While The New York Times Upshot column has Hillary Clinton at a 79% chance to win, the reality – to anyone watching the race closely – is that the odds are now 50-50. In fact, if Donald Trump can win Ohio and Florida, he stands a good chance of upsetting Hillary in the fall.
So, what seemed utterly improbable just a few weeks ago is now a serious possibility to any observer with a realistic view of the 2016 election. Therefore, the question needs to be asked: What would a Trump presidency do to the markets?
The man is so volatile and unpredictable that any forecast is certainly fraught with error. Still, for those of us in New York City – who have observed him for more than four decades – two things are imminently clear. One, Donald Trump loves to spend money. Two, Donald Trump always goes bankrupt.
What does that mean for investors and the U.S. economy? It means stimulus! Trump is the farthest thing from a fiscal conservative. And he no doubt salivates at the power of leverage that low interest rates provide the government, and he will surely increase spending on both defense and infrastructure the moment he enters office.
Gone will be the quiet frugality of President Barack Obama, who managed to reduce the Federal deficit by $1 trillion. Instead, borrowing will explode.
|The Constitution gives us the right to vote but doesn’t give any hints about who to vote for.|
Initially that should prove quite beneficial for the U.S. economy. The expansion of demand and the infrastructure spend could juice up the GDP and send stocks to record highs.
But it will also likely send U.S. rates higher as the Fed will have less reason to maintain its accommodative posture, which in turn could bring the whole U.S. economy to a screeching halt by midterm elections.
The markets, ironically enough, may already understand this dynamic in play. After a few days of choppiness, prompted in no small part by worries over the Trump bounce, they are right back to rallying again as the immediate message of the current campaign season seems to – let the good times roll. At least for now.
New theory on Amelia Earhart. According to decades of conventional wisdom, pioneering aviatrix Amelia Earhart and her navigator died in 1937 when their plane crashed and sank into the Pacific Ocean during her attempt to become the first woman to pilot a plane around the world. But now there’s a new theory, reports The Washington Post. Noted aeronautic archaeologist Ric Gillespie has found evidence that Earhart landed on uninhabited Gardner Island, where she lived out her last days as a female Robinson Crusoe.
Unilever courts actress’ brand. Actress Jessica Alba, 35, is much more than a pretty face to Unilever PLC (ULVR). The corporation, widely known for making Dove soaps, has been courting the sex symbol to buy her startup Honest Co., reports MarketWatch. The acquisition would give Unilever a foothold in the growing market for “green” household products. Alba – who starred in the franchises Fantastic Four and Sin City – and Unilever have been dickering over a sale price somewhere between $1 billion and $1.7 billion. Founded in 2011, Honest reported 2014 revenues of $170 million from selling disposable diapers, household cleaners, and personal-care products. The startup has succeeded by marketing its products as an environmentally friendly alternative to harsh products sold by bigger companies.
Deutsche Bank balks at $14B payout: The U.S. Department of Justice has been knocking on the door of Deutsche Bank AG to collect a $14 billion penalty for the alleged mishandling of American mortgage-backed securities, reports Bloomberg. The news sent the bank’s stock and bond prices into a tailspin. Since 2008, Deutsche Bank has already paid fines and settlements totaling more than $9 billion. But in a statement on the latest charges, the company said: “Deutsche Bank has no intent to settle these potential civil claims anywhere near the number cited. The negotiations are only just beginning. The bank expects that they will lead to an outcome similar to those of peer banks which have settled at materially lower amounts.“
The Money and Markets Team