Aside from Super Bowls, the first 2016 presidential debate to be held on September 26th figures to be the most watched prime time program in the history of television. Which is really odd because when I talk to people, I don’t seem to run into very many “undecided” voters. With rare exception, virtually every person is either voting for Hillary Clinton because they think she is the most qualified (or because they can’t stand Donald Trump) or voting for Donald because they can’t stand Hillary.
Ostensibly, debates are conducted to help voters decide who is the most qualified candidate. So if everyone already has made up his or her mind, why would the debate have such a large audience? Because it is going to be INCREDIBLY ENTERTAINING, that’s why!
Viewers will be glued to their TVs to see if Donald can be successful dragging the debate into playground banter. Meanwhile they will be watching to see if Hillary can maintain her composure better than the Republican candidates did during the primary debates.
We frequently get asked our opinion about the effects of the election on investments. We’re not even sure how to respond to that question today. Our first thought when asked that question is that presidents get way too much credit when the economy and markets are good, and they get way too much blame when they are bad. There are global and geo-political forces at work that have a much greater effect than the results of Election Day.
Ultimately, fiscal policy does become important, but we’re not yet sure what to be concerned about. Yes, Hillary has made it clear that she wants to bring down the cost of health care, particularly pharmaceutical costs. But can she be successful and will that overcome the massive wave of aging baby boomers’ demand for health care? If drug stocks declined after Election Day, we might use that as a buying opportunity.
If Donald is elected president should we own more defense stocks? And should we invest in companies that manufacture bricks? (Because it will take a lot of bricks to build that wall.)
When watching the debates, there are several important issues that should concern you as a U.S. citizen and registered voter. I wrote about two of them in the August Investment Commentary VOTE!
One major issue is the Supreme Court and how many vacancies might open during the next presidential term.
The other issue is jobs (or lack thereof). You should try to ascertain which candidate will be most successful creating quality jobs for the middle class. The gap between the “haves” and the “have-nots” has grown wider than ever, and it is beginning to threaten the political ideology of this country.
We need a more vibrant economy that generates jobs for the average American.
Markets took the month of August off and went to the beach. Neither the S&P 500, nor the All World Index nor the Barclays Aggregate Bond Index was up or down more than 1%. The two stock indexes were up a smidge, and bonds were down a smidge. Maybe the calm before the storm? We didn’t say that.
For the calendar year, U.S. stocks are up 7.8% while the All World (ex U.S.) Index was up 4.53%. Bonds are up just under 6%. Not a bad year so far in spite of August sitting this one out.
We know this is a slight exaggeration, but it seems as if almost every minute of every day, the drones at CNBC obsess about whether or not the Fed is going to raise interest rates. All day long someone is opining about the odds that the Fed will or will not raise interest rates. And the amount of interest rate hike they are obsessing about is .25%.
So what? Who cares?
We realize this is in part due to the fact that they have very little else to talk about. But we are here to tell you this is much ado about nothing.
For the record, our opinion is that they won’t raise rates. But even if they do, what’s the big deal? It’s a non-event. If the stock market reacts significantly to a rate increase, it will be short-lived… as short as the BREXIT reaction.
So quit worrying about a rate increase by the Fed and worry about fiscal policy that will foster an economy that will create good jobs… lots of good jobs.
At Boyer & Corporon Wealth Management, we are not yet seeing signs of a recession and are not yet hedging our equity positions. This year, we’ve been beefing up our allocations to emerging markets (particularly Brazil, Chile, Russia, India and South Africa) as well as our allocations to gold and gold mining companies.
We are not shortening our durations in bonds, but are finding it difficult to locate good quality bonds with any kind of decent yield.
This information is provided for general information purposes only and should not be construed as investment, tax, or legal advice. Past performance of any market results is no assurance of future performance. The information contained herein has been obtained from sources deemed reliable but is not guaranteed.