|Dow||-11.61 to 18,116.04|
|S&P 500||-3.68 to 2,104.42|
|Nasdaq||-15.45 to 5,010.97|
|10-YR Yield||-.015 to 1.909%|
|Gold||+$5.20 to $1,189.80|
|Crude Oil||+$.0.87 to $47.44|
It’s official. The 2016 Presidential Race is underway.
I say that because Texas Senator Ted Cruz just declared himself a Republican candidate for the highest office in the land.
Befitting this modern-day campaign era, he launched his bid on Twitter (TWTR, Weiss Ratings: D+) with a tweet reading “I’m running for president, and I hope to earn your support.” That was followed up by an official kickoff speech at Liberty University in Virginia, a Christian college.
Several other prospective candidates have been exploring their own bids for a while. Many of the leading players — from Kentucky Senator Rand Paul and former Florida Governor Jeb Bush for the GOP, to former Secretary of State Hillary Clinton and former Maryland Governor Martin O’Malley for the Democratic Party — are widely expected to join the fight soon.
|Republican Ted Cruz is the first official candidate in the 2016 presidential campaign.|
But Cruz clearly hoped to grab the spotlight by declaring early. The senator skews toward the far right of the Republican field. He is a staunch opponent of Obamacare who is especially conservative when it comes to social issues. That approach contrasts with some of his more centrist GOP rivals, who are willing to alienate ideological, primary voters in pursuit of a general election victory.
Now let me confess something: Politics tend to either bore or sicken me. Too many politicians lack principles and morals, and they’re too beholden to their big-money donors. They fail to live up to their campaign trail promises once they win office. Plus, their day-to-day decisions don’t have as much impact on the investment markets as, say, decisions made by monetary policymakers or lower-level regulatory agencies.
|“Too many politicians lack principles and morals, and they’re too beholden to their big-money donors.”|
But given the wide-open nature of the 2016 presidential race, things should be entirely different this time. This could be one of the most heavily contested, knock-down, drag-out fights in decades. That, in turn, should be yet another factor that boosts market volatility in coming months.
Furthermore, monetary and regulatory policymaking is much more politicized today than it was a decade or two ago. If we get a Fed-hating Republican in the White House, or if a banker-loathing Democrat wins the nomination, it could have serious implications for everything from interest rates to bank profitability in the years ahead.
So as the 2016 race gets underway, you’d be wise to pay closer attention to developments in Washington. I know I will!
Now let open up the floor to you. Do you think Senator Cruz is doing the right thing by declaring his candidacy early? Will it help or hurt him in the long run? What do you think about the crop of Republican and Democratic hopefuls? Anyone you support or loathe strongly, and why? Here’s the link to the Money and Markets website … make sure you use it!
|Our Readers Speak|
What happens when global debt loads soar, and when volatility increases substantially? We’re finding out now … and several readers weighed in on the website about what that means for investors.
Reader Chuck B. said “There is officially nearly $200 trillion in government and corporate debt outstanding worldwide, and probably another $200 trillion unofficially (household, etc.). Total debt/GDP has grown $25 trillion, or 17 percent, just since 2007.
“Central banks have printed only about $5.4 trillion, not nearly enough to compensate for all that debt and cause inflation. That debt is, as Larry says, the reason for the current, and growing, deflation. My take is that either the banks will need to print a heck of a lot more money, or most of that debt, at least, is going to need to be wiped from the books.”
Reader BAC added: “Here we are facing the reality of Greenspan’s ‘Age of Turbulence’ — the book that tried, in its convoluted way, to explain what Greenspan foresaw with the new Millennium. He talked about three billion people entering the free market, where only one billion currently reside. Now we are experiencing the sloshy waves of countries taking their alternating turns to print vast amounts of money to ease the pain in assimilating these countries/people into the world economy.”
But rather than panic or worry excessively, Reader Tom suggested a simple strategy: “This increased volatility is caused by people like you who scream ‘Run!’ A more prudent investor buys and holds for the long term, knowing that the market will invariably go up. Stick to high quality stocks, diversification, and a long-term perspective and you will come out ahead.”
So what do you think? Is the massive, global overhang of debt going to push us deeper and deeper into deflation? Will the excess supply of labor swamping the global economy make that problem even worse? Or is their hope for a more optimistic scenario … and how should investors react? Let me and your fellow investors know over at the website.
|Other Developments of the Day|
The default clock continues to tick down in Greece, with the country struggling to grow fast enough and collect enough in taxes to pay back its European creditors/overseers. Prime Minister Alexis Tsipras met with German Chancellor Angela Merkel in Berlin today as part of an ongoing effort to get some breathing room. But many Europeans are running out of patience with the leading Syriza party, as are fellow Greek legislators back at home.
U.S. energy companies are pushing harder for the government to relax crude oil export restrictions. The 1970s-era restrictions are exacerbating the glut in U.S. oil in storage, and putting domestic producers at a disadvantage vis-à-vis foreign firms. Only U.S. refineries like the restrictions, because they basically subsidize their profits.
Don’t look now, but copper prices just surged to their highest level in 2015. The New Zealand dollar and Australian dollar are also both near their highs for the year, suggesting the chinks in the dollar’s armor are getting bigger by the day.
One of my favorite sectors to invest in is health care, and hospital companies have been some of my favorite stocks in that sector. A key reason is the Obamacare program. Ted Cruz may hate it. But the program is boosting the insured population base in America. That means more customers for hospital companies, and lower bad debt expenses from uninsured patient bills.
With that in mind, Tenet Healthcare (THC, Weiss Ratings: C) just announced it would form a joint venture with privately held United Surgical Partners International. Tenet will own a 50.1 percent majority stake in the $1.9 billion company, which will become the largest provider of quicker, less complicated surgery and medical imaging services in the U.S. THC shares jumped almost 5 percent on the news.
Thoughts on these stories? Don’t be shy — share ’em over at the website!
Until next time,