Tough Love
Why would the Democrats opt for such an early debate? Normally presidential debates take place after candidates are selected at their respective conventions. Joe Biden’s well-known inability to speak extemporaneously added considerable risk to the Democrats’ debate decision.
I pondered the decision, not being aware of any “tricks” that could be forthcoming. Could the Democrats be so Machiavellian as to expose the President’s vulnerability to millions as a way to get him to “step down”? Frankly, now that the debate is over, we have to believe that the party accepted the debate risk as a way to get rid of Joe Biden in favor of a more attractive and capable candidate.
For those of us “waiting out” the election, the Biden tax increases and regulatory proliferation seem to have become less probable. We will be unable to predict the environment for investing until we have the new platform for the new candidate.
The differences between the Trump agenda and the Biden agenda are sizeable. Tax levels and specific changes will dictate different valuations for businesses as well as interest rates for everything. There are good reasons why we hesitate making significant asset allocation decisions or rendering opinions about the outlook for all investments. We have been ultra conservative with our investment perspective for over a year. Portfolio returns have been positive and to date, interest rates are floating up and down along with inflation reports. Everyone is playing the guessing game over inflation as well as interest rates. When is the Federal Reserve going to cut?
Consumer confidence is erratically on a declining pattern, giving us a warning sign of earnings risk in the consumer stocks. Some economists have attributed as much as 70% of our economy to the consumer. Accordingly, with confidence at a low ebb, we continue to see a bumpy ride at least until the election.
The bumpy ride obviously starts with our political mess, but it doesn’t stop there. Foreign policy and the response of adversaries who undoubtedly have witnessed our projected weaknesses have raised the risk in the geopolitical power struggle. This adds to our “Bumpy Ride” thesis looking forward.
The apparent Democratic plan is well underway, but getting rid of Joe Biden is easier said than done. He must agree to step down, and his latest rants indicate that “Old Joe” is in for the duration. You can be sure there are many secretive “power” meetings being set up to move events to an “old fashioned” open convention. Remember, John F. Kennedy emerged from such a process, so history reminds us that the smoke-filled rooms of the past can work.
What about Kamala? They can’t simply ignore the Vice President. The party elders have their work cut out for sure. There are millions of “extra” campaign dollars that could fund a life comforting stash for Kamala, but the law will need to be bent somehow. Is this crowd capable of such a thing?
There are a few names being offered as viable candidates. Gavin Newsom, the Governor of California, is perhaps the top pick today, but his record as Governor has left California with some severe issues.
Financially, the state deficit is out of control and individuals and their businesses are leaving the state at an increasing rate. He clearly would bring a profile that would be easy enough to shoot at.
I personally hope that the elders pick an attractive, clean, middle-of-the-road candidate who could attract independents and Trump haters. The well-defined division between the “left” and the “right” in this country needs to be moderated and a middle-of-the-road Democratic Party would go a long way as a first step. Here’s their chance.
The investment outlook is not clear. It is charged with risk, both domestic and geopolitical. The debt burden with its myriad of possible consequences gives us plenty to watch. We believe that we’re close to a new national direction that will represent a generational opportunity for those able to take advantage of this change. We feel a little more patience is warranted to assure a safe passage to that opportunity.
