US Elections: Trump

Thu, Mar 17, 2016 - 10:01am

Donald Trump is clearly the frontrunner for the GOP nomination, but our Geopolitical Strategy service argues that Trump has a serious probability of winning the presidential election. While we would still put our money on Hillary Clinton winning a head-to-head matchup, the probability gap between the two is not as large as predicted by the “smart money.”

What we call Trump’s “White Hype” strategy – of boosting support for the GOP among white voters – could narrow Clinton’s lead in several important swing states. Pursuing a greater share of the white electorate is a far more rational strategy for a GOP candidate than trying to appeal to the minority vote, a long-term GOP goal that cannot win the election in 2016. In addition, Trump is only a recession, major terrorist attack, or explosive Clinton scandal away from broadening his appeal – and these events all have non-negligible probabilities of occurring. On the other hand, Trump still faces numerous headwinds, including an otherwise massive lack of appeal among independent voters.

Hear Robert Kiyosaki on Rich Dad, Poor Dad, Donald Trump, and More

In the end, even if Trump fails to win the presidency, his appeal and campaign success will live on. His anti-free trade, anti-immigration, and pro-fiscal spending views will be impossible to ignore by future candidates, whether Democrat or Republican.

For investors, this also means that America’s “pro-business party” will cease to be the champion of globalization, lower taxes, deregulation, and the unfettered movement of capital and labor in the long term. At the very least, it suggests that current levels of near record-high profit margins and near record-low effective corporate tax rates are politically unsustainable.

These trends may be new in the US, but they are well entrenched in the rest of the world. From the BREXIT referendum and the widespread appeal of Trump-like politicians in Europe to increasing Chinese economic nationalism and great-power competition for a sphere of influence, the world is beset with geopolitical and political headwinds to globalization. Donald Trump is merely a symptom of the structural forces underpinning this paradigm shift.

To access the Special Report entitled “US Election: The Great White Hype”, please click here.

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