The Candidate 2016? Part One

Summary

Discussion, critique and analysis of the potential impacts on equity, bond, commodity, capital and asset markets regarding the following:

• Final 2016 Presidential Candidates.
• Candidates Economic Advisory.
• The Election as a Market Catalyst.

Prologue

Our trademark style, including an apt cultural icon as metaphor, the sweep of the monetary scene, disdain for "conventional" wisdom, rejection of "received" truths, an insouciant flair, and a grounding humility about the efficacy of econometric forecasting methods, is by design.

We attempt to encourage "outside the box" thinking by bringing together conventional and non mainstream information and ideas and liberally stirring the pot. The resulting controversy can spawn questions deserving of answers, stimulate much needed healthy discourse and hopefully, bring about positive change.  Moving West...

"Following our theme in Charade?...From a macroeconomic and demographic standpoint, through its many communications and announcements, the Fed "firmly anchors" inflation and market expectations.

Through the catalyst of risk weighted asset valuation, further mandated increases in capital requirements are causing capital constraints, liquidity issues and perhaps, a diminishing of Great Expectations"  - 10/31 - The Anchor Of Expectations?

Speaking of "Great Expectations", from the amount of controversy and discussion this election has spawned on a global basis, what can one infer? Submitted for your perusal, a three part sequel to March 24th's politically charged The Next President?. 

What follows is our insouciant, unbiased, balanced, hopefully entertaining, non partisan dig involving election process, electorate, candidates, their economic advisory teams and potential future affect of outcomes on the markets. Enjoy stirring the pot, we do. 

Trebek queries, How many US voters might feel on November 8, 2016 while voting for this years presidential election class? What is portrayed in this video? or What is your "choice" for....

The Candidate?

A 1972 American satirical comedy drama film starring Robert Redford and Peter Boyle, and directed by Michael Ritchie. The Academy Award winning screenplay, examines the various facets and machinations involved in political campaigns. The son of an ex-Governor Bill McKay, is a candidate for the U.S. Senate from California. He has no hope of winning, so he is willing to tweak the establishment.

While the tools and the news cycle have changed, the careful cultivation of message and image, the political doublespeak and opportunistic pandering is as contemporary as ever. What played as cynicism and satire then, however, is simply business as usual today, which is one of the reasons the film remains so prescient.

Vote The Odds on the Come-y?

Into the final stretch of the campaign, Hillary Clinton seemed to be coasting to victory. With two weeks left in the campaign, Clinton was a -550 favorite to Trump's +350 and Other's +3000 underdog odds.

Monday Oct 26th, news that the average premium hike in 2017 for people participating in some of the popular health plans available on the ACA federal exchange (as part of Obamacare) would be +25%, did not help Hillary's cause.

Friday Oct 28th, afternoon reports that the FBI is investigating potentially newly found Clinton emails, changed sentiment and drastically affected the odds. 

Clinton is now listed at -300 with Trump's odds increasing to +200, along with Others to +2500. In terms of probability, -300 means the books give Clinton a 75% chance of becoming president compared with an 85% chance at -550. For Trump, the change increases the implied probability from 23.5% to a 33% chance that he'll win the election.

Above note, after the new email news broke, stocks fell sharply. Regarding the FBI announcement...

"The FBI cannot yet assess whether or not this material may be significant, and I cannot predict how long it will take us to complete this additional work." - From FBI Director Comey's letter to Congress

With only 11 days until the election, was this development a coincidence? Or given the circumstances, is this video a reasonable facsimile of the relevance in Comey's bringing new information to light? TBD.

Vote Nixon?

We vividly remember 1972's Richard "Tricky Dick" Nixon's reelection campaign vs George McGovern...

Those risque buttons above, pale in comparison to the depths which this years presidential election class has sunk, as both candidates and the incumbent, have been vilified by media and various propaganda memes.

"This campaign trail was been wrought with accusations, shouting, profanity, a lack of comport, deference, demeanor, intelligence and the heightened inability to elucidate with alacrity. Replete with sexual repartee as to the size of Trumps hands, etc.? The rhetoric of Rubio, Cruz, Trump, Clinton with Sanders being the "best behaved"?... This is what passes in the new millennium for democracy in action with "freedom of choice"? - The Next President

Ignoring the vitriolic references being used by both sides in this process, and the socio-economic connotations that give rise to such, would be lacking in critical thinking, which is essential to any analysis. 

Vote Hate?

Above note, since 2008 hate voting or negative votes, its not who you are for, but who you are against, to keep the other guy out, have increased +21% with democrats, +18% with republicans, while positive voting, for the candidate you actually like, has shrunk -15% for both democrats and republicans.

Is this a sign of voting for the lesser of two evils?  Does the increase in hate or negative votes, and the decrease in positive voting, reflect a societal schism?

Vote Perception?

Above note, amongst registered voters, both candidates are the most disliked, and the least liked, in US presidential election history.  Is perception reality? Is this a manifestation of the hate vote or divisive political rancor?

A Contentious Process?

The 2016 presidential election is carving deep scars on the American soul. The nation is left to pick up the pieces after November 8th. Financial markets are starting to react to the coming turbulence but remain dangerously complacent.  Each of us has the ability to control our own personal destiny by our choices. - Michael Lewitt

Almost 2 years of campaigning; 39 Republican primaries and 17 caucuses; 39 Democratic primaries and 18 caucuses. 58.4M, or 29.2% of registered voters, actually voted in the Republican and Democratic presidential primaries. 

The GOP had their highest primary turnout since at least 1980, 14.8%. Prior to Trump becoming the presumptive candidate, the GOP turnout averaged 16.6%. Democratic turnout of 14.4% was well below the record 19.5% in 2008. 

Combined turnout of 29.2% fell short of the 30.4% record in 2008.  Voter turnout records: as a percentage of population, 1876 at 81.8%. As for total voter turnout, 2008 with 131M.

In 2012, 314M pop.; 215M eligible; 153M registered, 133M voted; reasons cited for not voting: not interested 13.4%; did not like candidates or issues 12.9%

In 2016, 324M pop; 227M eligible, 200M registered. 

The 2016 campaign may have reached dispiriting new lows, but voter registration has soared to a record 200M, of which 69% say they will vote, yielding a potential record 138M votes. How many voters will turn out on November 8th? How many will actually be able to cast their vote?

More to come tomorrow in Part 2 and in Monday's finale.