I will promise not to hijack my own website with too much in the way of US politics, but it does influence the markets in general as the current president will manipulate stock markets in a manner that best suits his political fortunes. Also the perception of Trump’s re-electability will have an impact on capital flows.
Back in my year-end report, I wrote:
USA Politics
In my previous year’s report, I made an educated guess that President Donald Trump would make all the gestures of running again for president but not actually run. Looking at the lead-up to what is a presidential election year, I am going to back out that prediction, mainly because of the competition that Trump is facing.
Odds markets have the following:
Biden: 2:1
Sanders: 3:1
Warren: 5:1
Buttigieg: 8:1
Bloomberg: 16:1
Hillary: 27:1
Yang: 34:1In my scorecard, I would rank Sanders #1 probability to win the thing. My guess is that Bernie Sanders (“authentic”) is going to give the Democratic Party establishment a run for their money, much more so than when he did in 2016. The evidence is in the fundraising figures. The fact that he has gone through the entire primary process before is a huge assist in terms of his campaign structure and this cannot be underestimated.
Likely to place second is Pete Buttigieg (“young”, “first (credible) LBGT presidential candidate”). He checks the correct Democratic Party boxes.
Third will be Elizabeth Warren (“establishment”). I would view Warren as having a better chance than the other establishment candidate, former VP Joe Biden. For the life of me, I can’t understand why Biden has been ranked so highly other than incumbency.
Bloomberg has the huge disadvantage of trying to replicate what Trump did to the Republican party, but it won’t work. And in the very rare chance he actually did win, I do not think he would contrast well to Trump in the general election, and everybody knows it.
I am fairly certain on my Sanders / Buttigieg projection, and absolutely certain that Biden is toast (he will likely give up after South Carolina, which is his strongest state, and held on the leap year day February 29, 2020), but the question is where the establishment vote is going to end up – originally I thought it was going to be Elizabeth Warren, but now it is looking like a contest between her, Amy Klobuchar or Michael Bloomberg. Interesting times indeed. Warren’s performance in the technology-error riddled Iowa caucus is good enough to give her credibility in New Hampshire (and geographically it is a closer state for her), but in future primaries, it will be interesting to watch that Democratic establishment vote.
Crowd count:
Democratic candidates:
https://www.youtube.com/watch?v=HOv6wiIZT4Y
vs Trump:
https://www.youtube.com/watch?v=R33k5M4a8aU
The fact that the guy can still fill a stadium (12,000 people), more than 3 years into his term, should frighten everybody else. Can’t imagine anybody other than Sanders doing this.
I’m more or less in the anyone-but-Trump camp, so my thinking shouldn’t be taken too seriously (and I’d still give at least even money, and probably more, that he gets term 2), but the filling-a-stadium thing, in my opinion, reflects his strengths and strategy, which is to keep his supporters in a near-constant state of high froth, and as such is not necessarily reflective of aggregate support. It is most definitely an enthusiasm gap which nobody but Sanders can even hope to bridge (though even that’s a stretch), but has, I’d argue, the side effect of keeping the antipathy to Trump strong as well. I think Trump understands well that polarization helps him maximize his chances, but also makes the relatively few people who hew to him still but with misgivings even more tentative than they’d otherwise be. This is a small pool which has likely grown smaller as people have tipped into one camp or another, but I think they’ll likely end up deciding the election, and will make choices largely based on their perception of the economy. Trump’s done what he can to juice it–can’t fault him for that–but the effects of hiccups in China (and Germany?) on a million or so farmers and factory workers may end up deciding this.
Basically, I still think it’s a balancing act, and still pretty much–despite the endless distractions on the other side–Trump’s show. I think that’s why markets aren’t even considering the possibility of a Pres Sanders–first, because it’s pretty far out, and second, because he barely has a speaking part so far in the national story. Could make for an interesting situation if that changes.
This is quite possibly conventional wisdom and not a value add at all!
@Aharon: I certainly don’t add much value in my US political commentary either! It’s so difficult trying to filter out one’s own cognitive biases that I get dementia after.
Bernie got a 7k-ish reception in NH on his victory speech, didn’t see the others. Klobuchar will now be on the attack list of the other nomination candidates for sure. Bloomberg is probably laughing since I think he was a winner in NH as well. A reasonably decent chance at a contested nomination, which would lead to potentially crazy outcomes. Bernie really needs to break above the 30% range on these multi-candidate primaries for him to have any chance of securing it by convention, so he will need to have a decent showing in NV and SC as well before super Tuesday.
For reference, Trump got 35% in NH in 2016 and 33% in SC, and 46% in NV. Even on “super Tuesday” he averaged 34% despite there being three ‘viable’ candidates (Cruz and Rubio).
One thing is for certain, the Democratic establishment vote is really fragmented right now. Biden’s done and Warren did far worse than I was expecting.
Pretty much agree with all of this. Sort of impressive how fragmentary (to be charitable) the process has been so far. I’d say we in the US deserve better but that, too, is subject to debate.
Powerpoint Pete is out of the race today. A mild surprise, especially before Super Tuesday. This will help the ‘anybody but Sanders’ camp of the Democratic wing, so it makes me wonder what deal he was offered to drop (Bloomberg?).
I’ll also add to my previous comment that when I wrote the post initially, Buttigieg didn’t destroy himself in the debates as being the “powerpoint” candidate. Sort of like “low energy Jeb”, that line of attacking did not help in any respect.
After Super Tuesday I’d expect Sanders, Biden and Bloomberg to remain, and possibly Warren if she can pick up a bunch more delegates and can retain her home state (polling doesn’t look good for her right now).
If there was a decent venue where one can bet on “Not one of: Sanders, Bloomberg, Biden”, I’d be taking the bet right now. Unfortunately the odds structured for this suck at present.
Looks like I blew this one!
Now that it’s going to be a two horse race, Biden will be able to get most of the establishment vote. If I was the Democrats though, I’d really be worrying, it is sort of like when Bob Dole was nominated for the Republicans against Clinton’s second term (back in 96….)