translate into cleverness in government remains to be seen. But Trump’s admiration of President Putin is worth taking seriously. Putin governs by smoke and mirrors in Russia, often taking decisions at a high political level that run against the direct and immediate economic interest of the country. And yet he remains wildly popular.
Whether Trump is capable of doing that, of giving the US electorate something they can believe in, is the big unknown. Markets are betting against it on the whole.
But markets should perhaps be careful what they wish for. One of President Bill Clinton’s advisors interviewed many years after he’d left office when asked what he’d like to come back as in the next life famously answered “the international bond markets.”
The reason being, he argued, that these are now the single most powerful force in the world. Not governments, but debt instruments.
And it may be that the primacy of globalised international finance markets is now what lies at the heart of the current confusion about politics and government.
The traditional right says big government is too strong, too powerful and too intrusive in peoples’ everyday lives. The traditional left says that government is tied in with other establishment interests in finance and industry and is thus oppressive of individuals and minorities.
And government itself tries to buy off these criticisms with ever greater spending and bigger and bigger debts. This makes the people who hold the debt very powerful indeed. But they are not specialists in government, as the widespread unpopularity of IMF interventions everywhere from Greece to Argentina can testify.
Trump, like Putin, is attempting to break this mould. He will not kowtow to the debt markets. Or at least not without a massive amount of face-saving nationalist bluster. And he will not be pushed around by technocrats. Whether that means he’ll be able to get anything done, nobody knows,
First he’s got to get past the archest technocrat of them all: Hilary Clinton.