The path to the White House

Between now and when Barak Obama leaves the Oval Office in January 2017 investment markets worldwide will experience considerable volatility.  Investors and especially fund managers do not usually excel in turbulent times.  For some specialists, volatility of markets is their domain.  Traders in currencies, futures, options, can be in their element, but for the majority of mainstream investors, the less volatility the better.  Thus the US presidential election is important (not that all US presidential elections are not important) but this election is critical from a number of different stand points from our, NZ perspective

• Finance/Markets/Inflation/Interest Rates/Currency
• Defence/Peace
• International relations/Trade
• Immigration
• Travel/Tourism

The destabilisation of the Middle East has allowed the rise of Muslim radical fundamentalism.  However much we peace loving democracies of the west despised the tyrannical rule of Saddam, his oil supplies once remained in Iraq hands and his blend of fear and brutality maintained an equilibrium across Libya, Syria and Iran.  Not the case today.  Whilst the dramatic drop in the price of oil will ultimately affect terrorist funding and Russian cash flow, world order in parts of Europe and the Middle East has already changed.  Israel must feel somewhat exposed.  With the growth in popularity of Vladimir Putin, his hubris is growing.  Eastern European countries and some Middle Eastern countries will inevitably fall victim to Russian expansionism.  It is ironic from my perspective that US and Cuba are once again on friendlier terms.  The former Krushev and Russian support for the Castro dictatorship of socialist Cuba is a reminder to all of

(a)        the failure of communism to progress individualism or national growth

(b)        the strategy of world dominance through power broking of some leadership models –

            based on their own form of non-democratic rule

I’m outlining some of the situations worldwide to bring focus back to US politics and ultimately their leadership transition.  The world needs our allies to be in alignment – firstly from a financial perspective, ie. the defence of capitalism, and secondly with regard to world order.  UK (and its possible withdrawal from the EU), Western Europe, North America (Canada and US) and Australasia, are joined through Nato and other alliances/allegiances.  And let’s have no doubt – we have each been grateful for that alliance over the last hundred years.  Disaffected in some instances by rogue dictatorships or incompetent fiscal policy from European countries.

In US the leading (past) dynasties of the Clinton’s and the Bush family are in serious question.  The various voters of Iowa, New Hampshire and South Carolina are seriously anti-establishment.  If they were not we wouldn’t be experiencing the extreme positions of Bernie Sanders with the Democrats and Ted Cruz/Donald Trump with the Republicans.  A left/right swing in both camps.  I don’t see either extreme being beneficial to New Zealand’s Trans-Pacific Partnership – both Trump and Sanders are accusing the US political establishment of opening up American markets without extracting equal concessions from trade partners.

There are two candidates, Sanders and Clinton looking for Democrat presidential nomination and three candidates – Trump, Cruz and Rubio on the Republican candidate list with a chance (in my opinion) to be the next President.  The selection process is extremely transparent, personal and at times – brutal.  And the candidate chosen from either side will need to repeat the process through the final presidential selection process in November.  The death of Justice Scalia (one of 9 Justices within the Supreme Court) has done nothing to alleviate prejudices and biases from either side of the political divide – as Obama (Democrat) has the right to make a recommendation to replace Justice Scalia (a Republican and sworn Conservative) whilst the Senate (predominantly Republican) has the right to reject any nomination.

Understanding the US constitutional structure (a Congress consisting of a Senate and a House of Representatives) the powers of the President and the judicial powers of the Supreme Court provide some balance to what we may have considered superficially through our somewhat media deranged journalism.  US is a democratic republic with a constitutional mandate – their checks and balances are numerous but not fool-proof.  Whose are?

There is no question in my mind as to the importance of determining which candidate will ultimately lead the greatest economic country of my time – my hope is that the process and the constitutional structure of US enables sufficient input from a thoughtful (free) society and a leadership group capable of managing world order in conjunction with their allies.  We’ve had a peanut farmer and a Hollywood film star in my time – and the latter proved to be the man for his time.  Sometimes we can be biased and quick to judge and slow to give credit where it is due.  I don’t think history will place Obama in the same league as Reagan – who would have picked that? – in New Zealand.  But who’s next?