USA Election – Why It Matters?
At the start of the year, I listed a number of key events that could have major impacts in the global economy. In my list, I mentioned Crude Oil, Brexit, Federal Reserve, Corporate Earnings, and the USA election. So far, the volatility of the crude oil price has increased, Brexit has already happened, Federal reserve is predicted to have the first hike in September, and there is a mixed performance in companies. The United States election, scheduled for November 8 is now the leading events in investor’s mind. This election will be historic no matter who wins. If Donald Trump wins, it will be the first time in American history that someone who has never been in politics has won the election. If Clinton wins, she will be the first female president in America’s history. Also, this will be the first time in American history that the contenders have the worst favorability rankings. Polls show that the USA election is one of the most competitive. After the democratic convention, Clinton had a bounce of more than 10%. In the past week, this bounce has been trimmed. In different polls, Trump has taken the lead over Clinton.
Why it Matters
For traders, the USA election is a major event that should not be ignored. The American president is the leader of the free world. The country is also the leading economy in the world. When it develops a problem, the spillover effects are felt far and beyond. A good example is in 2008 when the failure of its banks led to a global meltdown. Also, in the past, historic events such as the 1987 and the 1929 crash have had serious repercussions to the global economics. The dollar is the reserve currency for most countries in the world. Therefore, if the dollar weakens or strengthens, chances are that the effects will be felt far and wide. A win for Hillary Clinton will mean continuity in the Obama’s policies while a win for Trump is uncertain to the American and global environment. Clinton’s policies are similar to those of President Obama. Trump on the other hand has taken rather complicated policies such as tax breaks, strong immigration stances, and a new policy of rebuilding the country. In the investment field, Trump is causing fear. Economist has ranked him as one of the leading risks in the global economy. Investors such as Warren Buffet and prominent hedge fund managers have placed their bet on Hillary Clinton because they don’t trust Donald Trump. Moody’s has released a report praising Clinton’s economic roadmap.
Why Trump Could Win
Though am not a political analyst, I believe that Trump has a better chance of beating Clinton. First, a number of votes globally have solidified the theory that people are looking at something else. The Brexit vote where Britons opted to leave the EU is a clear example. The referendum result was very different from what the polls and pundits had predicted. Influential figures such as Barrack Obama advised the Britons not to leave the EU. At the final day, the Britons, tired of bureaucracy decided to vote with the minorities and leave the establishment. The same could happen in the United States where people decide to give a try to a non-politician. While Trump is funding his campaign, Clinton has received millions of dollars from the establishment. This is to the advantage of Donald Trump. Another reason why Trump could win is because of the bad reputation of Hillary Clinton who has been in the limelight for more than 40 years. As the secretary of the state, the world saw the formation of ISIS and the subsequent destabilization of the Middle East. This could favor Trump who has in the past made a number of accurate predictions. In 2000, he wrote about Osama Bin Laden when no one was talking about him. Last but not least, Trump is a master marketer. This is evident in the campaign spending. While the media is biased against him, he has received from it billions of dollars in free advertisement. Clinton has so far spent hundreds of millions of dollars in publicity. Trump has spent only a few millions of dollars. For instance, last week, Trump travelled to Mexico before making his immigration speech. This speech was freely covered by most American media. This could play in Trump’s favor.